One of the routine evaluations of business owner’s (and their consultants) relative to value to sell is cash flow. In fact it is a heart of the matter. Often the simple cash flow example is stated this way:
Cash flow to a single owner is
- Bottom line of the tax return or related profit and loss statement Plus
- Non-cash items Plus
- Interest Plus
- Owner’s wage Plus
- Other personal items not required in the business (think owner health insurance or private car) Plus
- Excess wages paid to a family member Equals
Cash Flow
This article explains some nuances that could alter the formula Click Here
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