There are 3 approaches to valuing a business – market, income and asset. This article covers the income approach.Types of Earnings
There are many types of earnings used in business valuation methods. Here are the most common ones with brief explanations. It is extremely important to use the correct type of earnings for the selected method.Earnings before taxes (pre-tax earnings) - Many valuation methods use pre-tax earnings.
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The earning capacity of a company is the primary driver of its value. Cash flow is the preferred measure of earning capacity for valuation purposes because it represents a purer form of earnings. Calculating cash flow begins with th... Read Post
There are 3 approaches to valuing a company – market, income and asset. This article covers the asset-based approach.The asset-based approach breaks a company down in to its pieces and attempts to value each individual asset separat... Read Post
There are 3 approaches to valuing a business – market, income and asset. This article covers the market approach.Preferred Approach A market-based valuation is preferred by most appraisers and users because it relates directly to th... Read Post