business man holding money

Finding out how much your company’s worth is probably simpler than you’re thinking. Whether it’s because you’re thinking about selling your business, merging with another, justify loans, or you’re just curious, getting an accurate number is simple.

Use these four ways to get a better understanding of your company’s worth and how to come up with that number.

  1. Find market capitalization.
  • Figure out the number off all the shares that your company has been authorized, issued, or purchased by investors.
  • Multiply that number by the current stock price. This gives you the market capitalization number, which represents the total value of the company’s overall value.
  • For example, if you have 10,000 shares, and each share is currently trading at $12, the company’s market capitalization is $120,000.
  • You can find the current price per share on financial analysis websites.
  1. Analyze recent business sales.
  • Research online the worth of other companies in your business that are roughly the same size to compare too.
  • Average together all of the sale prices. Do this by adding all of the totals up, then dividing it by the number of companies you’re comparing.
  1. Use your assets.
  • Evaluate the income from holding companies and investment firms that you work with.
  • Use the total value of your investments as a measure of finding the value of your company.
  1. Use the multiplier method.
  • Find an income figure. This could be your gross sales, gross sale with inventory, or net profit.
  • Research and find an appropriate percentage of a shared net profit between companies in your business of similar size. Average them together, and then multiply that percentage amount against your income figure.
  • For example, if your net profit is about $600,000, and the estimated net profit of your type of business is 0.6 percent, you business value would be $360,000.

If you live in the Salem County area and are looking for additional small business advice, give us a call at 856.794.8400.