A Basic Guide for valuing a company part 9

Tuy nhiên, các trung tâm nhỏ hơn có xu hướng chủ yếu là để bán các sản phẩm mua từ những người khác, một số cũng có thể bán thực vật và cây bụi mà họ phát triển bản thân. Dịch vụ đặc biệt được cung cấp tại các trung tâm khu vườn cá nhân phụ thuộc phần lớn vào quy mô hoạt động và / | 230 Wholesale Distributor Seller 8 X 20 years Amount 416 000 Annual Principal Interest Payment 41 755 Annual Combined Bank Seller P I Testing Estimated Business Value 101 076 Return Net Cash Stream to Be Valued 93 816 Less Annual Bank Debt Service P I - 101 076 Pretax Cash Flow - 7 260 Add Principal Reduction 54 016 Pretax Equity Income 46 756 Less Est. Dep. Amortization Let s Assume - 20 430 Less Estimated Income Taxes Let s Assume -0- Net Operating Income NOI 26 326 Debt service includes an average 54 016 annual principal payment that is traditionally recorded on the balance sheet as a reduction in debt owed. This feature recognizes that the owned equity in the business increases by this average amount each year. Return on Equity ROE Pretax Equity Income 46 756 Down Payment 225 000 Return on Total Investment ROI Net Operating Income 26 326 Total Investment 892 000 Hmm . ROE and ROI are better . but there s a fly in the ointment folks Basic Salary Net Operating Income Gain of Principal Tax-Sheltered Income Dep. Effective Income 50 000 26 326 54 016 20 430 150 772 Sound great The 54 016 principal gain can t be spent paying bills Buyer s Potential Cash Benefit Forecast Annual Salary Pretax Cash Flow Contingency Not Considered Income Sheltered By Depreciation Less Provision for Taxes Discretionary Cash 50 000 - 7 260 20 430 0 63 170 All Well and Good 231 Discretionary cash flow by this insertion of bank debt has been disadvantaged by nearly 40 from the seller-financed structure . It doesn t take a mathematician to guess that the 892 000 value estimate might thus be less also. In Chapter 10 Practicing with an Excess Earnings Method we learned of a simple method to back into price value discounting. Here s another twist to using this approach P I Payments Under Bank Seller Blended Financing 101 076 P I Payments Solely Under Seller Structure 66 949 Difference 34 127 Per Month 2 844 View the difference as being made up of 251 000 in bank debt of which is .