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The Complete Business Valuation Formula Guide: 10 Essential Methods

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Market-Based Business Valuation Formula For a market-based calculation, use: CV = (EBITDA x 1.5) – (Current Liabilities x 0.5) Or V = (EBITDA * 1.3) / (Revenue – COGS) As an example, if a business's EBITDA is $300,000 and current liabilities are $50,000, the calculation would be: ($300,000 x 1.5) - ($50,000 x 0.5) = $425,000.

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Company Valuation Methods—Complete List and Guide

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There are three primary approaches under which most valuation methods sit, which include the income approach, market approach, and asset-based approach. The income approach estimates value based on future earnings, using techniques like the discounted cash flow analysis. How Do I Value a Business?

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How can I learn to valuate a company?

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Key Concepts to Know: Before diving into the valuation techniques, it's important to understand concepts like the time value of money, risk and return trade-off, and the significance of growth rates. Various Approaches to Valuation: Valuation can be approached through three main methods - market-based, asset-based, and income-based valuation.