... comparability?
Comparable value is an appraisal term, and I maintain that business
valuators are not really a part of that fine organization called the appraisal
society. True, business valuators ... because facilities are as necessary to the operational function
as are equipment and other hard assets. However, one should always ap-
praise real estate as a stand-alone value, because it can...
... equation
of debt and salary into several past years’ actual cash flow. Are several past
years’ performances adequately consistent with the sample year used, and
has there been adequate cash to accommodate ... ratios, and compare applicants with industry stan-
dard performances. Larger commercial banks have wonderfully arrayed
comparable data banks, and, of course, they also have reams of inter...
... so. Many pro-
fessionals requir e ‘‘advances’’ against futur e work. These also may not
appear on the balance sheet and may be accounted for on infor mal doc-
uments that ar e maintained separately ... understand basic accounting and
60 Valuation Techniques
the valuation of cash streams. And payback is the measurement criteria for
value and pricing overall. Having completed our hypothet...
... Liabilities
2001
Industry
Median
1.8 .8
107
13
Valuation of a Restaurant
The aroma of good food is hard to beat. My uncle built a chain of 90
smorgasbord restaurants. Ray Kroc built McDonald’s. Although both had
formal ... than the
values they hold in these hard assets.
We knew from initial review of the balance and income statements that
this plastics manufacturer had an added overall...
... ex-
ists. Seasonality, waxing and waning within lines, makes straightforward
forecasting of sales and cost of goods sold inappropriate for major items
of sale. Inventories are more apt to contain larger ... corporation
are housed in an attached building at the personal residence and property
of the owner. The attached building serves as a retail outlet as well as the
catalog sales headqua...
... analysis. Also, in making this assumption,
we would not ordinarily calculate a weighted average cash stream.
Ratio Study
Financial experts will not always agree as to which ratios are particularly
germane ... little
meaningful information from these ratios applied to smaller businesses.
Therefore, these ratios are not included. Balance sheet data necessary for
calculating certain ratios...
... Business Value $ 250,8 93
Add: Tangible Asset Value 38 2,500
TOTAL BUSINESS VALUE (Prior to Proof) $ 633 ,39 3
(Say $ 635 ,000)
Financing Rationale
Total Investment $ 635 ,000
Less: Down Payment (Approximately ... It’s all in the economics of supply and
demand andsupply and demand are always major ingredients in es-
timating business value.
Financial Analysis 191
Ratios for net profit, bef...
... high-quality main-
sails, headsails, and spinnakers, the company manufactures six items of
boat hardware and two lines of winches. The business has been in opera-
tion for nearly 60 years and has had ... can signify a more liquid position and/or
Financial Analysis 2 13
Balance Sheet Reconstructed for Sale Purposes
Fair Market
Assets
1992 Value
Current
Accounts Receivable $ 33 , 237...
... Business
$171,600
Forecast Year 1 ס $1 43, 000*
(1 ם .20)
$192,500
Forecast Year 2 ס $ 133 ,681*
2
(1 ם .20)
$ 239 ,800
Forecast Year 3 ס $ 138 ,7 73*
3
(1 ם .20)
$295,900
Forecast Year 4 ס $142,699*
4
(1 ם .20)
( $31 2,000 ... per month at 10 years
Using an ‘‘Equal Monthly Loan Amortization Payment’’ table, locate
the page containing 10%, and 5 years, and then 10 years. We find that it
ta...
... year.
The Valuation Exercise
Book Value Method
Total Assets at Year-End 2001 $ 616,485
Total Liabilities 35 6,1 63
Book Value at Year-End 2001 $ 260 ,32 2
Valuation of a Marina 279
ing these margins ... possesses intimate marketplace awareness, these estimates for fair mar-
ket value can quickly become ruled by the numbers game. As a rather too
*Alchemy A medieval chemical science an...