Adjusted Net Profit

The Bigger Picture In Selling Your Business

This is net profit adjusted (recalculated) based on net profit shown on the financial statement of a business. Thus net profit is adjusted to account for add backs and other items that may not have been taken note of in the accounting of it (net profit) as presented on the financial statement.

To all intents and purposes (not least, in business valuation and determination of purchase price when selling a business), Adjusted Net Profit is a reliable indicator of true profitability of a business, as it may account for certain costs such as owner expenses, non-cash expenses and one-off items if they had not been accounted for in the net profit declared.

Adjusted Net Profit is of great significance in a business sale as it is a key measure when using the multiplier method in valuing a business and determining its purchase price.

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