Optimum Capital Structure for a Business

The capital structure of a business is the mixture of equity and debt it uses to finance its operations. The optimum capital structure is one which minimizes the weighted average cost of capital and thereby maximizes the valuation of the business.

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Business Valuation Methods

When a business is seeking funding it will usually require a valuation. There are various business valuation models which can be used including PE multiples, assets based and discounted cash flow techniques.

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Know Your Numbers – Startup Valuation – Part 4

Programs such as Dragons’ Den and Shark Tank have highlighted the need for an entrepreneur to know their numbers and provide a reasonable startup valuation when seeking investment for a startup business and preparing for a shark tank or dragons’ den type pitch.

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Business Valuation Calculator

When a business is seeking investment it needs to decide what percentage of the business it will offer in return for the investment (think dragons den or shark tank).

This simple business valuation calculator allows you to enter the investment and the percentage, and carry out a business valuation analysis to establish the return an investor will make.

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PE Multiple Valuation

The PE multiple valuation or PE ratio valuation technique can be used to provide a rough valuation of the equity of a business based on its earnings after interest, tax and depreciation.

The price earnings ratio calculation formula is given a follows:

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