Business Valuation Calculator

Prepare the Client’s Earnings

This business valuation calculator reconciles statement profit to maintainable earnings before applying the enterprise-value multiples you supply. Start with profit after tax for the entered earnings period. The calculator adds back the statement’s income tax and net financing expense to reach earnings before interest and tax, or EBIT.

Earnings before interest, tax, depreciation and amortisation (EBITDA) also adds back depreciation and amortisation. EBIT retains those expenses. An after-tax price-to-earnings multiple values equity on a different basis and cannot be entered as an EBIT or EBITDA enterprise multiple.

Replace the owner remuneration deducted in the accounts with the cost of employing someone to do that work. Add back genuinely one-off expenses, then deduct recurring costs missing from the accounts. Remove pre-tax net income from surplus assets valued separately. Record the explanation and source for every adjustment in the workpaper field.

Recurring wages and operating costs already deducted in statement profit stay deducted. An expense cannot be both an add-back and a missing recurring cost. Business Queensland’s valuation guidance explains why earnings, assets and the business’s circumstances all affect the assessment.

Enter the Valuation Assumptions

Supply enterprise multiples that match the chosen earnings measure and its period. Low, central and high are separate assumptions, in ascending order. The fictional 3, 4 and 5 times example is arithmetic for a workpaper, with no implied industry benchmark.

The earnings period records the accounts used. The valuation date records when the asset and debt balances apply. For annual multiples, first reconcile the accounts to maintainable annual earnings. The calculator does not annualise a short period automatically.

An EBITDA multiple applied to EBITDA gives enterprise value before net debt. Grant Thornton’s Dealtracker explanation describes that basis. Applying the same multiple to EBIT changes the earnings denominator and needs its own supporting judgement.

From Business Value to Equity

Equity value equals enterprise value plus surplus cash and non-operating assets, less financial debt and debt-like liabilities, plus the working-capital adjustment. Enter only cash above normal operating needs. The non-operating asset figure excludes that cash.

A positive working-capital adjustment adds an excess over the normal level assumed in the multiple. A negative amount deducts a shortfall. Keep normal working capital inside the enterprise assumption. Each bridge amount appears once, and financing costs added back to earnings remain separate from the debt principal deducted here.

In the fictional client-business example, $1,040,000 of central enterprise value gains $48,750 of surplus cash and $32,500 of non-operating assets. Deducting $172,500 of debt, $17,500 of debt-like liabilities and a $7,750 working-capital shortfall leaves $923,500 of equity.

Remove surplus-asset income from earnings before adding the asset’s value. Incorrect: leave that income capitalised and add the full surplus asset again. Correct: remove its pre-tax net income through the earnings adjustment, then include the surplus asset once in the equity bridge.

Compare the Net-Asset Result

Adjusted net assets equal all adjusted assets less all adjusted liabilities on an equity basis. Include operating assets, surplus cash and non-operating assets in the asset total. The liabilities total includes debt and debt-like liabilities.

The fictional example has $687,500 of adjusted assets and $305,000 of liabilities, giving $382,500 of net assets. This sits beside the $923,500 central earnings-based equity value. The calculator keeps both methods separate and does not average them.

Incorrect: add the equity bridge again to an all-assets-minus-all-liabilities total. Correct: compare that equity net-asset result directly with earnings-based equity. The Australian Government’s business valuation guide describes asset and earnings approaches and the records needed to assess them.

Read the Value Range

The default reconciliation produces $260,000 of maintainable EBITDA. Multiplying by 3, 4 and 5 gives enterprise values of $780,000, $1,040,000 and $1,300,000. The same negative $116,500 equity bridge gives equity values of $663,500, $923,500 and $1,183,500.

The sensitivity table changes maintainable earnings by 10% in each direction while keeping the bridge and entered multiples fixed. At the central multiple, $234,000 of earnings gives $819,500 of equity. Earnings of $286,000 give $1,027,500.

Zero or negative maintainable earnings leave the earnings-based values unavailable because a positive earnings multiple is unusable on that basis. Net assets remain visible. Debt above enterprise value can produce negative equity, and liabilities above assets can produce negative net assets.

Download the JSON workpaper to retain the inputs, adjustment explanations and scenario outputs. The Excel-compatible CSV has editable numeric inputs and formulas for the reconciliation, equity bridge, valuation range and net-asset comparison. It also reproduces every sensitivity cell. Open it in a spreadsheet and save it as a workbook before editing.

For a client considering a business sale, use the valuation range to compare the supplied assumptions before discussing a possible sale price. The calculated equity value depends on the earnings basis, multiples and bridge amounts entered.

Use the business viability assessment tool to review financial health separately from the valuation assumptions.

The calculations stay on your device without uploads or browser storage. They record the arithmetic of your assumptions. A market valuation still needs evidence for the earnings, multiples and asset values, including the rights being valued.