Offtoa proposes a valuation for you company using “comps,” in a manner similar to that used by a real estate appraiser when s/he prices your home based on comparing it to similar homes that have been sold recently. In the case of valuing your company, Offtoa uses seven factors:

1. Industry segment. The industry segment you selected on Assumptions/General. This has a drastic effect on the valuation. If you decide you are in biotechnology, we will compare you to other biotechnology companies, but if you decide you are in diversified food, we will compare you to other diversified food companies. To give you an idea of how different industry segments are, take a look at the price/earnings ratio for biotechnology at http://biz.yahoo.com/ic/515.html. Compare this to the price/earnings ratio for diversified food at http://biz.yahoo.com/ic/340.html. At any point in time this could represent a factor of 100x.
2. Liquidity Date. The date you tell us you will experience a liquidity event at the Exit tab of Assumptions/Financing/Investments. We will use the trailing financial numbers on that date. If you are growing fast, the later that date, the higher your valuation.
3. Revenues. Twelve months of trailing revenues as of the date of the liquidity event. We will take that number times the “revenue multiple” of your selected industry to create one estimate of your company's value.
4. Gross profits. Twelve months of trailing gross profits as of the date of the liquidity event. We will take that number times the “gross profit multiple” of your selected industry to create one estimate of your company's value. To increase gross profits, decrease COGS, increase volume, or increase prices.
5. EBITDA. Twelve months of trailing EBITDAs as of the date of the liquidity event. We will take that number times the “EBITDA multiple” of your selected industry to create one estimate of your company's value. To increase EBITDA, decrease COGS, decrease expenses, increase volume, or increase prices.
6. EBIT. Twelve months of trailing EBITs as of the date of the liquidity event. We will take that number times the “EBIT multiple” of your selected industry to create one estimate of your company's value. To increase EBIT, decrease COGS, decrease expenses, increase volume, or increase prices.
7. Earnings after tax. Twelve months of trailing EATs as of the date of the liquidity event. We will take that number times the “profit multiple” of your selected industry to create one estimate of your company's value. To increase EAT, decrease COGS, decrease expenses, increase volume, or increase prices.

Related Questions:

How do I change the industry segment for my company?

How do I change the exit date? How do I change the liquidity date?

How can I lower COGS? How can I lower costs of goods sold?

How do I change the price for a product?