Your firm currently has $180,000 in assets and $30,000 in debt business. Financial records show the...

Your firm currently has $180,000 in assets and $30,000 in debt business. Financial records show the most recent EBITDA to be $90,000 and recent the most net income to be $20,000. You (the entrepreneur) paid yourself a salary that is $10,000 higher than the current market rate. Based on the past growth of your firm and the current outlook for your industry, you think a multiple of “#” is appropriate. Assume a profit multiple of 2.

pt 1:

starting number:
add back:
adjusted number:
multiple:
value:
subtract:
quick and dirty value:

pt 2:

Would you be willing to sell the firm for $100,000?
yes or no

pt 3:

Would you be willing to sell the firm for $200,000?
yes or no

Solutions

Expert Solution

Value of Business = $170000

pt 2: Would you be willing to sell the firm for $100,000?

No, because offer price is less than value of business

pt 3: Would you be willing to sell the firm for $200,000?

Yes, because offer price is Higher than value of business

*Please comment if you face any difficulty and please don't forget to provide positive rating*

jeff jeffy answered 1 year ago

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