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Articles by Joseph Phelon

• Is Book Value Really Value?
  Why do some people use book value as their selling price? It's because they erroneously think it's simlar to market value. Book value doesn't take into consideration the value of fully depreciated assets or intangible assets. It also doesn't address the fact that some assets are actually worth more than their original price. Works of art, wine, and precious metals, are just a few examples.
  Published 04Dec2010, viewed 402 times

• Measuring Your Profitability
  Some businesses are worth more than others. Analyzing profitability ratios can help you determine if your business is worth more or less than the average business in your industry. An analysis of the company's historical ratios and an analysis of the company's ratios against industry standards is a good way to measure your company's profitability.
  Published 28Nov2010, viewed 251 times

• Cash Flow 101
  Your company or practice has three faucets pouring cash into them. You also have three drains taking cash out. Understanding how cash flows in and out of your company and knowing how to make adjustments are essential to surviving a recession.
  Published 20Nov2010, viewed 305 times

• Forecasting 101
  Forecasting is a vital part of any business valuation. Buyers do not purchase historical results. They buy what they perceive the company is expected to generate in the future. Although this expectation is often influenced by past results, future prospects are essential. At times, the expected future performace does not reflect historical performance. Changes in the industry, economy, and market can and do change future expectations.
  Published 08Nov2010, viewed 231 times

• The Golden Choice of Leverage
  Using leverage in your business or professional practice is similar to sailing a Spanish treasure galleon. When an economic storm turns into a recession, you find yourself trying to stay afloat. Having a lot of fixed costs makes it difficult to keep your business from sinking. If you are unable to offload the excess weight (i.e. cut costs or change fixed costs to variable costs) in a timely manner, you can sink your business.
  Published 26Oct2010, viewed 156 times

• Four Essential Elements to Your Rate of Return
  Whether you are investing in stocks, bonds, a privately held business, real estate, or any other asset, the rate of return used to calculate the investment's value is one of the most important factors. Understanding what a rate of return is and what it isn't will help you in your investment decision.
  Published 19Oct2010, viewed 234 times

• The Four Things to Watch for in Business Values
  Many people rely on the reported value in an appraisal report to buy or sell a business or professional practice. In this article, I give four areas in appraisal reports where inaccuracies tend to arise. I hope to give you, the reader, some tools to evaluate an appraiser's work.
  Published 13Oct2010, viewed 140 times

• The Two Ways We Buy
  When it comes to purchasing any product or service, we consider our options and make our choices. If you think about it, our purchasing decisions can be separated into two categories. We see things as a commodity or as a specialty. Understanding the difference between the two will help you make the right choice.
  Published 06Oct2010, viewed 150 times

• 7 Ways to Survive the Great Recession
  Large public enterprises as well as national governments have been impacted by this recession. Businesses finding themselves leveraged and strapped for cash are willing to sell products, services, or even the entire business for favorable prices to buyers who have the available funds. Here are seven ways to not only survive but also to position yourself to benefit from the great recession.
  Published 25Sep2010, viewed 154 times

• The Worth of an Opinion
  What is an opinion worth? Before answering this question, it is important to understand that opinions come from three types of people. Those who think they know but don't, those who know but have an agenda or bias, and those who know and are independent, objective, and competent. This article will give you tips to know which type of person you are dealing with.
  Published 20Sep2010, viewed 153 times

• Controlling Expenses - Think of Horse Racing
  If you find yourself short of money, imagine a horse race. A few calculations in a computer spreadsheet program can reveal which areas of your business are running at a faster rate than revenue. The expenses with the fastest growth rates and the largest dollar amounts are the ones you should focus on first. Your ability to control expenses has a direct impact on your company's profitability and cash flow to the owner.
  Published 15Sep2010, viewed 158 times

• Businesses are like Diamonds
  A gemologist grades the value of diamonds using the 4 Cs. Similar to grading diamonds, the value of a business is graded by using the three As. These are the market approach, assets approach, and income approach. By using the three As, the company's brilliance as well as its flaws appear. Similar to inspecting a diamond through a microscope, it is only after a careful evaluation of the company will the value become clear.
  Published 13Sep2010, viewed 174 times

• Five Errors Found in Business Appraisals
  By understanding five of the most common errors in valuing a company, you can avoid costly mistakes in buying and selling a privately held businesses or professional practices.
  Published 05Sep2010, viewed 172 times

• The Two Most Valuable Traits of Business Ownership
  Because a minority ownership interest in a privately held business lacks both control and marketability, a 10% ownership of a $1 million business is worth less than the prorata share. It is worth less than $100,000. How much less? Well, that depends.
  Published 28Aug2010, viewed 153 times

• How Risk Affects the Value of Your Business
  Risk is an essential element of value. Investors are inherently risk adverse and will accept risk only when the expected rate of return compensates them sufficiently for taking the risk. Understanding risk and how to manage it will add value to your business.
  Published 18Aug2010, viewed 129 times

• Are You Average?
  Certain factors carry more weight than others in pricing your business or professional practice. No useful purpose is served by taking an average of a few calculations and basing the valuation on the results.
  Published 12Aug2010, viewed 198 times

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