Answer to Question #150692 in Finance for KJ

Question #150692
The success of your APP brought the attention of a venture capital firm, they are interested in investing your company. Though the APP proves to be a success, your company has not begun to make profits. You have a solid cashflow, but the business is still losing money. You want a fair valuation for your business. How would you evaluate your business using what you learned in economic?
Expert's answer

To evaluate your business using what you learned in economics you may do the next steps:

  1. Tally the value of assets. Add up the value of everything the business owns, including all equipment and inventory.
  2. Base it on revenue. How much does the business generate in annual sales?
  3. Use earnings multiples.
  4. Do a discounted cash-flow analysis.
  5. Go beyond financial formulas.

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