Funds Flow: The Company as an Active Salable Valuing a going concern requires a professional and technical scaffolding that integrates the various components that constitute the reality of conveniently grouped assets to produce a certain flow of funds. Dr. Carlos E. Spina, author of the book “much is really a company” and with whom we have collaborated on more than one opportunity in this exciting problem, introduces us to this work in this very necessary and exciting. Assuming we all know that the company has launched a value, we will discuss in a very simple way how to determine that value. There are many methods, some simple and others complex, but not its complexity that determines the method, but this must be adapted to the particularities of the property you want to value. The first approach is the book value, ie net worth. This involves thinking that the value of the company is the algebraic sum of assets and liabilities valued in accordance with professional standards.It seems obvious that this method does not cover many aspects relating to the formation of value, as we shall see. If we add some kind of improvement to the method mentioned above, we might assume that all of the assets involved is not necessary to develop the business in question, to be more clear, there may be obsolete or worthless assets to achieve the end sought, making it necessary after the value of the company’s remaining assets, are called substantial, ie those that are indispensable. These assets can be valued at market value. In all fairness the reader may be thinking at this point that the value so determined, it lacks one ingredient, which is precisely what is technically known as goodwill, which is defined as the ability to earn profits superutilidades or above normal .For example if we have a sum of money, we can place it on a fixed date, but if we invest in a business likely to obtain higher returns, albeit with additional risk factor. Not go into detail on how to obtain technically this goodwill, although there are ways to do this, however we want to emphasize something. In many types of business that key value is known or at least fairly determined by market forces, so try to use any method is useless because it sends the supply and demand. This is not unusual and serves as a simple business maxiquiosco, whose level of billing and location determine its value, added to the assets involved (goods, facilities, other fixed assets, etc.) and also applicable to more complex business, such as agricultural establishments, where the area will determine the type of exploitation and probable yields, with a known market and quite transparent.If we’re in this situation, the method to use is the Method “Multiple in price-earnings ratio” or some variant. The method is simple and effective if the right circumstances to apply, for example, suppose that the expected gain of a particular business is 10 and the average price-sector earnings is 20, we can determine the price, so that if Price / Earnings 20, knowing that the gain is 10, clearing the price would PRICE / 10 20 so that the PRICE 20 x 10 200. Of course this is not always usable by the other methods to be used. Under these circumstances the most popular method is called the Present value of future cash flows. We will discuss briefly the method and its rationale. Any investment project has a value that is determined by cash flows generated. What are the flows of funds Quite simply are cash funds are released through the project life.We can not go into detail about how to develop a flow of funds, but basically we could say that is the algebraic sum of the results, depreciations and other charges not representing movement of funds, fewer investments, plus or minus the change in working capital, less the income tax. The reason is simple, the release of funds is what you can spend or invest in new projects. So, if we adopt the method, the first thing to do is to estimate future cash flows that generate business. This task has a primary complex, which is precisely the method of estimation, since in reality it is the expectation of what will happen thereafter. This may be at risk (defined as a probability of change of expectations) or directly under uncertainty (total ignorance of the evolution of the variables or expectations).Overall, the first thing you have to estimate are the company’s future results, for which it should determine future sales, costs and expenses. There are different methods methods, some statistics to estimate the evolution of any variable, eg sales. In general, given the future development of sales, other variables are somehow dependent on these (ie in general terms, it may be that the variable determining the evolution of the other may be, for example, purchases) . Costs and expenses generally are dependent on these. However, we must take into account the costs which are fixed and which are the variables, since any increase in sales will result in a profitability by leveraging the use of fixed cost components. Thereby determining the expected result, we must estimate the change in working capital, primarily receivables, inventories and trade payables.The increase in operating capital, determine a reduced flow of funds available, while its reduction will increase them. Then be evaluated investment in fixed assets, which are those necessary to obtain such funds. Here we introduce a normal question, when doing a valuation.