M/s.

XYZ
About Your Valuation Report
This report is generated for M/s. XYZ establised in the year 1994 and engaged in the business of
Technology situated at Mumbai on the basis of data provided by the management.

In analyzing your business, we have generated four distinct and useful estimates of value in addition to
as many as 10 value parameters:
1) Income Capitalisation Based Value
2) Discounted Cash Flow Based Value
3) Net Asset Value (NAV)
4) Key Value Driver Based Value

Value Parameters
The Score of Value Parameters (VPs) were calculated based on the analysis of company specific data
entered by you input with reference to various industry specific averages linked to thousands of other
businesses. These VPs are useful measures of the overall financial and operational health and growth of
your business and they should be checked regularly.

We assign a score based on the value of the parameter derived from the data entered by you on the scale
of 1 to 10.
There are various types of "Value" as calculated for the business:

1) Fair Market Value : The Fair Market Value is the price of the business when both the buyer and
seller have reasonable knowledge of the business and are willing and unpressured to transact.

2) Going Concern Value : Going Concern Value is the value of a business that is expected to continue
operating into the future.

3) Liquidation Value : Liquidation value is total worth of company's physical assets when it goes out of
business or if it were to go out of business.

The value which is relevant depends upon many factors specific to a business.

Sale of business is normally structured in a way that suits the buyer and seller the most looking at their
constitution and tax status.

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Methodology
This valuation was generated considering as many company, industry -and location- specific details as
available, the value presented in this report is an estimation of the Fair Market Value of the business and
its assets and liabilities and is subject to assumptions listed below. Some events and circumstances that
might impact the overall valuation of a specific business may not have been considered for the purpose
of this report.

Valuation methods from the income, market and asset approach have been utilized to evaluate the
valuation results for the subject company. The opinion of value given in this report is based on
information provided by the user and other sources. This information you input is assumed to be
accurate and complete. However, SpireValue has not audited or attempted to confirm this information
for accuracy or completeness. Its important to note that the estimates presented herein are not "final
numbers". Instead, we are providing general estimates. As a result, the overall valuation may best be
considered a frame of reference.

Essentially, our aim is to try to provide a proprietary but real world oriented valuation approach for
small, midsize and emerging businesses. In doing so, we consider methods from the following valuation
approaches utilized by professional business appraisers today:

Income Capitalisation Approach: With this approach, a valuator determines the value based on
entity's record of past earnings, normalizes them for unusual revenue or expenses, and multiplies it a
capitalization factor.

Discounted Cash Flow Approach: With this approach, a valuator determines an expected level of cash
flow for the enterprise using a entity's record of past earnings and future growth potential, normalizes
them for unusual revenue or expenses, and discounts them with the help of WACC (weighted average
cost of capital).

Net Asset Value Approach: With this approach, a valuator determines the value of the business based
on the carrying value of assets (net of liabilities) owned by the enterprise.

Key Value Driver Approach: With this approach, a valuator determines the value of the business based
on the key value drivers of the business. The value of business is determined by multiplying the variable
income per unit of key value driver with the number of key value driver achieved.

2
Your Valuation Amount
(INR Lakhs)
Income Capitalisation Based Enterprise Value -
This fair market value conclusion is the value of the company available to its owners,
shareholders and long term debt providers and incorporates all of the assets included in the
asset value plus the firms liquid financial assets cash, deposits, etc. and minus its liabilities
current and non-current.

Discounted Cash Flow Based Enterprise Value 245,796

This fair market value conclusion is the value of the company available to its owners,
shareholders and long term debt providers and incorporates all of the assets included in the
asset value plus the firms liquid financial assets cash, deposits, etc. and minus its liabilities
current and non-current assuming future growth in the operations as estimated by you.

Net Assets Value (Book Value) Based Enterprise Value 29,835

This value is calculated on the basis of carrying cost of the assets and liabilities in the books
of account.

Key value Driver Based Enterprise Value 806

This value is based on the key value driver of the company. Companies which do not have
profits and / or assets are normally valued using this method.
The value is calculated on the basis of potential revenue (Net of variable cost) per unit of key
value driver after deducting the fixed costs.

