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Idea from Kevin Johnston


Valuing a Business Using the Capitalized Earnings Method


You determine the capitalization rate of a business by dividing current earnings by the monetary value of the company. The result is a percentage. When you capitalize earnings, you divide future and present earnings by the capitalization rate. This gives you a strong idea of how much the business should sell for.


Kevin Johnston


  • buying a business
  • selling a business
  • value a business
  • valuing a business