Below is a list of our most Frequently Asked Questions. If you have a question which is not answered here, please contact us and we would be happy to assist you.
» My business is in profit but where did the cash go?
» Can you help me prepare a business plan and forecasts for the bank?
» What is my business worth?
My business is in profit but where did the cash go?
There are a number of reasons why a company may be profitable but has no liquid (cash) assets.
- money could be invested in high levels of stock and work-in-progress
- turnover may be high but customers may be slow to pay
- early payment of liabilities
- investment in fixed assets such as buildings or plant and machinery
- seasonal variations in the business cycle resulting in high sales in one period and a lull in others
- poor cashflow can be an indication that the company is overtrading - but you'll have to call us in to explain that one!
Can you help me prepare a business plan and forecasts for the bank?
Yes. Come and talk to us today!
We'd be delighted to put forward a proposal for your consideration.
What is my business worth?
The most widely used valuation methods to value your business are the dividend method, the earnings multiple method, the discounted cashflow method and the asset-based method. Valuing a business is a complex task. We at SJ Chartered Accountant have the required competencies and experience to assist and advise you on valuing your business. Below is a brief description of each method.
- Dividend yield: This basis of valuation is considered appropriate when evaluating a minority shareholding. This method calculates the value of the business by dividing the dividend by an appropriate dividend yield.
- Price earnings: This basis of valuation is considered appropriate when evaluating a majority shareholding. This method capitalises the appropriate sustainable after tax earnings at an appropriate price earnings ratio in order to arrive at a valuation.
- Discounted cashflow: This basis of valuation is considered appropriate when evaluating a majority shareholding. This method calculates the value of the business by discounting the future cashflows by an appropriate discount rate.
- Asset-based: This method looks at the assets of the business and values based on the fair or open market value of the assets. This method is normally most appropriate when valuing a majority shareholding and/or when the other methods above are not appropriate due to negative earnings, a zero dividend policy or a negative net present value cash position.
