One should start with evaluating the balance sheet of the company. The asset side of the balance sheet refers to the property of the business while liabilities refer to the claims of the lenders or other financial institutions. An appropriate way to estimate the worth of a business is by adding the stockholder and owner’s equity while the current and long term liabilities also play a prominent role in identifying the book value of the firm.
Identify your short term and long term assets. Short term assets are those which can be consumed or sold within the duration of one year while the assets exceeding the consumption limit more than a year fall under the category of long term assets. Long terms assets generally include vehicles, machinery and properties. Here some people often miss a crucial point, the third type of assets, intangible assets, which include trademarks, patent or logos owned by the company.
Multiply your last year’s sales revenue by the industry standard. For example, if your sales revenue for previous year was USD200,000 and the industry standard is 2, then your asset worth is USD400,000.
Do not forget to record the cash worth of your assets. For example, if a goods manufacturing firm has a stock worth of USD20,000 in inventory, they should include it. You should also remember to calculate the asset values based on depreciation (vehicles, machinery) and appreciation (property).