Company Valuation, Valuation of Company, Business Valuation, Company Value

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Company Valuation, Valuation of Company, Business Valuation, Company Value

Are you going to buy or sell a company or a business? We offer you a template for company valuation which you can download and use for free. With our template for business valuation you kan do a valuation of a company and calculate a company value. A company value depends on the companys future ability to generate profit and cashflow, it is though difficult to estimate and forecast future sale and its impact on expenses and payments, especially for new companys. It is a little bit easier to appreciate a company value for a company with some history, then you can look at historical income statements for some years backwards in time and calculate the proportion of expenses in relation to the revenue. These proportions can be used to estimate expenses based on a forecast of revenue in the future.

1. Company valuation, Valuation of company, Business valuation, Company value

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Company valuations
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With this template in Excel you can do a company valuation of a business by the method of discounting future income. An valuation of a company according to this method demands estimations of future revenue and expenses. Each years income is discounted by a discount rate, which means that income is worth less if it arises late in the future then if it arises today. Income in the future gives less contribution to the company value compared to income today.

The workbook includes five (5) worksheets and cells with green color is cells for input, cells with white color is output cells and have formulas. In the worksheet named Valuation is a company value computed based upon discounted income. The first ten future years of income is discounted by the discount rate. The Residiual value is the business value that comes from the infinite years after the first ten years and this value is added to the company value.

The principle for valuation of a company according to this method with discounted income assumes the company to survive forever, "Going concern". A business value computed according to this model can be lower than the net worth (Market value of assets minus market value of liabilities).

The person or company how are about to buy or sell a company or a business have to decide on there own which valuation method that are most fair and correct to appreciate one companys value. Valuation of companys with models give you hints about a companys value and can not replace your human skills.

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