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Questions & Answers

Q: What is Investment Analysis Software...and what are the examples?

A: Full details and examples of operation are available at .

Question and Answer Item 341 - Browse All Question and Answer Items

Q: Business Valuation - Does this tool allow one to assess a business such that you can derive at a offering price for a small business. For example, I am considering a business wherein the asking price is $150,000 and the cash flow is $80,000. The way I interpret your model, this business would have a negative value to me if I can make $80,000 on the outside.

A: Yes the Business Valuation Model was originally designed with small business in mind. If you can earn $80k without investing (risking) any capital then a business that only returns $80k but costs $150k is worthless to you because you are getting no return on your investment (you would be better of putting it in the bank). Having said that you need to look at the return over time ie the 3 year forecast. So input your forecast variables to gain some insight into what returns are possible from the business. If returns have the potential to double over the forecast period then it becomes a different story. The valuation developed by the model considers the 3 year returns when developing a valuation. Also if there is a lifestyle component in the business then possibly you are prepared to accept a lower return?

Question and Answer Item 33 - Browse All Question and Answer Items

Q: I am using your Excel Valuation sheet for an investment presentation for my company. Please can you tell me is it possible to change some of the headings etc as they don't quite match mine?

A: You can adjust any labels that are in blue cells and the changes will be carried throughout the model. All other headings etc remain protected and are unable to be changed in the standard Non-Commercial registered software. If you purchase a Commercial license we can upon request provide access to an unprotected version of the Business Valuation Model in which you can adjust labels (however this should be undertaken with care to ensure you maintain the validity of the formula). You can upgrade to a Commercial License at .

Question and Answer Item 40 - Browse All Question and Answer Items

Q: My question is on the inputs page. The space for owner labor in my case is $35,000. The outside earnings box seems to ask for total outside earnings being given up without regard to the owner labor amount I plan on paying myself once cash flow allows (the 35k entered in cells C19 and C28). My outside earnings would only total about $60,000. When I enter 60k into cell c64, the valuation is a negative number. When I enter 25k in cell c64 (60k-35k) I get a positive value of the business. The cash flow projection allows me to pay myself partial salary the first year and full salary the second. So it seems to me that the 25k--which is all I'm giving up of outside pay is the number to enter as owner's external earning power (cell c64). Am I understanding it correctly? Thank you for your help. I'm helping a friend on his purchased model, but as a financial adviser, intend to purchase the commercial license on my very next business client.

A: The Owners External Earning Power (C54) is the amount of earnings given up when the owner commits to the business. If you could earn 60k outside the business then before the business can start providing a return on investment it must give you a return of 60k. Anything above will be a return on investment. The contribution you (the owner) make to the business in labor is included as the Owner Labor in the Variable and Fixed Costs. This is the cost of basically paying someone else to do what you do in the business. The actual amount you pay yourself does not really matter as any profit is the owners. So when we look at the Results page we see the Operating Surplus (which is the surplus available from the business without the contribution of the owner), and the Owner Cash Flow which is the Operating Surplus plus the value of labor provided by the owner. To determine the return on investment we then deduct the amount the owner gave up to wok in the business and deduct an allowance for depreciation leaving the Business Return. Which is the amount the business investment really provided for the owner. I hope this makes sense, if not let me know.

Question and Answer Item 43 - Browse All Question and Answer Items

Q: I am trying to use this tool for a retail business that has inventory. My questions concern accounting for inventory value as an asset (not to be depreciated) and 'cost of goods' an an adjustment to sales.

A: For non-depreciating items you can handle them as a component of the Other Investment (operating capital). This value is actually adjusted by the Valuation (depending on the return you set). Considering the Inventory when you generate a valuation the Other Investment value should cover the the cost of inventory (stock on hand). If there was no other investment component to consider then the Other Investment would consist of Inventory plus Goodwill. If the Other Investment is less than the inventory then the required return is not achieved.

Question and Answer Item 44 - Browse All Question and Answer Items

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Thanks so much!Gail Tagarro Thanks very much for putting the BAS-I-C software 'out there' - so far it seems terrific and perfect for what I need.Chris Hargreaves I just down loaded the excel version...awesome....thanks so muchEdward M. Rouse great model for small biz and start up!Russell Smith I have my own accounting firm and I must admit that I am very impressed ... IT IS OUTSTANDING.Robert B. Wester, Jr Excellent software program. I have already referred several folks to your site to download the demo. Hopefully, they will turn into sales for you. Good Luck!Anthony Beebe're good. Thanks for your help...and the rapid response was greatly appreciated. I think you have a great product; I've been doing 'if/then' scenarios on future options for my company, and it is quite fascinating using your program...You guys were great...exactly what I was looking for...I was very impressed with your customer service...great follow-up and execution. 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It has been a real winner in presentations here already. I have more to explore with it, too.Chad Haight ...I am in the midst (or shall we say was in the midst) of selling my company for a much lower amount...your software is working wonderfully...i think i shall send you a bottle of your favorite...Sean Hawley Love this application! It certainly can improve one's comfort level, especially the small business owner, when talking to the financial people. Seems to me like you can get a quick budget snapshot as well as the business valuation. Thanks again!Stan Shaw I am impressed with your business valuation model.Peter Davies Am really enjoying working with this programme, I am sure within the next week I will be putting an order in. I have found it so easy to use, wish I had known about it years ago, life would have been much easier.Lyn Laycock This spreadsheet has really made my life easy and I have recommended it to my colleagues.Moses Mwanjirah We are very pleased with your Business Valuation Model.Steve Geringer ...very easy to use.Karl Hayes Just purchased your great spreadsheet.Terje Larsen I think it is a very useful spreadsheet and I'm using it and I haven't found anything better and have stopped looking.Antoine Matarasso I am very happy with the Excel valuation model supplied. I think it constitutes good value for money and has been of great help to me in my work.Graham Ireson Well done. It proved very useful for me already.Roland Mechler The program is quite easy to use.Jackquie Grant I still love the software.Jim Dickey Received and working great... 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