How is the total price of a digital business calculated?

[jrineakter]

Do you have a digital company and want to calculate its total value? Be careful, this does not mean that you want to sell it. Far from it. It may simply mean that you are curious and want to know how much your business is worth… Or you may be aware that this information gives you a really decisive power.

Ultimately, knowing the total price of a digital company can be useful when negotiating with other companies, whether they are suppliers or potential investors. Whatever interests you most. Of course, this is keeping in mind that “price” and “value” are not exactly the same thing: the price does not necessarily reflect the value of a company.

Think of Facebook buying Instagram: it's clear that the real value of Instagram is much lower than its value to Facebook. And that's why Zuckerberg's giant bought the australia number data photography (and selfie) social network for $730 million. That's a pretty penny.

But there is one thing that happens here: calculating this value is not something that a little program that you download from the Internet does… It is something that has to be done actively. And that is why in this article we are going to tell you about five different ways in which you can calculate the total price of your digital company.

1. Book value
Calculating the book value of a digital company is probably the easiest way to approach this task. After all, the book value of a business only takes into account its net worth, and that is something relatively easy to obtain.

All you have to do is add up the monetary value of the company's assets, i.e. the equity assets. These assets are the contributions of the partners, the movable and immovable property, the accumulated profits... And, once added, subtract the liabilities: the company's debts. The amount obtained is the book value of your digital company.

2. Liquidation value
Liquidation value calculation is an estimate of the company's economic value (i.e. book value) at a specific point in time. In other words, value is not something abstract, but rather linked to market prices at a specific point in time.

In this way, the calculation of the liquidation value does not take into account the cost prices of the assets, but rather their specific value in a probable sale at the present time. In this way, the prices of the assets of the digital company are adjusted according to the market and the same calculation is made as for the book value.

3. Sales multiple
Sales multiple calculations are usually applied exclusively to technology businesses. If your company is of this type, you can calculate a sales multiple by calculating the approximate value of sales by multiplying the sales capital by a specific coefficient.

This coefficient is defined by analysing the activity of both the technology business itself in a previous period of time and the activity of similar companies. In this way, the resulting value can be extrapolated at the time of calculation.

4. Value of benefits
The value of the benefits is a method also known as PER. Or in other words: Price-to-Earnings Ratio. It is a method that is especially relevant when we are looking to calculate the value of our digital company on the Stock Market.

And, in fact, it is a particularly simple method, since all you have to do is divide the price of each share of the digital company by the profit it brings to the business annually. The resulting value is the PER. Quite simple.

5. Value of dividends
Again, the value of dividends is something that is usually calculated in cases where the digital company is listed on the stock exchange. In this regard, the value of dividends takes into account the dividends per share that are expected.