How to determine your business's net cash flow

The most widely used method of determining the fair market value of a small business is based on the reconstruction or recasting of a business's profit and loss statement. This process is known as normalizing, adjusting, or adding back to the financial statements. The goal however is one in the same: To show the true earning power or cash flow of the business. By adding back to the net profit all the non-essential items not necessary to run the business, a more realistic cash flow for the business can be determined. This true or discretionary cash flow can be very helpful as a guide for valuing or pricing a business.

Please click here to access a blank business net cash flow form. We would advise you to print out one or several copies of  this form and fill in information using your latest (full) fiscal year financial statements. If you have any questions please do not hesitate to contact us. Or contact your accountant or personal financial advisor.

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