You're evaluating a company for acquisition. How do you assess its financial health?
When you're evaluating a company for acquisition, understanding its financial health is key to making an informed decision. Here's how to assess it effectively:
How do you approach evaluating a company's financial health? Share your insights.
You're evaluating a company for acquisition. How do you assess its financial health?
When you're evaluating a company for acquisition, understanding its financial health is key to making an informed decision. Here's how to assess it effectively:
How do you approach evaluating a company's financial health? Share your insights.
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?irk?tin maliyy? sabitliyini qiym?tl?ndirm?k ü?ün ilk n?vb?d? maliyy? hesabatlar? t?hlil edilm?lidir. M?nf??tlilik, likvidlik v? ?d?m? qabiliyy?tini d?y?rl?ndirm?k ü?ün balans hesabat?, m?nf??t-z?r?r hesabat? v? pul ax?n? hesabat?na n?z?r sal?nmal?d?r. Maliyy? performans?n? qiym?tl?ndirm?k ü?ün borcun kapitala nisb?ti v? kapital?n g?lirliliyi kimi g?st?ricil?r yoxlan?lmal?d?r. ?m?liyyat f?aliyy?tind?n g?l?n pul ax?n?na diqq?tl? yana?araq, ?irk?tin davaml? olaraq kifay?t q?d?r v?sait yaratd???na ?min olmaq vacibdir. H?m?inin bazar pay?, qiym?tl?r v? t?l?bat?n gedi?at?n? bilm?k mü?yy?n proqnozlar verm?y? k?m?k ed? bil?r.
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You should have a list of companies that come under your conditions, check on the matching percentage and finalise one. - Due diligence of the company needs to be checked. - Analysis of their books - valuation to be done from our side. If the due diligence is passed, I personally go for a company that has - good cash flow - Industry matching or a higher Net profit - I will also check the Team skills - Less Long term loans and more current assets - bad debt ratio - also will check and approve assets; it's Important, it's something that can be manipulated. Let's not talk about what PWC and Sathya computers did in india years back.
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Financial analysis is great and you'll get a broad overview from what is suggested. But it can really help to go beyond the numbers. 1) Look at the Landscape - how are competitors faring? What trends will put pressure on the balance sheet or margins? 2) Speak to Salespeople - understand the key selling points of the key products. What makes customers buy? How long is the sales cycle? What are pricing trends? How much new business is coming vs. returning customers. 3) Speak to People Who make the Product - Understand how they make the sausage. What are the vulnerabilities in the supply chain? How intensive is production? How depreciated is the equipment? Is there room for cost savings?
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When evaluating a company's financial health, I first analyze its cash flow and liquidity, particularly vital in the capital-intensive aviation industry. For lessors, I examine the lease portfolio's diversity and lessee credit risk, ensuring steady cash flow. For airlines, I assess fleet age, ownership ratios, and maintenance reserves, focusing on minimizing cost and maximizing asset life. In a past case few years ago, as part of a consulting project, I advised a lessor with high exposure to an emerging airline. By restructuring lease terms and diversifying lessees, we mitigated risk and improved cash flow stability, safeguarding financial health amid uncertain market conditions.
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