If you’re looking to sell your business or are just interested, it’s crucial to know how much your company is worth. Knowing your worth is crucial to plan your financials, attracting investors and negotiating with potential partners and purchasers. It can be a challenge to assess the worth of a business, however there are some key steps that you can take.

The assets and liabilities of a company are a standard method to assess the value of a business. This method takes into account all the assets that the business has like equipment or inventory, then subtracts the debts that the company is owed, like commercial loans or mortgages. This value is often referred to as liquidation value, book value or net asset value.

The value of a business can be determined by looking at its revenue and sales. This method calculates a company’s total revenues and sales after subtracting operating expenses and multiplying it by an industry multiple. This number is an estimate for what your company could sell for if you put it on the market.

Other elements that affect a business’s worth include its size, its industry and the management team. Larger companies are valued higher than smaller ones because they have the resources to devote to marketing and product development. Additionally, a strong leadership team and a well-trained workforce are typically viewed as a big selling point for businesses.