Ad Back Financial Summary
This is the type of financial summary you should expect:
ABC Pty Ltd
Cost of goods Sold
|Motor Vehicle Repairs (One Off)||7000||0||0|
|Total Ad backs||101450||60000||84300|
|Adjusted Net profit||201450||135000||154300|
W.A. Business Brokers and Business Valuers generally calculate the “Total Surplus” or “Adjusted Net Profit” of a business before wages for one working owner operator. If it is a husband & wife business then only one working owners wage is added back as a single buyer would have to replace the wife with an employee. This enables businesses to be compared “apples for apples”. For example if the husband and wife are paid wages of say $100,000 and the wife could be replaced by an employee at $40,000 per annum then the amount of $60,000 would be added back.
If the business interests you, ask for the complete financial statements. Do your own percentages to see any unusual variance.