Profits aren’t the only way to measure a company’s success. Youshould also be aware of how much your company is worth. One way todo this is to examine your company’s most updated balance sheet.That figure at the bottom for net worth, representing assets minusliabilities, is a good indicator of whether you’ve built value inyour business–and if you have, how much.
Don’t stop your valuation checkup with your balance sheet,though. There are a few other ways to measure value. One of themost important valuation techniques is based on expected futurecash flow, or how much cash your company should be able to throwoff for you or another owner in the next several years. Businessesare typically valued as a multiple of their future cash flows, butdifferent industries and types and sizes of businesses use avariety of indicators. To find out what rule applies to yourindustry, check with your trade association
