Discretionary earnings valuation method used for smaller companies

Business Valuation UpdateVol. 4 No. 6
June 1998
Shannon P. Pratt, CFA, ARM, ABAR, FASA, MCBA, CM&AA
pratt's stats (PS), accounts receivable, inventory, control value, international business brokers association (IBBA), invested capital, nonoperating assets

Summary

The "multiple of discretionary earnings method" is gaining acceptance as a method for valuing small companies, but the user must understand it, or it may be misapplied. Three key questions To ...