What Is Inflation? Inflation is a term used to describe the change in price of a bundle of products and services over time. Normally, it’s defined as a rate. For example, if the total price of a bundle of goods and services was $100 a year ago and now it’s $105, then the inflation in […]
This post will take a small dive into some common ways to calculate the equity value of a company, focusing on private businesses. Valuing Equity Definition In short, valuing equity is the ownership interest in a business after subtracting the financial obligations (e.g., debt)/debtholder ownership). Company Value – Debtholder Ownership = Equity Value Valuation professionals […]
When discussions of business valuations arise, the terms of EBITDA (or EBIT) and PEBITDA (or PEBIT) invariably become part of the discussion. But what do they mean? And when do you use one instead of the other? Or do they both simply arrive at the same conclusion when finding a valuation figure? If you’re interested in knowing […]
Technology Technology is an important tool that can improve a company’s performance and competitiveness. Some companies lack the resources to update technology, and therefore find it difficult to keep up with the technological changes in their markets. On the other hand, some companies manage to keep pace and are aware of changes to their market, […]
It sure is fast, but how reliable is a business calculator? There are certainly pros and cons to using a business calculation software, with some situations more viable than others. If you’re contemplating using a business calculator, we encourage you to read this article to answer some of the questions you may be (and should […]
Cost of Equity The cost of equity is the rate of return an investor expects to receive as compensation for the risk associated with owning the stock or shares of a company. In comparison with the cost of debt, in which interest payments and repayment of principal are defined in a contract, the cost of […]
Copyright is a legal term that refers to the exclusive right that an individual or corporation has over original works of authorship. This means that they can take legal action against someone who uses the copyrighted asset for commercial purposes. Types of Copyrights Among the most common copyrights, such as music, paintings, and books, but artistic […]
After Michael Jackson’s death in 2009, his likeness and image were under trial to determine their value and the tax impact it would have on Jackson’s heirs. After years of trial disputes, the judge decided that the IRS valuation was heavily overpriced due to misappreciations, and instead sided closer to the estate’s expert valuation at […]
Net working capital (NWC) are all those short-term financial resources that your company requires to be able to continue day-to-day operations efficiency (resources to fund or support your operation), thus avoiding delays or disruptions. NWC consists of various current assets such as inventory, accounts receivable, cash, and some current liabilities such as accounts payable. Importance of Net Working Capital […]
When performing a business valuation, several discounts should be considered that may need to be applied to a business’ value. Below, we will explain what a discount for lack of control means, as well as when an investor, appraiser, or other users of valuation information should be aware of it. DLOC Valuation The DLOC is a discount […]