Other relevant information

NotesQuizPaper exam

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

NotesQuizPaper exam