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Idea from Kevin Johnston

Title

Valuing a Business Using the Capitalized Earnings Method

Summary

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.

Author

Kevin Johnston

Keywords

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