Worksheets for Recasting Financial Statements

Your ValuAdder business valuation software contains integrated financial statement recasting worksheets you can use to prepare for your business valuation:

• Start with the company’s historic financial statements – the Income Statements and Balance Sheets.
• Do important adjustments to determine the business earning power. This financial statement normalization or reconstruction is an essential step in your business appraisal.
• Assess the company’s risk.
• Calculate the discount and capitalization rates for your valuation.
• Prepare all the inputs you need for your business valuation calculations.
• Apply the lack of marketability and minority discounts to value a partial business ownership interest.

You will find the worksheets helpful when using the well-known business valuation methods available in ValuAdder that include the Capitalized Excess Earnings, the Discounted Cash Flow and the Multiple of Discretionary Earnings.

The Capitalized Excess Earnings worksheet provides you with the following business valuation inputs:

• Business earnings and earnings growth rate.
• Adjusted business assets.
• Adjusted current liabilities
• Fair rate of return on business net tangible assets.

The Discounted Cash Flow worksheet prepares these business valuation inputs for you:

• Net cash flow projections
• Discount rate
• Business terminal value

The Multiple of Discretionary Earnings worksheet assembles the following business valuation inputs:

• Seller’s discretionary cash flow
• Adjusted net working capital
• Adjusted non-operating assets
• Adjusted long-term liabilities

The Company Risk Assessment worksheet lets you determine these key valuation inputs:

• Calculate the business discount rate using the standard Build Up cost of capital model.
• Assess company specific risk using a 10-factor risk evaluation procedure.
• Determine the capitalization rate.
• Calculate Weighted Average Cost of Capital for companies financed by debt and equity capital.

You can create the worksheets directly from your ValuAdder product as follows:

• Run ValuAdder.
• Click on the Recast Financials button on the Start Tab.
• In a window that opens, select the worksheets based on how many years of historic company financial statements you have available.
• Click on the Create Worksheets button to open your worksheets for editing.

You can now edit your worksheets in a Microsoft Excel^® or compatible spreadsheet program.