Tangible vs Intangible Value 1 How do you

Tangible vs Intangible Value 1

How do you Value a Company? “AN INVESTMENT IN KNOWLEDGE PAYS THE BEST INTEREST. ” Tangible Values Intangible Values Cost Approach Recession Value = Assets - Liabilities Market Approach Value = Multiple x Financial Metric Income Approach Value = Cash Flow / Risk Bull Economy 2

“ACME FITNESS DISTRIBUTORS, INC. “ -- Profit & Loss 2018 2019 2020 Total Income $ 26, 106, 602 $ 32, 819, 728 $ 27, 971, 359 Total COGS $ 16, 222, 939 $ 20, 281, 903 $ 17, 180, 325 Gross Profit $ 9, 883, 662 $ 12, 537, 825 $ 10, 791, 034 Expenses Contributions* Depreciation Expense* Total Expenses $ $ $ 175, 000 64, 613 6, 576, 987 $ $ $ 160, 000 72, 838 7, 954, 099 Net Ordinary Income $ 3, 306, 675 $ 4, 583, 726 $ $ $ 187, 500 69, 228 7, 031, 831 3, 759, 203 EBITDA* EBIT* $ $ 3, 546, 288 3, 481, 675 $ $ 4, 816, 564 4, 743, 726 $ $ 4, 015, 931 3, 946, 703 Deal Price $ $ 25, 000 30, 000 7. 0 x 8. 5 x 25, 000 30, 000 1. x 2. x Deal Price $ $ Implied EBITDA Multiple 5. 2 x 6. 2 x Implied Revenue Multiple 8. x 9. x Average $28, 965, 896 $ 4, 126, 261 $ 4, 057, 368 6. 2 x 7. 5 x Average 6. 2 x 7. 4 x Industry 3. 0 x 5. 0 x 0. 9 x 1. 1 x 0. 9 x 1. 0 x 0. 4 x 0. 6 x Common Financial Ratios Debt Ratio (Total Liabilities / Total Assets) Current Ratio (Current Assets / Current Liabilities) Working Capital (Current Assets - Current Liabilities) Working Capital as % of Revenue Assets-to-Equity Ratio (Total Assets / Owner's Equity) Debt-to-Equity Ratio (Total Liabilities / Owner's Equity) Industry Valuation* $ 12, 378, 783 $ 20, 631, 304 Industry 0. 64 2. 00 2, 330, 737 8. 0% 2. 79 1. 79 0. 50 3. 00 10% 3. 00 0. 75 3