Your Business Value :

Highest of the Enterprise Value 245,796
Add: Non Operative Assets 19,789
Less: Loan Funds 1,785
Equity Value 263,800

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Financial Summary
Name XYZ XYZ
Client Id 113 113.1
Period 3/31/2018 3/31/2017
Nature of Business Technology Technology

P&L Headings (INR Lacs)

Sales and Services 19,995.00 14,111.00

Non Operative Income 0.00 0.00

Total Income 19,995.00 14,111.00

Operating Cost Excl 23,301.00 14,296.00

Depreciation
Depreciation 3,136.00 978.00
Interest Cost 287.00 53.00
Non Operative Exp 0.00 0.00
Total Expenses 26,724.00 15,327.00

Net Profit Before Tax -6,729.00 -1,216.00

Tax Payable 0.00 0.00
Net Profit After Tax -6,729.00 -1,216.00

Balance Sheet (INR Lacs)

Capital plus reserves 28,050 14,565

Loans 1,785 -
Current Liabilities & 6,600 6,206
Provisions
Total Liabilities 36,435 20,771

Fixed Assets 9,517 7,504

Inventory 10 12
Debtors 808 608
Other Current Assets 6,311 3,537
Non Operative assets - -
Cash & Bank 19,789 9,110

Total Assets 36,435 20,771

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Future Projections :

Inc in
Fixed Working Inc in Fix Net
Year Sales Operating Work Tax Cashflow
Assets Cap Assets
Cost Cap
0 19,995 26,437 9,517 529 - - - -
1 59,985 68,736 24,744 1,270 15,227 741 - - 24,719
2 179,955 178,714 64,335 3,047 39,591 1,777 - - 40,127
3 539,865 464,657 167,271 7,313 102,936 4,266 20,309 - 52,303
4 593,852 501,829 180,652 7,825 13,382 512 27,607 50,522
5 653,237 541,976 195,105 8,373 14,452 548 33,378 62,883
6 718,560 585,334 210,713 8,959 15,608 586 39,968 77,064
7 790,416 632,160 227,570 9,586 16,857 627 47,477 93,295
- - - - - - - - -
- - - - - - - - -
- - - - - - - - -

Value Parameters Overview

In order to better understand your company’s operations, we have calculated a variety of Value
Parameters (VPs) for your review and comparison to industry benchmarks. In terms of valuation

outcomes for your firm, key factors include size, profitability and growth.

The following page provide an Overview of VPs; the subsequent group of pages go into further detail
about individual Parameters.

Value Your Start End Total

Your Weight Weighte Score
Parameters Value Range Range Total Score Score weighted
d
Return on
-0.67 0.00 0.50 10.00 0.00 5.00 50.00 0.00
Investment
Asset
1.99 1.00 6.50 10.00 1.80 1.00 10.00 1.80
Turnover
Fixed Assets
Turnover 2.10 1.00 19.00 10.00 0.61 1.00 10.00 0.61
Ratio
Inventory
1999.50 1.00 14.00 10.00 10.00 1.00 10.00 10.00
Turnover
Debtor
24.75 1.00 19.00 10.00 10.00 1.00 10.00 10.00
Turnover
Profit Margin
-0.34 0.01 0.23 10.00 0.00 1.00 10.00 0.00
(On Sales) 5
Profit Margin
-0.34 0.01 0.23 10.00 0.00 1.00 10.00 0.00
(On Sales)
Interest
-22.45 2.00 20.00 10.00 0.00 1.00 10.00 0.00
Coverage
Debt-to-
0.06 2.00 0.00 10.00 9.68 1.00 10.00 9.68
Equity
Current Ratio
4.08 1.20 2.00 10.00 10.00 1.00 10.00 10.00

Value Parameter: Return on Investment (ROI)

What does it mean?

Return on investment provides us with the Rate of return earned on the investment made by equity and
debt fund providers.ROI can be basically considered as profitability ratio of the business as a whole.
This provides how much returns on generated from the investments from the overall company
investments in assets.

Why should it matter?

ROI is a universal and very useful measure to compare a company’s profitability to that of its market
comparables in the same industry. If this ratio is higher than Cost of Capital, then the growth will
increase enterprise value.

Explained with an example

If an E-Commerce company has an ROI of 0.48 this means it generated ₹48 in net income for every
₹100 invested

Return on Equity (ROI) Over Time

Compares profitability to the business of a company over time. Indication of the strength of the business
model.

Start Total Your

Year Ratio Range End Range Score Score

Previous Year -0.22 0.00 0.50 10.00 0.00

Current Year -0.67 0.00 0.50 10.00 0.00

Return on Investment
0.00
Previous Year Current Year
-0.10 -0.22
-0.20
-0.30 Ratio
-0.67 6
-0.40
 -0.20
-0.30 Ratio
-0.67
-0.40
-0.50
-0.60
-0.70
-0.80

Value Parameter: Asset Turnover

What does it mean?

This activity or turnover ratio addresses how efficiently the assets deployed in the business are used
during the given time period.

Why should it matter?

A lower ratio could mean inefficient use or underutilisation of the assets, possibly due to pricing
policies. An abnormally higher ratio may indicate a too narrow view of exploring available business
opportunities.

Explained with an example

If a textile manufacturer had an asset turnover of 8, this means its net sales are equals 8 times all of the
assets deployed in the business.

