Rules of Thumb – use with caution.
Rules of thumb are informal easy to use market based units of comparison which apply a “multiple of” to some indicator of the operating results of a business in order to estimate its Market Value.
Rules of thumb are informal easy to use market based units of comparison which apply a “multiple of” to some indicator of the operating results of a business in order to estimate its Market Value.
Market Value is defined by The International Valuation Standards Council (www.ivsc.org) as “The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgably, prudently and without compulsion.”