Knowing the worth of your business could help you decide whether to invest in new equipment, locate a partner, or secure investment dollars. It also serves as a baseline for the way your company’s finances are doing and can be helpful to compare against other companies in your industry.

To assess the value of a company to determine its worth, add all the assets such as property and inventory, and subtract any liabilities or debts. This approach may be a good starting point, however, it’s important to realize that your business is more than its assets and liabilities.

You can employ the market method for an accurate estimate. This method is based upon recent sales of similar businesses. This method utilizes seller’s discretionary earnings, also known as SDE. It is similar to EBITDA but adds in things like charitable donations and employee outings.

A multiple of annual sales can be used to assess revenue. The number of times you multiply will depend on the industry, trends and your company. A knowledgeable business advisor or broker can provide you with suggestions on the best method for your particular company. No matter which method you choose, it’s important to update your calculation on a regular basis and communicate with an experienced business appraiser to provide the most accurate assessment of the value of your business. They can also visit this web-site help you in planning for a possible acquisition or sale of your business.