Documentation

Capitalisation of Future Maintainable Earnings Method

Table of Contents

Overview #

The overview will give a summary of the valuation method.

Forecasts #

Forecast Overview #

A forecast can be created using previous year as a base for the forecasted values or manual entry.

Import a Forecast #

A template for importing can be accessed by using the Download Template button. This will be prefilled with accounts for the Entity prefilled and dates in the future.

  • Excel File: Excel template to import
  • Bank Balancing Account: Account which will be used to balance
  • Retained Porift Balancing Account: Account which will be used to balance
  • Valuer or Management: Is the forecast created by the valuer or the business.

Edit a Forecast #

When a forecast is in Valuation Ultimate you can use the dropdown on screen to edit the forecast.

Using the dropdown in the values, the value can be overridden if the forecast was generated from a previous period.

Comments can be added which will be shown on the forecast report

Adjustments #

The Adjustments screen will show all the accounts and periods for the business and allow you to click either:

  • Account: To create adjustments for all periods at once
  • Value: To create adjustments for a single period
  • New Account: Create a new account in the Entity of the valuation
  • Bulk Adjustment: Create the same adjustment across selected accounts across all periods. (Note. Selected using the boxes on left of Account Name)
  • Bulk Delete: Delete all adjustments for selected accounts (Note. Selected using the boxes on left of Account Name)
  • Report: View the Adjustment Report
  • Notes: Create a Valuation note in the context of Adjustments
  • Clone Adjustments: Clone adjustments from another Valuation already created in the Business.

Single Adjustment #

A single adjustment will create an Adjustment for a single period.

  • Type:
    • Fixed Amount: A value to adjust the raw value
    • Percentage: A percentage to adjust the raw value
    • Exclude: Exclude the entire raw value
    • Set to Amount: Ignore the raw value and set to a value
  • Description: A description which will be shown in reports
  • Input: value of the adjustment based on Type choice

Group Adjustment #

An Adjustment Group can be created to adjust multiple periods using the one form.

  • Adjustment Type: Adjustment type to be applied for the group
  • Group Description: Description of the group
  • Adjustment Amount: Amount of adjustment
  • Inflate/Deflate: Inflate/Deflate the value entered across the periods

The Apply to All button will fill the values from the group into the periods at the bottom of the form.

Bulk Adjustment #

A Bulk Adjustment allows you to adjust multiple accounts at once, using the same adjustment. Commonly used to exclude multiple accounts at once.

  • Accounts: Accounts selected from previous screen
  • Adjustment Type: Adjustment type for the bulk adjustment
  • Description: Description which will be applied for each adjustment

Adjustment List #

Adjustment List

The Adjustment List will give an overview of Increasing and Decreasing adjustments which have been made.

Weighting #

Weighting allows you to add weighting to the periods of the Valuation. Some templates are available to fill the weightings. Weightings are required to equal 100%.

Once valid weightings are entered the Future Maintainable Earnings value will be generated.

Weighting Average Template #

You can select predefined weightings using the dropdown available. Depending on the number of periods available the following options are available.

  • Straight Average – All Years
  • Straight Average – 2 Years
  • Straight Average – 3 Years
  • Straight Average – 4 Years
  • Straight Average – 5 Years
  • Most Recent Year Only
  • 70/30
  • 50/30/20
  • 40/30/20/10
  • 30/25/20/15/10

Multiple #

Multiple allows you to add the multiple for the valuation.

  • Type Choice: How the Multiple is being created
    • Manual Value: Provide a single value for the multiple
    • Build Up: Provide a detailed value which each item can have it’s own description
    • Cell Reference: Reference to a Custom Table cell (Note. See Custom Table for more information)
    • Discount Rate: Generate the multiple by creating a discount rate
    • Comparable Transactions: Use the outcome of creating Comparable Transactions
    • Comparable Companies: Use the outcome of creating Comparable Companies
  • Value: Visible when the Manual Value is selected
  • Description: A description why the multiple was chosen

Value/Ordinary Balance Sheet #

Allow you to adjust balance sheet items for this valuation.

Equity Discounts #

Equity Discounts allow you discounts of multiple levels for a Equity Holding.