We continue to get questions about whether or not a business’s inventory is included in the multiples found Banker Valuation’s Comps Database. The answer is YES! Similar to Pratt’ Stats and the IBA Database, Inventory IS included in the multiples /values in our data. To our knowledge, the only database that does not include inventory is BizComps.
Therefore, when calculating a value using Banker Valuation’s data, inventory would NOT be added…as it is already included in the multiple.
Keep in mind, however, the only inventory that should be added to the calculated value would be excess inventory. Excess inventory, in terms of business valuation, would be any amount of inventory above the industry norm. Various databases such as RMA or Integra are reliable sources for insight on what normal inventory amounts should be per industry.
We will share more on excess inventory in our next blog post.