ACCA FR Syllabus C. Analysing And Interpreting The Financial Statements - Other relevant information - Notes ^{5 / 6}

When buying a company

• Audited financial statements

• Forward looking information 

  Eg. Profit and financial position forecasts
  Capital expenditure budgets and 
  Cash budgets and 
  Order levels

• Current (fair) values of assets being acquired

• Level of business risk

  Highly profitable companies may also be highly risky, whereas a less profitable company may have more stable ‘quality’ earnings

• Expected price to acquire a company

  It may be that a poorer performing business may be a more
  attractive purchase because it has higher potential for growth