The Finance Blog

# Enterprise Value Calculator: Determine a Business’ Present and Future Cash Flows

Business Value Calculator – The Easiest Way to Determine a Business’ Present and Future Cash Flows

Enterprise Value Calculator is an analytical tool used by companies to evaluate their company in a cost-effective manner. Enterprise Value Calculator, sometimes called enterprise value, is a measure of the total worth of a business – an amount that can be purchased by one of the owners/operators of the business, or an entity that acquires the asset for its own use. Here, we shall explain the theory, explain how to compute the Enterprise Value Formula, and give a simple example to illustrate how to compute the enterprise value in your business.

A Business Enterprise Value (BEV) is a measurement of the net present value of a business asset. Assets that have not yet been monetized in an accounting or cash flow context include intangible assets (such as patents), assets that do not depreciate over time (such as equipment and fixed assets), and/or fixed assets that have not been depreciated over time (such as inventory). The sum of all of the net present values of assets will equal the BEV. A Business Enterprise Value Calculator (BEVC) is a mathematical formula that can be used to generate BEV estimates from the historical financial statements of any business, including income statement data, balance sheet data, and tax return data.

In many cases, businesses do not realize the full cost of their assets, because these expenses are not reflected in the company’s financial statements. For this reason, BEVC is useful because it provides a single number that represents the current worth of an asset – that is, the discounted value of the assets. Using BEVC, businesses can then accurately determine what amount they need to obtain to recoup the cost of the assets and then use the resulting dollars to purchase additional assets, thus increasing their BEVC.

A Business Enterprise Value Calculator will not necessarily reflect the total current value of a business, nor should it be used in isolation. Instead, it is designed to provide a framework by which a company can determine the present value of an asset and then evaluate all of the other factors that could influence its value in order to determine a reasonable business value for the enterprise. The calculator is also important because it allows the owner of the business to determine the value of the future cash flows of the business, and therefore the amount of capital needed to purchase additional assets and/equipment, and make necessary upgrades.