Asset Turnover Over Time

Comparison of the ratio over time indicates increase or decrease in its efficiency over time.

Start Total Your

Year Ratio Range End Range Score Score
Previous Year 2.59 1.00 6.50 10.00 2.89
Current Year 1.99 1.00 6.50 10.00 1.80

Asset Turnover
3.00

2.50

2.00
Ratio
1.50 7
2.59
 2.00
Ratio
1.50
2.59
1.00 1.99
0.50

0.00
Previous Year Current Year

Value Parameter: Fixed Assets Turnover

What does it mean?

This activity ratio shows the company’s ability to generate net sales from their investments in fixed
assets.

Why should it matter?

A higher ratio shows productive fixed asset investment. This ratio is more vital and useful to the
manufacturing industry.

Explained with an example

If a manufacturing company had a fixed asset turnover of 3.8, this means the company generated sales
worth ₹380 for every ₹100 of investment in fixed assets.

Fixed Assets Turnover Over Time

Shows how productive a company’s assets are.

Start Total Your

Year Ratio Range End Range Score Score
Previous Year 1.88 1.00 19.00 10.00 0.49
Current Year 2.10 1.00 19.00 10.00 0.61

Fixed Assets Turnover

2.15
2.10
2.05
2.00
Ratio
1.95
2.108
1.90
 2.00
Ratio
1.95
2.10
1.90
1.85
1.88
1.80
1.75
Previous Year Current Year

Value Parameter: Inventory Turnover

What does it mean?

This activity or turnover ratio addresses how efficiently goods are sold by calculating how many times a
company’s inventory/stock is sold and replaced in a given time period.

Why should it matter?

A lower ratio could mean poor sales and excessive inventory, possibly due to pricing policies. A higher
ratio may indicate a too narrow selection of product and possibly lost sales. Companies selling
perishable goods have a very high inventory turnover. Keeping inventory balances to a minimum will
reduce costs but may reduce sales volume.

Explained with an example

If a winery had an inventory turnover of 5.7, this means it sold all of its average inventory 5.7 times
each year

Inventory Turnover Over Time

How many times is the inventory sold in a given time period.

Start Total Your

Year Ratio Range End Range Score Score
Previous Year 1175.92 1.00 14.00 10.00 10.00
Current Year 1999.50 1.00 14.00 10.00 10.00

Inventory Turnover
2500.00

2000.00

9
1500.00 Ratio
 2000.00

1500.00 Ratio

1000.00 1999.50

1175.92
500.00

0.00
Previous Year Current Year

Value Parameter: Debtor Turnover Ratio

What does it mean?

The receivables turnover ratio is an accounting measure used to quantify a firm's effectiveness in
extending credit and in collecting debts on that credit.

Why should it matter?

A high receivables turnover ratio indicates that the company’s collection of accounts receivable is
efficient, and that the company has a high proportion of quality customers that pay off their debts
quickly. A high ratio can also suggest that the company has a conservative policy regarding its extension
of credit. It may suggest that a company operates on a cash basis.

Explained with an example

If a wholesaler has a receivables turnover ratio as 11.6 , it means it collects its receivables 11.6 times on
average per year.

Debtor Turnover Ratio

Increases over time could signal difficulty in collecting from customers.

Start Total Your

Ratio Range End Range Score Score
Year
Previous Year 23.21 1.00 19.00 10.00 10.00
Current Year 24.75 1.00 19.00 10.00 10.00

Debtor Turnover Ratio

25.00

24.50 10
 25.00

24.50

24.00
Ratio
23.50
24.75
23.00
23.21
22.50

22.00
Previous Year Current Year

Value Parameter: Profit Margin (On sales)

What does it mean?

This “post-tax” profitability ratio known as “return on sales” indicates the relative profit margin of the
company for each rupee of sales.

Why should it matter?

Similar to the return on investment ratio, a higher percentage ratio indicates a higher rate of relative
profitability. Higher gross profits and lower operating expenses coupled with higher revenues will
strengthen this important metric, which can be compared both over time and against the market
comparables

Explained with an example

If a company has a percentage ratio of 17%, this means that for every ₹100 of revenue it has a posttax
income of ₹17.

Income-to-Revenue Over Time

A rising percentage will often lead to a higher valuation.

Start Total Your

Year Ratio Range End Range Score Score
Previous Year -0.09 0.01 0.23 10.00 0.00
Current Year -0.34 0.01 0.23 10.00 0.00

Profit Margin (On sales)

11
0.00
Previous Year Current Year
 Profit Margin (On sales)
0.00
Previous Year Current Year
-0.05 -0.09

-0.10
-0.15 Ratio
-0.34
-0.20
-0.25
-0.30
-0.35
-0.40

Value Parameter: Interest Coverage

What does it mean?

