Business Valuation Calculator

How it is calculated

Value = annual earnings × multiple. Earnings is the yearly profit figure you choose to value, and the multiple is the number of years of that profit a buyer is assumed to pay. The tool does a single multiplication and shows the result in dollars with two decimals.

The multiple cannot be negative. Earnings can be entered as a negative number and the tool will return a negative value, so check the sign. The answer is only as good as the earnings definition behind it (net profit, seller's discretionary earnings, EBITDA) and the multiple, which should come from comparable sales in the same industry. No debt, cash, growth or risk adjustments are made.

Common mistakes

• Applying a multiple meant for EBITDA to net profit (or the reverse): multiples are only comparable when the earnings definition is the same.
• Forgetting to add back or deduct the owner's pay: a business that looks profitable before the owner's salary may earn little after it.
• Using last year's one-off peak or loss as the earnings: the multiple assumes a representative yearly figure.
• Treating the result as the price you will receive: the tool ignores debt, inventory, cash and negotiation, so it is a first-pass estimate.