Historical Cashflow Analyzer
Uncover the True Financial Story of Any Business.
The Multi-Year Cash Flow Analyzer is a professional-grade tool designed specifically for business owners and buyers to normalize financial statements and calculate accurate business valuations. This interactive tool allows you to:
- Analyze up to 5 years of financial data simultaneously
- Calculate normalized EBITDA and Seller's Discretionary Earnings (SDE)
- Identify and document owner benefits and legitimate add-backs
- View year-over-year performance trends with highlighted significant changes
- Generate comprehensive reports for valuation discussions
Developed by Atlantic Coast Business Brokers, this tool implements industry-standard recasting methodologies to reveal a business's true earning capacity. Whether you're preparing to sell your business or evaluating an acquisition, our Cash Flow Analyzer provides the clarity needed to establish defensible valuation multiples.
Cash Flow Analyzer
How to Use the Cashflow Analyzer
A Guide for Business Brokers
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1. Initial Setup
The analyzer opens with a default year tab (typically the previous year).
All input fields start at zero – you'll fill these with your client's financial data.
2. Adding Financial Years
Click the "+ Add Year" button to add another year for analysis.
When prompted, enter the specific year you want to analyze (e.g., 2022, 2021).
Add up to 5 years for comprehensive trend analysis.
3. Editing Year Tabs
Click the pencil icon (✎) on any year tab to rename or change it.
This allows you to organize years in chronological order or focus on specific fiscal periods.
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4. Business Information
Enter the business name in the top field – this will be used in reports and exports.
5. Income Statement Data
Enter the "Reported Net Income" from the business tax returns or P&L statement.
This is your baseline figure before any adjustments.
6. Owner Benefits (Add-Backs)
Document all owner compensation and benefits that represent discretionary income:
Owner's salary and payroll taxes
Health insurance and retirement contributions
Personal vehicle expenses
Travel, meals, and cell phone expenses attributed to the owner
Any other owner perks running through the business
7. Other Add-Backs
Enter non-cash expenses and one-time costs:
Depreciation and amortization
Interest expenses
One-time or non-recurring expenses
Non-essential expenses that a new owner might eliminate
Family member salaries above market rate
8. Notes Section
Document context, explanations, and supporting information for any add-backs.
These notes will be included in exported reports.
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Original Acquisition Price: What the seller paid when purchasing or starting the business
Where to find it: Purchase agreements, closing statements, formation documents, initial capital contribution records
For startups: Include initial investment, business formation costs, startup expenses
If records are incomplete: Work with client's accountant to reconstruct through bank statements, loan documents, or tax returns
Capital Improvements: Any significant investments that improved the asset value (not regular expenses)
Where to find it: Capital expenditure records, depreciation schedules, fixed asset lists, equipment purchase receipts
Examples include: Building renovations, major equipment upgrades, business expansions, new technology systems
Documentation needed: Invoices, contracts, canceled checks, loan documents for improvements
Note: Only include items not previously expensed on tax returns
Selling Expenses: Professional fees, appraisals, and other costs directly related to the sale
Where to find it: Current invoices from attorneys, accountants, appraisers, business brokers (if separate from commission)
Qualifying expenses: Legal fees for transaction documents, accounting costs for financial due diligence, valuation services
Advise clients to: Keep detailed records of all transaction-related expenses as they occur
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9. Calculating Results
Click the "Calculate" button to process all years of data.
Review the results in the right panel for each year.
10. Switching Between Years
Click on different year tabs to review data for each period.
The "Averages" tab shows consolidated multi-year analysis.
11. Understanding the Averages Tab
The year-by-year comparison table shows trends across all periods.
Significant changes (±20% or more) are highlighted in green (increases) or red (decreases).
Average EBITDA and SDE figures at the bottom provide key valuation metrics.
12. Deleting Years
Click the "×" on any year tab to remove it from analysis.
Note: You must maintain at least one year in the analyzer at all times.
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13. Printing/Saving PDF
Click "Print / Save PDF" to generate a comprehensive report.
The report includes all years, comparisons, and notes in a client-ready format.
14. Exporting to CSV
Click "Export CSV" to download the data for use in Excel or other tools.
This is useful for incorporating results into valuation models or presentations.
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15. Data Verification
Always verify add-backs with supporting documentation.
Be consistent with add-back methodology across all years.
16. Multiple Scenario Analysis
Create different versions for conservative vs. aggressive valuations.
Consider running separate analyses for different add-back assumptions.
17. Client Communication
Use the generated reports to walk clients through the normalized financials.
Highlight the average SDE as a basis for applying valuation multiples.
This tool streamlines the financial recasting process, allowing you to focus on value-added analysis and client discussions rather than complex spreadsheet calculations.
FAQs
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EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and SDE serve different valuation purposes. EBITDA adds back interest, taxes, depreciation, and amortization to net income, but excludes owner compensation. SDE includes all owner benefits (salary, perks, personal expenses) in addition to EBITDA add-backs. For small businesses, SDE is typically more relevant as it represents the total financial benefit available to a single owner-operator, while EBITDA is more commonly used for larger businesses with management teams.
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Using a multi-year average (typically 3-5 years) provides a more accurate representation of sustainable earnings by smoothing out anomalies and one-time events. This approach accounts for business cycles, unusual expenses, extraordinary revenue years, and recent trends. Buyers and lenders typically give more weight to consistent performance over time rather than a single year's results, which could be influenced by temporary factors.
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For each add-back, you should have verifiable documentation such as: tax returns, profit & loss statements, general ledgers, payroll records, loan documents, equipment purchase receipts, owner's personal expense reports, and detailed transaction records. For expenses shared between business and personal use (like vehicles), maintain logs showing business percentage. Banks and buyers will scrutinize add-backs, so each item should be defensible with proper documentation.
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When the tool highlights significant changes (±20% or more), be prepared to provide context. For revenue increases, explain successful marketing campaigns, price adjustments, or market expansions. For decreases, discuss industry challenges, strategic shifts, or temporary setbacks. For expense fluctuations, identify one-time purchases, shifts in business model, or efficiency improvements. The key is transforming what might appear as inconsistency into a coherent business narrative that supports your valuation.
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Yes, pandemic years (typically 2020-2021) often require special consideration. For businesses negatively impacted, you might exclude or normalize these periods, or document PPP loans/grants separately. For businesses that saw unusual growth, determine whether that growth is sustainable or represents a temporary surge. In the notes section, clearly explain your methodology and provide context for how the pandemic specifically affected this business. Buyers will understand these were unusual years, but need clarity on the "new normal."
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This requires a two-step analysis in the tool. First, calculate the standard SDE including all owner compensation. Then, for buyers planning to be absentee owners, create a separate calculation that accounts for market-rate management costs. In the notes section, document the prevailing salary for a general manager in this industry and region. This creates a "working owner SDE" and an "absentee owner SDE," giving potential buyers flexibility to see how the business performs under different ownership scenarios.
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Yes, but with important adjustments. If the business owns its real estate, you should enter the current market-rate rent as an expense rather than the actual mortgage payment. This helps separate the operating business value from the real estate value. In the notes section, document the real estate's estimated value and current mortgage details separately. This approach allows for cleaner comparative analysis and prevents the real estate component from distorting business operation metrics, giving buyers a clearer picture of the business regardless of whether they purchase both the business and property or just the business operations.