Also referred to as “times interest earned”, this solvency ratio is equal to profits before interest and
taxes (PBIT) divided by interest expense and it is used to determine the ease by which your company
can pay interest on outstanding debt obligations.

Why should it matter?

A lower ratio may cast doubt on the company’s ability to meet ongoing principal and interest burdens.
The higher the ratio, the easier it is for the firm to repay its current debt and take on additional debt if
necessary. Bankers, creditors and even investors often calculate and analyze this ratio to gauge the firms
solvency position. Similar to most ratios, averages will differ by industry.

Explained with an example

If a software company has an interest coverage ratio over 2 times, this suggests that it has the ability to
meet its interest payments two times over and may qualify for additional debt.

Interest Coverage Over Time

Shows how much cushion a company has in paying its interest expenses.

Start Total Your

Year Ratio Range End Range Score Score
Previous Year -21.94 2.00 20.00 10.00 0.00
Current Year -22.45 2.00 20.00 10.00 0.00

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 Interest Coverage
-21.60
Previous Year Current Year
-21.70
-21.80 -21.94

-21.90
Ratio
-22.00 -22.45
-22.10
-22.20
-22.30
-22.40
-22.50

Value Parameter: Debt-to-Equity

What does it mean?

This solvency ratio is a function of the firm’s “capital structure” (all assets must be financed by either
debt or equity) and provides a measure of the company’s financial leverage. It often takes into account
the total liabilities of the company while some versions include only long term debt. It indicates the
proportion of equity (owner investments and retained profits) and liabilities the company is using to
finance its asset base..

Why should it matter?

A higher ratio generally means that the company has been aggressive to finance its growth with debt
and the creditors are assuming a higher risk. A lower ratio generally indicates that the company is
“safer” due to lower mandatory principal and interest payments, but it may also suggest an overly
cautious ownership. Capital intensive industries tend to have a higher debt to equity ratio than others.

Explained with an example

If a company has a ratio of 2.8. This means that for every ₹100 owned by the shareholders the company
owes ₹280 to its creditors.

Debt-to-Equity Over Time

Shows the extent of the debt load, in comparison to a company’s equity value.

Start Total Your

Year Ratio Range End Range Score Score
Previous Year 0.00 2.00 0.00 10.00 10.00
Current Year 0.06 2.00 0.00 10.00 9.68
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 Debt-to-Equity
0.07

0.06

0.05

0.04 Ratio

0.03 0.06

0.02

0.01

0.00 0.00
Previous Year Current Year

Value Parameter: Current Ratio

What does it mean?

This liquidity ratio compares a company’s current assets to its current liabilities. This ratio provides an
indication of the company’s ability to pay its current liabilities when due.

Why should it matter?

A higher percentage ratio indicates that the company is better equipped to pay the liabilities out of its
realisations of current assets. A abnormally high ratio may also indicate inefficiency in realisations of its
current assets.

Give me an example
If a furniture store has a ratio of 2 this means that for every ₹100 of current liabilities, it has ₹200 in
current assets.

Current Ratio Over Time

Shows the company's relative ability to handle working capital.

Start Total Your

Year Ratio Range End Range Score Score
Previous Year 2.14 1.20 2.00 10.00 10.00
Current Year 4.08 1.20 2.00 10.00 10.00

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 Current Ratio
4.50
4.00
4.08
3.50
3.00
2.50 Ratio
2.00 2.14
1.50
1.00
0.50
0.00
Previous Year Current Year

About SpireValue.com

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We help the entrepreneurs and business owners to know the value of their organization.

Know the value

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This Report arms you with a valuable data about your organisation, which will help you:
Indentify Potential for Growth
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Way Forward

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Large Businesses have access to all kind of advisory on restructuring and taxes.
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We intend to create a similar platform Small & Medium Businesses.

Your Business may be in good shape, but there is always room at the top.
With the critical information provided in the report, you may:
Expand your business via marketing, restructuring and tax consulting
Look for a strategic partner
Plan to Exit

If you have more specific questions and feel our experience and network may be of value, please
feel free to contact us to start a dialogue. If you further need a certified copy of the report you
may please wirte to us at [email protected] and we will be glad to connect you to the
registered valuers empaneled with us.

Disclaimer:
SpireValue is a facilitator for the users to value their businesses. SpireValue does not certify the
correctness of the contents of this report.
The calculations made in the report are based on the inputs provided by the users and other publicly
available information, which is not verified by SpireValue for its correctness or completeness. This
report is not meant to be used to obtain credit or any other commercial purposes. This report is
intellectual property of SpireValue and is provided for internal use and should not be copied.

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