Multiple of Revenue
Multiple of EBITDA
Multiple of Net Profit
Your estimated business value is: $0.00
Understanding Business Turnover and Valuation
Business turnover, often referred to as revenue or gross income, represents the total amount of money a company generates from its primary business operations over a specific period, typically a fiscal year. It is the "top line" figure on an income statement, indicating the volume of sales before any costs or expenses are deducted. While high turnover can signify a strong market presence and demand for products or services, it doesn't directly translate to profitability.
Why Turnover Calculation is Important:
Performance Tracking: Monitoring turnover over time helps businesses understand growth trends, seasonality, and the effectiveness of sales and marketing strategies.
Benchmarking: Comparing turnover against industry averages provides insights into a company's competitive standing.
Valuation: Turnover is a key factor in determining the overall value of a business, especially when considering sale, investment, or mergers.
Loan Applications: Lenders often review turnover history to assess a company's ability to repay debt.
Calculating Business Value Based on Turnover and Profitability
While turnover is crucial, a more accurate valuation of a business often considers its profitability. This calculator helps estimate a business's market value using common valuation methods. The core idea is to apply a multiplier to a relevant financial metric (revenue, EBITDA, or net profit) to arrive at an estimated business worth.
The Formulas Used:
Multiple of Revenue: Estimated Value = Total Revenue × Valuation Multiple (Revenue)
Multiple of EBITDA: Estimated Value = EBITDA × Valuation Multiple (EBITDA)
Multiple of Net Profit: Estimated Value = Net Profit × Valuation Multiple (Net Profit)
The specific multiple used depends heavily on the industry, growth prospects, market conditions, business assets, and the specific metric (revenue, EBITDA, or net profit) chosen. Higher multiples are generally associated with faster-growing companies, established market leaders, or businesses with strong recurring revenue streams. EBITDA is often preferred by investors as it offers a clearer picture of operating profitability before financing and accounting decisions. Net profit is the ultimate bottom line but can be influenced by non-operational factors.
How to Use This Calculator:
Enter Total Revenue: Input the total sales generated over the period you are analyzing.
Enter COGS and Operating Expenses: These help understand your cost structure but are not directly used in the primary valuation calculation methods presented here, though they inform profitability.
Select Valuation Method: Choose whether you want to value the business based on its Revenue, EBITDA, or Net Profit.
Enter Corresponding Financial Metric:
If you chose 'Multiple of Revenue', ensure the 'Valuation Multiple' field reflects a multiplier typically applied to revenue in your industry.
If you chose 'Multiple of EBITDA', you will need to input your business's EBITDA and the appropriate 'Valuation Multiple (EBITDA)'. This input group will appear after selection.
If you chose 'Multiple of Net Profit', you will need to input your business's Net Profit and the appropriate 'Valuation Multiple (Net Profit)'. This input group will appear after selection.
Enter Valuation Multiple: Input the multiplier relevant to your selected valuation method and industry. This is a critical factor that requires research into comparable business sales.
Click 'Calculate Business Value': The calculator will provide an estimated valuation.
Disclaimer: This calculator provides an estimate for informational purposes only and should not be considered professional financial advice. Actual business valuations are complex and depend on many factors. Consult with a qualified business broker or financial advisor for accurate valuation services.
function calculateTurnoverValue() {
var revenue = parseFloat(document.getElementById("revenue").value);
var costOfGoods = parseFloat(document.getElementById("costOfGoods").value);
var operatingExpenses = parseFloat(document.getElementById("operatingExpenses").value);
var valuationMethod = document.getElementById("valuationMethod").value;
var valuationMultiple = parseFloat(document.getElementById("valuationMultiple").value);
var calculatedValue = 0;
var displayValue = "";
if (isNaN(revenue) || isNaN(valuationMultiple)) {
alert("Please enter valid numbers for Revenue and Valuation Multiple.");
return;
}
if (valuationMethod === "multipleOfRevenue") {
if (isNaN(revenue)) {
alert("Please enter a valid number for Total Revenue.");
return;
}
calculatedValue = revenue * valuationMultiple;
displayValue = '$' + calculatedValue.toFixed(2);
} else if (valuationMethod === "multipleOfEBITDA") {
var ebitda = parseFloat(document.getElementById("ebitda").value);
if (isNaN(ebitda) || isNaN(valuationMultiple)) {
alert("Please enter valid numbers for EBITDA and Valuation Multiple.");
return;
}
calculatedValue = ebitda * valuationMultiple;
displayValue = '$' + calculatedValue.toFixed(2);
} else if (valuationMethod === "multipleOfNetProfit") {
var netProfit = parseFloat(document.getElementById("netProfit").value);
if (isNaN(netProfit) || isNaN(valuationMultiple)) {
alert("Please enter valid numbers for Net Profit and Valuation Multiple.");
return;
}
calculatedValue = netProfit * valuationMultiple;
displayValue = '$' + calculatedValue.toFixed(2);
}
document.getElementById("result").innerHTML = 'Your estimated business value is: ' + displayValue + '';
}
// Show/hide EBITDA and Net Profit input fields based on selected method
var valuationMethodSelect = document.getElementById("valuationMethod");
var ebitdaInputGroup = document.getElementById("ebitdaInputGroup");
var netProfitInputGroup = document.getElementById("netProfitInputGroup");
function updateInputVisibility() {
if (valuationMethodSelect.value === "multipleOfEBITDA") {
ebitdaInputGroup.style.display = "flex";
netProfitInputGroup.style.display = "none";
document.getElementById("valuationMultiple").placeholder = "e.g., 5 for EBITDA";
} else if (valuationMethodSelect.value === "multipleOfNetProfit") {
ebitdaInputGroup.style.display = "none";
netProfitInputGroup.style.display = "flex";
document.getElementById("valuationMultiple").placeholder = "e.g., 10 for Net Profit";
} else { // multipleOfRevenue
ebitdaInputGroup.style.display = "none";
netProfitInputGroup.style.display = "none";
document.getElementById("valuationMultiple").placeholder = "e.g., 2.5 for Revenue";
}
}
valuationMethodSelect.addEventListener("change", updateInputVisibility);
// Initial check on page load
updateInputVisibility();