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Business Valuation Calculator
Professional DCF-based business valuation with detailed financial projections
Currency:
Business Financials
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Your business’s current annual profit or free cash flow. This is the starting point for future projections.
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Expected annual percentage increase in earnings. Industry average is typically 5-15%.
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Number of years you expect the business to grow at the specified rate before stabilizing.
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Your required rate of return considering risk. Higher risk businesses require higher discount rates (typically 10-25%).
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Multiple applied to final year earnings to calculate terminal value. Common range is 3-8x depending on industry.
Valuation Results
Estimated Business Value
₹0
Based on Discounted Cash Flow (DCF) method
Present Value of Growth Period
₹0
Terminal Value
₹0
Total Business Value
₹0
Value Multiple
0.0x
Business Value ÷ Current Earnings
Projected Earnings & Discounted Values
| Year | Projected Earnings | Discount Factor | Present Value | Cumulative PV |
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Valuation Breakdown
Discounted Cash Flow (DCF) Formula
DCF Valuation Formula:
Business Value = Σ [Earnings_t / (1 + r)^t] + [Terminal Value / (1 + r)^n]
Where:
• Earnings_t = Earnings in year t = E₀ × (1 + g)^t
• E₀ = Current year earnings
• g = Annual growth rate
• r = Discount rate
• t = Year number (1 to n)
• n = Number of growth years
• Terminal Value = Final year earnings × Terminal Multiple
• Earnings_t = Earnings in year t = E₀ × (1 + g)^t
• E₀ = Current year earnings
• g = Annual growth rate
• r = Discount rate
• t = Year number (1 to n)
• n = Number of growth years
• Terminal Value = Final year earnings × Terminal Multiple
Example Calculation:
For a business with ₹1,000,000 current earnings, 8% growth for 5 years, and 12% discount rate:
Year 1: ₹1,080,000 / (1.12)^1 = ₹964,286
Year 2: ₹1,166,400 / (1.12)^2 = ₹929,846
Year 3: ₹1,259,712 / (1.12)^3 = ₹896,614
Year 4: ₹1,360,489 / (1.12)^4 = ₹864,562
Year 5: ₹1,469,328 / (1.12)^5 = ₹833,661
Total Present Value = ₹4,488,969
Year 1: ₹1,080,000 / (1.12)^1 = ₹964,286
Year 2: ₹1,166,400 / (1.12)^2 = ₹929,846
Year 3: ₹1,259,712 / (1.12)^3 = ₹896,614
Year 4: ₹1,360,489 / (1.12)^4 = ₹864,562
Year 5: ₹1,469,328 / (1.12)^5 = ₹833,661
Total Present Value = ₹4,488,969
Example Business Valuations
Small Service Business
Earnings
₹500,000
Growth Rate
6%
Years
5 years
Discount Rate
15%
Business Value: ₹2.1M (4.2x multiple)
Tech Startup
Earnings
$250,000
Growth Rate
25%
Years
7 years
Discount Rate
20%
Business Value: $3.2M (12.8x multiple)
Established Manufacturing
Earnings
₹2,000,000
Growth Rate
4%
Years
5 years
Discount Rate
10%
Business Value: ₹9.8M (4.9x multiple)
How to Use This Business Valuation Calculator
- Select Currency: Choose between INR (₹) or USD ($) for your valuation
- Enter Current Earnings: Input your business’s current annual profit or free cash flow
- Set Growth Rate: Estimate realistic annual earnings growth based on market conditions
- Specify Growth Period: Choose how many years of high growth you expect before stabilization
- Determine Discount Rate: Set your required return based on business risk (higher risk = higher rate)
- Add Terminal Multiple (Optional): Include exit multiple for more accurate long-term valuation
- Calculate: Get instant DCF valuation with detailed breakdown and projections
- Review Table: Analyze year-by-year earnings projections and discounted values
- Download Report: Save your valuation analysis for records or presentations
Note: This calculator uses the professional Discounted Cash Flow (DCF) method, which is widely used by investors and financial analysts for business valuation.
Frequently Asked Questions
What is Discounted Cash Flow (DCF) valuation?
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DCF is a financial valuation method that estimates the value of a business based on its expected future cash flows, discounted back to their present value using an appropriate discount rate. It’s considered one of the most accurate and fundamental approaches to business valuation.
How do I determine the right discount rate?
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The discount rate should reflect the riskiness of your business. Factors to consider: industry risk (tech = higher, utilities = lower), company size (small = higher risk), financial stability, and market conditions. Common ranges: 10-15% for stable businesses, 15-25% for high-risk ventures, 25%+ for startups.
What is terminal value and why is it important?
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Terminal value represents the value of all cash flows beyond the explicit forecast period. Since businesses typically continue operating indefinitely, terminal value often constitutes a significant portion (50-80%) of the total business value in DCF calculations.
Can this calculator value startups with no current earnings?
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While DCF can be used for startups, it requires projecting future earnings from scratch. This calculator works best for established businesses with current earnings. For pre-revenue startups, other methods like comparables or venture capital method may be more appropriate.
How accurate is this valuation method?
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DCF is theoretically sound but highly sensitive to input assumptions. Small changes in growth rates or discount rates can significantly impact the valuation. Use realistic, conservative estimates and consider getting multiple valuation opinions for important decisions.
What’s a typical business valuation multiple?
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Valuation multiples vary by industry: Service businesses 2-5x, Tech companies 5-15x, Manufacturing 3-6x, Retail 2-4x. However, multiples should be derived from fundamental analysis rather than used as standalone benchmarks.