How do you calculate the value of a business?

Is there any formula for? So what you earn with it in the month x something? For example, you hear something like "netflix was worth 50 billion," but how did you calculate that?

To do this, a business valuation. In investment theory, the value of the future monetary value is used, measured by the alternative use of the capital invested.

In practice, this is done by forecasting future profits (more precisely cash flows) and discounting them with an alternative interest rate of about 2-4 percent. In this respect, there are very large margins, both in terms of forecasted profits and the interest rate.

example

Future forecast profits per annum: 1 million, interest rate 2%, enterprise value 1 million / 0.02 = 50 million