Evaluating a Business   A business's worth, is that price at which it will support it's structured debt service and pay a fair salary to the owner along with a fair return on the owner's investment.   MARKET COMPARISON Divide sale price by total sales (any average). Weight it- what's more important? Net profit should be at least 2/3 of decision.   INCOME Net profit- minus manager's salary divided by cap rate. (20-35%)   REPLACEMENT Value of stock and fixtures plus 1 years net profit.   LIQUIDATION Value of stock and fixtures at bargain/wholesale liquidators price. Replacement value of equipment, less depreciation.     Business Buyer Resource Center - "Learn 100s of tips, strategies and techniques to help you find and buy the right business".       Bizology - the study of business for sale Bizology.com email to : info [at] bizology [dot] com Chambersburg, PA 17201-1712       * SELLING * FOR SALE * CONTRACTS - FORMS * FINANCIAL * REFERENCE * * TAX - LEGAL * * BUYING * | you are in buying index now |   business checklist | business information sheet | buyers ask questions | buyers cash requirements | buyer disclosure | buyer information | buyer memorandum | buyer resources |due diligence checklist | confidential buyer profile | escrow deposit | food service | how to evaluate a business | let's see the books | pre-paids | ratios | thank you | terms of the trade | what happened to seller financing | where's the value | what to look for | valuation program | HOME main index