Question

In: Finance

I have a small business based on wholsale. How can I know how much my business...

I have a small business based on wholsale. How can I know how much my business is worth or if it has any stock value???

Is there a website/number I can go to where I see if I even have any stocks???

Because I don’t know how the stock market works
(I’m new at this)

Solutions

Expert Solution


There is no website which I know as such and I am pretty sure if there is any such website then that will not hold true because worth of the business is more on perception driven.

You can value your business yourself!!!

Just check the cash flows (Net cash after all expenses) you are generating from business on years basis and then estimate how will be your cash flow would grow for next 5 years.

Suppose you estimate your cash flows to grow at 10% per year for 5 years and present yearly cash flow is $10000 then your estimated cash flows would be:

Time

Year 1

Year 2

Year 3

Year 4

Year 5

Cash flow

10000

11000

12100

13310

14641

Now discount this cash flows with current expected or desired general income or interest rate:

If 5% is discounting rate or expected rate in your country then table will be as below:

Time

Year 1

Year 2

Year 3

Year 4

Year 5

Total

Cash flow

10000

11000

12100

13310

14641

Present Values

       9,524

       9,977

       10,452

       10,950

       11,472

    52,375

(Explanation: Present value = At Year 1 = Cash flow / (1+Rate)^Year = 10000/(1+5%)^1 )

It is very simple approach to calculate the worth of business.

Total business worth = $52,375

Above will include every operating aspect be it inventory or debtor or creditors …. Because those are operating activities hence comes under projection of the business cash flows covers up everything

You can add your present value or market value fixtures and furniture, other worthy items in above to bring total worth of the business.

I hope this helps!!!


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