Marketability Discount – “The concept of marketability deals with the liquidity of the interest—how quickly and certainly it can be converted to cash at the owner’s discretion. ”Source: Chapter 6, Fundamentals, Techniques & Theory, National Association of Certified Valuation Analysts (NACVA)
“We will define Marketability […] Read more
What is the Company Specific Cost of Capital?
The Cost of Capital typically used for a business valuation is the Ibbotson’s Build-up method which comprises several risk factor elements discussed in a previous article. What method or calculation do you use for your company […] Read more
Flaws and Errors in Rules of Thumb Cost of Capital. When using rules of thumb to figure the cost of capital, you have to know that there are certain flaws and errors in rules of thumb that can cost an owner or valuation user large losses […] Read more
Most accounting software programs do not calculate the CM. Why is the CM so important?
Almost all businesses track REVENUE, COST OF GOODS or SERVICES with the resultant – GROSS MARGIN. However, there is a principle called VARIABLE COSTS that needs to be explained. A variable cost […] Read more
It is often necessary to calculate the cost of capital when you are trying to make decisions concerning investments or lending. You may also need to show your current cost of capital if you are trying to elicit investments for your company. This is to say that your […] Read more
When using rules of thumb to figure cost of capital, you have to know that there are certain flaws and errors in rules of thumb that can cost an owner or valuation user large losses and errors. Rules of Thumb formulas are estimations and do not take into […] Read more