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Small Business Valuation Formula

Small business valuation formula are the tools used by business valuers to benchmark businesses against their peer groups.

Some of the most commonly used small business valuation formula terms to describe the business's profits and the price the business sells for are:

EBITDA- earnings before interest tax depreciation and amortisation

EBIT- earnings before interest and tax

NPAT- nett profit after tax

PEBITDA- proprietors earnings before interest tax depreciaton and amortisation

ROI- return on funds invested

ROFI -also return on funds invested.

Small business valuation formula are all about the relationship between the profit a business can maintain and the resulting value that profit gives the  business in the marketplace.

Knowing the appropriet small business valuation formula to apply for each particular business is critical as inapproprite use of the wrong small business valuation formula can result in an inaccurate valution of the business.