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Capitalised earnings sensitivity table
Enter maintainable earnings and the range of multiples your evidence supports. The table shows the value at each multiple and the capitalisation rate each one implies.
- Written for
- Owners and advisers testing an indicative value or a broker appraisal.
- Answers
- How sensitive is an earnings-based value to the multiple, and what capitalisation rate does a multiple imply?
Illustrative arithmetic, not a valuation. This tool shows how the numbers you enter combine. It does not test whether those numbers are right, and it is not an independent valuation of any business. Everything runs in your browser: nothing you type is sent to Valuo or recorded in analytics.
You supply the multiples. Valuo does not publish market multiples here: we do not yet have licensed transaction data that supports them. Use multiples from evidence you can defend, and match them to the same earnings definition.
Worked example
A hypothetical business has maintainable EBITDA of $300,000 and net debt of $150,000. The multiples tested (3 to 4.5) are assumptions for the example, not market evidence.
| Multiple | Implied capitalisation rate | Enterprise value | Equity value |
|---|---|---|---|
| 3.0 | 33.3% | $900,000 | $750,000 |
| 3.5 | 28.6% | $1,050,000 | $900,000 |
| 4.0 | 25% | $1,200,000 | $1,050,000 |
| 4.5 | 22.2% | $1,350,000 | $1,200,000 |
Each step of 0.5 in the multiple moves the value by $150,000. That is why the evidence for the multiple deserves as much scrutiny as the earnings.
When not to use it
- Earnings are nil, negative or not yet established.
- Earnings are expected to change materially (a discounted cash flow may suit better).
- The value of the assets exceeds the earnings-based value: see valuing an asset-heavy business.
- The multiple comes from a different earnings definition, an asking price, or a rule of thumb.
Cite or reuse this page
Valuo Insights team (2026). Capitalised earnings sensitivity table. Valuo. https://valuo.com.au/insights/tools/capitalised-earnings-sensitivity/ (updated 14 November 2026).
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