The Principal financial methods of evaluation

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Author: Joseph Nacmias (CPA)
McGladrey & Pullen, LLP., Certified Public Accountants 
750 3rd Avenue, New York, NY 10017 

Telephone: (212) 297-4888 / Fax:  (212) 972-9088
E-Mail: Joseph_Nacmias@rsmi.com / http://www.mcgladrey.com

2.1 The Principal financial methods of evaluation

·          Market value of business including goodwill.

·          Present value of future cash flows

·          Multiple of current earnings adjusted for “abnormal” costs

 

Recent prices of companies have been in the area of 6 to 7 times current operating cash flows (earnings before interest, depreciation, amortization and income taxes) or about 5 times operating income (earnings before interest and income taxes).


DISCLAIMER

The information provided here and on the other pages linked hereto is intended for educational purposes only, and is not legal advice. Particular situations require particular analyses that can only be provided by legal and/or accounting professionals who specialize in the relevant fields and who know all the details of a situation. Also, a presentation such as this does not establish the attorney and/or CPA-client relationship that is necessary in any rendering of legal or other professional advice. Finally, one should be aware that the law is a chameleon-like beast that changes its colors frequently, and what holds good today may be reversed by tomorrow. The comments herein should then be read in that light.


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