This simple and extremely useful calculator is aimed at investors who are analysing a company raising funds by crowdfunding.
The Price-to-Earnings (PE) ratio of a company, either private or public, is one of the most widely used valuation methods.
It values a company by comparing the value of a company’s shares against its earnings (usually net profit) in a 12-month period.
For publicly traded companies it is relative simple to calculate a company’s value using the share price and the number of shares outstanding. However, when an investor is analysing a privately held company the price of shares can only be valued reasonably by a recent or upcoming round of funding.
A company using a crowdfunding platform will be required to set out the amount they want to raise and the level of equity they are willing to give investors in return.
By taking the target funds to be raised and equity offered along with net profit forecasts to you can calculate the PE Ratio of a company.
When you have used the Investment Superstore Price-to-Earnings Calculator you can compare your findings against the readings of similar listed companies to evaluate the relative value of a private company raising funds by crowdfunding.
If the company you are researching is offering a an equity stake that runs past two decimal point or you need a more exact calculation that is not available on the above calculator, you can use a version of the above calculator that replaces the ‘equity offered’ slider.