Introduction

 

The Ten Cap Calculator estimates what a company may be worth based on its owner earnings. Inspired by Warren Buffett's concept of owner earnings, the Ten Cap method focuses on the cash a business generates for its owners rather than traditional accounting earnings. I use this method as one of several valuation tools when determining whether a company is attractively priced.

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No valuation method is perfect, so I recommend using the Ten Cap Calculator alongside my Margin of Safety and Payback Time calculators as part of a broader investment process.

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Where to Find the Data

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The quality of the calculation depends entirely on the inputs you use.

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The required financial data can usually be found in a company's annual report or through financial data providers.

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I often use Finbox because it provides the key metrics needed for the calculation in one place. On Finbox, Tax Provision is listed as Income Tax Expense, making it easy to locate the required figures.

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What You Need

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Cash from Operations: Enter the company's Cash from Operations, which can be found in the cash flow statement. This represents the cash generated from the company's core business operations.

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Capital Expenditures (CapEx): Enter the company's Capital Expenditures from the cash flow statement. These represent investments made to maintain and grow the business.

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Income Tax Expense: Enter the company's Income Tax Expense (sometimes called Tax Provision). This can usually be found in the income statement.

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Shares Outstanding: Enter the total number of shares outstanding. This information can usually be found in the company's annual report, investor relations website, or through financial data providers.

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Understanding the Result

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The Ten Cap Value represents the suggested purchase price per share based on the Ten Cap methodology. The calculator first estimates the company's intrinsic value using owner earnings and then automatically applies a 50% margin of safety. This means the displayed Ten Cap Value already includes a 50% discount to the estimated intrinsic value, providing an additional cushion if the company's future performance is weaker than expected or your assumptions prove too optimistic.

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Like any valuation model, the result should be used together with a broader analysis of the company's competitive advantages, management, financial strength, risks, and long term growth potential.​

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Try the Calculator

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Enter the company's Cash from Operations, Capital Expenditures, Tax Provision, and Shares Outstanding below. The calculator will estimate the company's Ten Cap Value based on its owner earnings.