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How to do Valuation of a Jewelry Business

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    Knowing the Valuation of a Jewelry Business

    Valuation of a Jewelry Business: Determining the value of a jewelry business is vital for many circumstances like buying/selling of business, M&A, and wills involving the business owner. Another reason for determining the value of a jewelry business is to obtain insurance and sell the jewelry company.

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    Methods for Valuation of a Jewelry Business

    Assets

    Assets of a jewelry company can include vehicles, equipment, cash, land, inventory, materials, real estate, accounts receivable, buildings, fixtures, and the rest. One of the challenges of valuing a stock is that precious stones have price fluctuations often.

    The information stated on the balance sheet is what the precious stones or gem was bought for and not the current or present worth today valuation of a jewelry business. Also, gemstones such as diamonds are of different value. A yellowish diamond has a lesser value than a blue clear white stone. Other factors that can affect the price of gems are carat weight and how it was cut.

    The value of silver and gold can swing – higher or lower within the year. So, before selling your jewelry store, have an appraisal of all the gemstones available in your inventory. Also, check the current market prices of the precious metals to sell at a fair market price.

    Liabilities

    The liabilities of a jewelry company are what the company owns. The liabilities can include account payable, leases, and bank loans. Contingent liabilities may happen in the future, such as a lawsuit against a company’s owner that a customer filed for changing the diamond in her necklace when the owner cleaned it. It is not easy to put several dollars on the contingency as you are ignorant of winning the lawsuit or settling the customer.

    Formula Based on Net Worth

    This is a simple formula for knowing the value of a jewelry business. Have the value of all the assets summed up and minus the total value of liabilities. The difference is the business owner’s equity, net worth, or the  Valuation of a Jewelry Business. In this method of jewelry business valuation, the company’s value as an ongoing company is not considered.

    Other valuation methods

    Using assets, liabilities, or the difference between both is not the only methodology for determining the value of a jewelry company. A jewelry business can be valued using a method known as multiple earnings. The Valuation of a Jewelry Business is based on the industry multiple prevailing in the industry

    To sell your jewelry company at the right price, consult a professional appraiser to value your business . They know the best business valuation method to use to determine the fair value of your business.