Business Valuation Calculator

Calculator

Methods

Analysis

Ratios

FAQ

Enter your company's financial data to calculate business value using multiple valuation methods.

📈 P/E Ratio Method

Price-to-Earnings multiple valuation

💰 DCF Method

Discounted Cash Flow analysis

📊 EBITDA Multiple

Earnings before interest, taxes, depreciation

📚 Book Value

Asset-based valuation method

Annual Revenue ($)

Net Income ($)

EBITDA ($)

Total Assets ($)

Total Liabilities ($)

Free Cash Flow ($)

Growth Rate (%)

Discount Rate (%)

Industry P/E Ratio

Industry EBITDA Multiple

Industry Type

Company Size

📈 P/E Ratio Valuation

$1,500,000

Based on earnings multiple

Net Income: $100,000

P/E Multiple: 15.0x

💰 DCF Valuation

$1,200,000

Discounted future cash flows

Free Cash Flow: $80,000

Growth Rate: 5.0%

Discount Rate: 10.0%

📊 EBITDA Multiple

$1,200,000

Earnings before taxes valuation

EBITDA: $150,000

Multiple: 8.0x

📚 Book Value

$300,000

Net worth of assets

Total Assets: $500,000

Total Liabilities: $200,000

Key Financial Ratios

15.0x

P/E Ratio

5.0x

Price-to-Book

1.5x

Price-to-Sales

8.0x

EV/EBITDA

20.0%

ROE

10.0%

Profit Margin

Valuation Summary

📊 Valuation methods comparison chart would be displayed here

Valuation Methods

Price-to-Earnings (P/E) Ratio Method:
Multiplies net income by industry P/E ratio. Simple and widely used, but sensitive to earnings fluctuations and accounting methods.

Discounted Cash Flow (DCF) Method:
Values business based on projected future cash flows discounted to present value. Most theoretically sound but requires accurate forecasting.

EBITDA Multiple Method:
Multiplies EBITDA by industry multiple. Good for comparing companies with different capital structures and tax situations.

Book Value Method:
Based on net worth (assets minus liabilities). Conservative approach, best for asset-heavy businesses.

Valuation Method Comparison

Method	Best For	Advantages	Disadvantages	Accuracy
P/E Ratio	Profitable companies	Simple, widely accepted	Earnings dependent	Medium
DCF	Stable cash flows	Intrinsic value focus	Forecast sensitive	High
EBITDA Multiple	Capital intensive	Ignores capital structure	Ignores capex needs	Medium
Book Value	Asset-heavy businesses	Conservative, tangible	Ignores intangibles	Low-Medium
Revenue Multiple	High-growth companies	Good for unprofitable	Ignores profitability	Low

Industry P/E and EBITDA Multiples

Industry	Typical P/E	EBITDA Multiple	Growth Rate	Risk Level
Technology	20-30x	10-15x	15-25%	High
Healthcare	15-25x	8-12x	8-15%	Medium
Manufacturing	12-18x	6-10x	3-8%	Medium
Retail	10-15x	5-8x	2-5%	Medium-High
Financial Services	8-15x	N/A	5-10%	Medium
Utilities	12-16x	8-12x	2-4%	Low

Valuation Analysis

Comprehensive analysis of your business valuation across different methods and market conditions.

Valuation Range Analysis

Scenario	P/E Method	DCF Method	EBITDA Multiple	Book Value	Average
Conservative	$1,200,000	$1,000,000	$1,000,000	$300,000	$875,000
Most Likely	$1,500,000	$1,200,000	$1,200,000	$300,000	$1,050,000
Optimistic	$1,800,000	$1,500,000	$1,500,000	$300,000	$1,275,000

Valuation Factors to Consider:

Market Conditions: Bull vs bear markets affect all valuation multiples
Industry Trends: Growing vs declining industries command different premiums
Company Size: Smaller companies typically trade at discounts to larger ones
Liquidity: Private companies trade at 20-40% discount to public companies
Control Premium: Controlling interest adds 20-30% to valuation
Key Person Risk: Dependence on founder/key employees reduces value

Valuation Adjustments:

Marketability Discount: 15-35% for private companies
Minority Interest Discount: 10-25% for non-controlling stakes
Key Person Discount: 5-25% for founder dependence
Size Discount: 5-15% for smaller companies
Growth Premium: 10-30% for high-growth companies
Quality Premium: 5-20% for superior management/systems

Financial Ratios

Key financial ratios that impact business valuation and investment decisions.

Profitability Ratios

Ratio	Formula	Current Value	Industry Average	Rating
Gross Profit Margin	(Revenue - COGS) / Revenue	40.0%	35.0%	Good
Net Profit Margin	Net Income / Revenue	10.0%	8.0%	Good
EBITDA Margin	EBITDA / Revenue	15.0%	12.0%	Good
Return on Equity	Net Income / Shareholders' Equity	20.0%	15.0%	Excellent
Return on Assets	Net Income / Total Assets	20.0%	10.0%	Excellent

Valuation Ratios

Ratio	Formula	Current Value	Industry Average	Rating
Price-to-Earnings	Market Value / Net Income	15.0x	15.0x	Fair
Price-to-Book	Market Value / Book Value	5.0x	3.0x	High
Price-to-Sales	Market Value / Revenue	1.5x	2.0x	Attractive
EV/EBITDA	Enterprise Value / EBITDA	8.0x	8.0x	Fair
EV/Revenue	Enterprise Value / Revenue	1.2x	1.5x	Attractive

Ratio Interpretation:

P/E Ratio: Higher P/E indicates growth expectations or overvaluation
Price-to-Book: Values above 1x suggest market premium over net worth
EV/EBITDA: Enterprise value multiple, good for comparing leveraged companies
ROE: Measures efficiency of equity use, higher is generally better
Profit Margins: Higher margins indicate pricing power and efficiency

Frequently Asked Questions

Which valuation method is most accurate? No single method is perfect. DCF is theoretically most sound for stable businesses, while multiples are good for market comparisons. Use multiple methods for a valuation range.
Why do valuations vary so much between methods? Each method captures different aspects of value. DCF focuses on cash generation, P/E on earnings, EBITDA on operational performance, and book value on net worth.
How often should I value my business? Annual valuations are common for planning purposes. Update more frequently during fundraising, acquisitions, or major business changes.
What if my business is unprofitable? Use revenue multiples, DCF based on projected cash flows, or asset-based methods. Focus on path to profitability and growth metrics.
How do I find industry multiples? Use public company data, industry reports, M&A transaction databases, or business broker networks for comparable company analysis.
Should I hire a professional appraiser? For legal purposes (estate, divorce, litigation), formal appraisals are required. For planning purposes, these calculations provide good estimates.
How does company size affect valuation? Smaller companies typically trade at discounts due to higher risk, lower liquidity, and limited resources. Size premiums favor larger companies.
What increases business value? Consistent growth, strong margins, diversified revenue, experienced management, systems/processes, and market position all increase value.

📊 Business Valuation Calculator