How to Measure Your Business Growth in terms of Its Value
You can’t just be running your business without stopping at some point to gauge where you are. When it comes to assessing your growth, you can adopt some techniques to achieve this. The important thing is that you should implement consistent techniques that cover different areas of your business — both internal and external factors. Keep reading to learn more.
Step #1: Compute Your Business’ Book Value
Your business’ book value shows the difference between your business’ assets and liabilities — it’s simply the net value of your business’ entire property. When you want to determine your business’s book value; compute your assets – fixed assets, current assets, as well what the company owes (its debts) – fewer liabilities such as loan balances and unpaid bills.
Step #2: Calculate Market Capitalization
This calculation would apply if your company sells stock publicly. In this case, you will use market cap measurement to determine the company’s outstanding stock’s total value. In order to calculate this, you need to multiply the total number of shares outstanding with the current stock price.
Those who engage in market capitalization do so when they want to calculate the growth of a business over time. And, this assessment is a common indicator of the size of a company. It is a technique engaged by financial professionals. By the way, the best way to achieve accurate business growth measurement is to outsource the task to financial experts. Your company’s annual report contains information that would be used in calculating market capitalization. You can also leverage any stock market news website for this purpose.
Step #3: Determine Your Cash Flow Growth
To determine the amount of actual money your business is generating, you need cash flow information. If you decide to outsource your business growth measurement to financial experts as suggested earlier, they will request for your cash flow report as one of the sources for the measurement. This would aid them in determining the value of your business or company. Adopting the discounted cash flow analysis process, future cash flow is extrapolated in order to find a value for the business. You use current cash flows as a measure against previous cash flows, which in turn would reveal if your business will remain solvent or not.
Step #4: Compute Your Business’ Price/Earnings Ratio
If your company is a publicly-traded one, your price-earnings ratio shows the premium on the stock of the company. In essence, this is the Current Stock Price/Average Earnings per share in the past twelve months (the slash represents a division sign). If the result from this computation is high, it simply implies that investors are looking forward to a high value in the future.
Kick-off your business growth’s measurement with the tips above.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.
Daina Middleton says: 
How to Measure Your Business Growth in terms of Its Value
You can’t just be running your business without stopping at some point to gauge where you are. When it comes to assessing your growth, you can adopt some techniques to achieve this. The important thing is that you should implement consistent techniques that cover different areas of your business — both internal and external factors. Keep reading to learn more.
Step #1: Compute Your Business’ Book Value
Your business’ book value shows the difference between your business’ assets and liabilities — it’s simply the net value of your business’ entire property. When you want to determine your business’s book value; compute your assets – fixed assets, current assets, as well what the company owes (its debts) – fewer liabilities such as loan balances and unpaid bills.
Step #2: Calculate Market Capitalization
This calculation would apply if your company sells stock publicly. In this case, you will use market cap measurement to determine the company’s outstanding stock’s total value. In order to calculate this, you need to multiply the total number of shares outstanding with the current stock price.
Those who engage in market capitalization do so when they want to calculate the growth of a business over time. And, this assessment is a common indicator of the size of a company. It is a technique engaged by financial professionals. By the way, the best way to achieve accurate business growth measurement is to outsource the task to financial experts. Your company’s annual report contains information that would be used in calculating market capitalization. You can also leverage any stock market news website for this purpose.
Step #3: Determine Your Cash Flow Growth
To determine the amount of actual money your business is generating, you need cash flow information. If you decide to outsource your business growth measurement to financial experts as suggested earlier, they will request for your cash flow report as one of the sources for the measurement. This would aid them in determining the value of your business or company. Adopting the discounted cash flow analysis process, future cash flow is extrapolated in order to find a value for the business. You use current cash flows as a measure against previous cash flows, which in turn would reveal if your business will remain solvent or not.
Step #4: Compute Your Business’ Price/Earnings Ratio
If your company is a publicly-traded one, your price-earnings ratio shows the premium on the stock of the company. In essence, this is the Current Stock Price/Average Earnings per share in the past twelve months (the slash represents a division sign). If the result from this computation is high, it simply implies that investors are looking forward to a high value in the future.
Kick-off your business growth’s measurement with the tips above.
Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! inspires entrepreneurs to build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.
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