Finance Formulas / July 6, 2018 / Alyvia French
Business valuation is the process of determining the economic value of a business or company. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership and even divorce proceedings. Owners will often turn to professional business valuators for an objective estimate of the value of the business.
Economic profit or loss is most useful when comparing multiple outcomes and making a decision between these outcomes. This is especially true for decisions with multiple variables that affect and do not affect accounting profit. For instance, one decision may result in a higher accounting profit, but after other variables are considered, the economic profit of another decision may be higher.
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