equity value

1 min read. A business valuation typically involves determining the future cashflows that a company will generate and applying an appropriate multiple on the cashflows to arrive at the value of operations. The most common error I’ve seen in business valuations done, including those generated by online valuation software, is that cash on hand is automatically added to value without assessing if it’s needed for operations. Similar errors include adding the net tangible assets to equity value. These are working capital (i.e. accounts receivable, net of accounts payables, inventory, etc.) and capital assets such as equipment and trucks, etc. These […]