Total Enterprise Value = Performance Measure X Multiple of Earnings
There are four Performance Measures that a company can track: Revenue, Net Income, EBITDA, and Assets. A business' Multiple of Earnings is a multiplier that is based on how risky it would be to invest in or buy a business. The higher the Multiple, the less risk a business has.
What many business owners are not aware of is that there is actually a range for your possible multiple and that is where the opportunity for value growth lies. Not where your Multiple is today, but where it could be.