This section summarizes the primary insights derived from a thorough review of the company’s financials, highlighting any significant trends, discrepancies, or anomalies that could affect the valuation or transaction. These findings provide a clear snapshot of the company’s financial health and operational performance.
Adjusted EBITDA is calculated by excluding non-recurring, non-operating, or unusual items to provide a clearer picture of the company’s core operating performance. This adjustment helps assess the true profitability and cash-generating ability of the business. choose the right investment options for your portfolio. We provide support for each adjustment.
A recast P&L reflects all adjustments made to the original profit and loss statement, including addbacks to EBITDA. This provides a more accurate representation of the company’s operational performance.
This analysis identifies any seasonal fluctuations in revenue or profit, helping to adjust for periods of peak or low performance. By understanding seasonality, we can provide a clearer estimate of long-term profitability and stability.
A detailed P&L analysis reviews the company’s income statement for trends, anomalies, and insights into operational efficiency. This allows for a deeper understanding of the business’s cost structure and revenue streams. This analysis is done a monthly, quarterly and annual level.
This analysis evaluates the risk posed by reliance on a small number of customers or vendors. High concentration could indicate vulnerability in revenue streams or supply chains that may need to be addressed in the transaction.
The balance sheet analysis focuses on the company's assets, liabilities, and equity to assess its financial stability and liquidity. Key items are reviewed to identify any financial risks or opportunities for improvement.
This adjustment accounts for changes in working capital that reflect the company’s true operational needs. By analyzing the net working capital, we gain insights into the company’s short-term financial health and ability to cover its obligations.
This analysis reviews the aging of accounts receivable (AR) and accounts payable (AP) to assess liquidity and cash flow efficiency. It helps identify any potential collection issues or payment delays that could affect the business’s financial performance.
Proof of cash verifies the accuracy of cash flow by reconciling the bank statement with the reported cash movements in the company’s books. This ensures that the financial statements reflect actual cash deposits and disbursements and not just accounting entries.
The book-to-tax reconciliation compares the company's financial accounting records with tax filings to identify discrepancies between reported earnings and taxable income. This ensures consistency and compliance with tax regulations while adjusting for tax-related impacts.
Payroll reconciliation ensures that employee compensation records from a payroll provider match the PL. It helps identify any discrepancies or inconsistencies that may impact labor cost calculations or compliance with tax laws.