- NPV Value of your business
- This is the value of all of your future cash flows discounted in today's dollars at your Weighted Average Cost of Capital (WACC).
- Expected annual growth
- This is the rate you expect your business to grow. This rate is only used on years 2 and above to estimate your future cash flow.
- Weighted average cost of capital (WACC)
- This is the cost of capital, or the interest rate, your investors require to put money into your business. Unless you are a Fortune 500 company with excellent business credit scores, this rate should be at least 12% to 25%. For small businesses that rate can be much higher.
- Years of cash flow to include
- This is the number of years that the projection will include in the value of your business. For example, if you include 100 years (the maximum) we calculate the present value of all future cash flows generated for the next 100 years into your business' value. Entering a high number would assume that the business would continue with the current projections for that entire length of time. You may wish to reduce this projected period if you have a known end date for the business cash flows, or to make a more conservative estimate of the value.
- Operating profit
- This is your total profit before interest and taxes. This is often called Earnings Before Interest and Taxes or EBIT.
- Interest expense
- Total interest expense for the year.
- Interest income
- Total interest income for the year.
- Income taxes
- Total income taxes paid for the year.
- Depreciation and amortization
- If you had any depreciation on equipment or buildings enter those amounts here. They are added back into your cash flow.
- Change in accounts payable
- If you had a net change in your accounts payable, enter the change here. If you had an increase in accounts payable, your cash flow goes up. If you had a decrease in your accounts payable, your cash flow is reduced.
- Change in inventory
- If you had a net change in your inventory, enter that amount here. If you are holding more inventory your cash flow is decreased.
- Change in accounts receivable
- If you had a net change in your accounts receivable, enter that amount here. Reducing your accounts receivable by collecting money owed more quickly can increase your cash flow and your valuation.
- Other net change
- Enter any other net change in other assets or liabilities that impacted your cash flow for the period.
- Capital expenditures
- This is the amount you spent on capital equipment and buildings that you were not able to expense for the period. If you were able to expense the expenditure, it is already accounted for in your EBIT.
- Additional investment income
- Enter any other investment that increased or (decreased) your cash flow for the period.
