Stability of Historical Earnings

Stability of historical earnings is the single most weighted risk factor in calculating the risk multiplier in business valuation. The key is to have good and stable income for the three prior accounting periods (usually one year).

Stability of Historical Earnings

Stability of Historical Earnings

No other element of the Multiply Discretionary Income Formula has as much weighted value as the historical earnings of the company. Every knowledgeable business entrepreneur, accountant, lawyer, broker, you name them; they look for this information first. There’s a reason for this.

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