RABCPA PC Blog
Many people do not realize that accounting actually started in 3500 BC, and it steadily developed until approximately 450 A.D. In 450 A.D. an Italian monk named Luca Picioli wrote a book called Summa the Arithmetic, Geometry of, Portion. This book codified for the first time in history the basic principles of accounting. The book discussed the methodology of recorded debits and credits, preparing income and balance sheets. That is why Luca Picioli is largely known as the father of accounting. Posted November 30, 2018 by Robert A Bonavito in Educational Videos
When valuing a company, exit multiples are very important. Typically, we use exit multiples as a sanity check. For example, if the company has a value of $2 million, EBITDA of $250,000, its exit multiple would be 8. Once we have the exit multiple we can then compare it to other companies within the industry. Posted October 25, 2018 by Robert A. Bonavito in Business Valuations
What is the perpetuity growth method? Essentially, it is exactly what it says it is; continued growth into the future. Most people have difficulty assuming something is going to grow forever. But if you actually go through the calculation it makes sense. For example, let’s say you were valuing Ford Motor Company in 1930 and you are looking at the cash flows, it turns out that the company existed for a very long time and continues to do very well today. However, what most people do not realize that when you get out 15 or 20 years the net present value is almost 0. Meaning that those future years the net present value of those calculations is not that much money. The perpetuity method is accurate. Posted October 10, 2018 by Robert A Bonavito in Business Valuations
