ABC Sporting Goods Examining the asking price of a business includes reviewing all past records and assessing the future financial outlook for the business, the economy, and the industry. You are buying the future not the past. Critical Assumptions for ABC Sporting Goods: ABC Sporting Goods is a small business, operating as a corporation. ABC has been in business for 15 years. The owner draws a salary listed under officers’ compensation. The store has been in the same location for the past seven years and has a Triple Net Lease (i.e. pay real estate taxes, building insurance, and maintenance). Sales decreased slightly in the past two years, but the company has tried to maintain market share by lowering their prices. This has impacted both gross and net profit. The owner wishes to sell his business and retire. The stress of running the business for the last 15 years, for 10 or 12 hours a day has begun to impact his health. The owner feels that the business has a good reputation with many loyal customers. He believes the business should be valued at $750,000. Review attached spreadsheet for Financial Information on ABC Sporting Goods: Profit & Loss Directions:
ABC Sporting Goods
Examining the asking price of a business includes reviewing all past records and assessing the future financial outlook for the business, the economy, and the industry. You are buying the future not the past.
Critical Assumptions for ABC Sporting Goods:
ABC Sporting Goods is a small business, operating as a corporation.
ABC has been in business for 15 years.
The owner draws a salary listed under officers’ compensation.
The store has been in the same location for the past seven years and has a Triple Net Lease (i.e. pay real estate taxes, building insurance, and maintenance).
Sales decreased slightly in the past two years, but the company has tried to maintain market share by lowering their prices. This has impacted both gross and net profit.
The owner wishes to sell his business and retire. The stress of running the business for the last 15 years, for 10 or 12 hours a day has begun to impact his health.
The owner feels that the business has a good reputation with many loyal customers.
He believes the business should be valued at $750,000.
Review attached spreadsheet for Financial Information on ABC Sporting Goods: Profit & Loss
Directions:
Return on sales (net profit divided by gross revenues)
Return on assets
Return on net worth
Quick ratio
Current ratio
Inventory turnover (gross sales divided by inventory)
Assets to sales ratio
Total liabilities to net worth
I have provided BizStats website: http://www.bizstats.com/ and uploades the Profit & Loss xls