Excess Earning Method Calculator

Excess Earning Method Calculator Explained:

(a) What is this? Using the Excess Earnings Method, this calculator gives a value for a business.

(b) What does this tell me? In theory, what value your business has using this method.

(c) Why should I use it? To get a potential valuation on your business. Once EBPITD and the required ROI are determined, the calculator requires the "industry average returns on assets" and the multiplier. The industry data can be secured from industry analysts, accountants or financial advisors. The same is true of the multiplier. Most Fast Moving Consuemr Goods (FMCG) retailers typically have a multiplier of betwen 2 and 5. Wages are included here and are regarded as "fair market value" for the owner/manager to run the business.

(d) Caution: A business, is like anything, it all depends what someone wants to pay for it. Do not assume that this valuation will be what you will achieve at the time of sale of your business. Any decisions you make, or don't make should be with the assistance and advice of your accountant or trusted financial advisor. You use this calculator at your risk.