Business Administration

Category: Marginal Value

  • EBITDA – Drawbacks

    EBITDA – Drawbacks

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    by

    David J Hoare MSA
    in

    There are several business financial attributes required for EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) to work well as a basis for the multiple of earnings method (the method used with the Market Comparable Valuation Approach); see Fair Market Value for a better understanding of the three primary business valuation approaches.

  • EBITDA – Buyer Beware (Case Study)

    EBITDA – Buyer Beware (Case Study)

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    by

    David J Hoare MSA
    in

    This article will illustrate the opposite effect using the same business information. A buyer of a business should be leery of financial information and look for improper accounting processes. The goal is to reduce the operational income and ultimately the value of the business. The goal is to get the business valuation to a realistic…

  • EBITDA

    EBITDA

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    by

    David J Hoare MSA
    in

    EBITDA is an acronym for Earnings Before Interest, Taxes, Depreciation and Amortization. The value is generally known as operational profit before capital expenditures and tax obligations.

  • Fair Market Value

    Fair Market Value

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    by

    David J Hoare MSA
    in

    Value at the individual level is strictly personal.  But as more buyers for the same item come into play the price of the item begins to stabilize. If there are hundreds of thousands of buyers, the price reaches a high level of consistency or what is called ‘Fair Market Value’.

  • Marginal Revenue in Business

    Marginal Revenue in Business

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    by

    David J Hoare MSA
    in

    The scholarly definition and reality are two different perspectives. The student is taught that marginal revenue equals the additional dollars generated for an additional single unit of sales. It is literally taken right down to the micro measurement. This is simple to understand but in small business, the scope of its meaning and impact are substantial to the…

  • Focus Groups – Adding Real Value to Your Business

    Focus Groups – Adding Real Value to Your Business

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    by

    David J Hoare MSA
    in

    I often wonder how a business could get better if it didn’t know what being the best meant. How could a small business entrepreneur determine he was indeed performing at or above the industry standard if there was no information available to say what was the best, average or poor? There isn’t any real performance standard,…

  • Calculating the Value of a Business – Discretionary Income Multiplier Formula

    Calculating the Value of a Business – Discretionary Income Multiplier Formula

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    by

    David J Hoare MSA
    in

    In the world of small business, the sale of a business is dependent on two critical elements. They are DISCRETIONARY INCOME and the BUSINESS RISK MULTIPLIER. These two elements are multiplied to create the overall value of the business operation. In general, no small business operation is worth more than three times the discretionary income.

  • The Cost of One Putt

    The Cost of One Putt

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    by

    David J Hoare MSA
    in

    Using a large database, I calculated the average cost of one putt for each professional golfer. In business, this is known as the marginal cost of doing business.