This information is available from the tax returns or financial statements. In a sixth column, compute a weighted average for each line. Multiply the latest year by five, the next to the latest year by four, and so on. Then divide the total by 15. The weighted averages are a good starting point for adjusting revenues and expenses, with the appraiser's guidance, to what you believe they will be in the future.
Future profitability is what buyers of businesses are seeking.
The theory behind the weighting is that the most recent figures are better predictors of the future than the earlier results. The five year financial history, if available, will also provide evidence of revealing trends. An appraisal may cost thousands but a consultation may only cost hundreds of dollars so before you buy or sell what may be your largest asset, consult with a pro. The RCH valuation specialists are highly credentialed and ready to service all your valuation needs. If you feel that improved cash flow would benefit your company and increase your operations, this article could be beneficial for your business.