Financial Analysis Report: Evaluating Business for Sale Opportunity

This report presents a financial analysis of a construction business offered for sale, aiming to secure funding for acquisition. It includes an executive summary, background information, and a detailed methodology for assessing the business. The scope encompasses a comprehensive review of the company's financials, including balance sheets, profit and loss statements, and cash flow analysis. The report analyzes the business size, publicity, subcontractors, insurance coverage, and operational aspects. It also covers market analysis, SWOT analysis, and financial projections, alongside risk assessments and recommendations. The report emphasizes the importance of due diligence, financial statement interpretation, and the development of a business plan to justify the acquisition and secure financing from a bank. The report aims to demonstrate the viability of the business under current market conditions, identify potential risks, and provide a foundation for making an informed investment decision, highlighting the student's understanding of financial terms, accounting principles, and business planning.

Running head: BUSINESS FOR SALE
Business for Sale
Name of the Student
Name of the University
Author’s Note

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Executive Summary
This current report has focused on the business that is directly associated with the overall process
of construction. The principles of accounting that mainly relates to the industry to construction
has the ability to interpret the financial statement of the business. The study also includes the
overall flow of cash statement along with cash flow budgeting that would point out the future
amount of expenses for the business. Building the base with no customers is accessible with the
confidential data which is accessible for the collection of data for gaining customers. The returns
of the investment along with the concepts and techniques includes the cash flow that is
discounted in nature for better management in the overall process of internal rate of return.
Business in the construction industry includes ethical practices along with management of human
resources. For planning the business in the construction industry. This report is attached below &
is to be presented to ABC Bank in order to seek funds to initiate his entrepreneur career.

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Table of Contents
Introduction......................................................................................................................................4
Background and structure of the business.......................................................................................4
Methodology of the business...........................................................................................................5
Scope of the report...........................................................................................................................5
Business size....................................................................................................................................6
Publicity of business........................................................................................................................6
Previous sub-contractors..................................................................................................................6
Insurance coverage of the company................................................................................................7
Change of ownership and services..................................................................................................7
List of suppliers...............................................................................................................................8
Previous project of the company.....................................................................................................8
Tax and license under VBA.............................................................................................................9
Previous employee benefits of the company...................................................................................9
Loan security and personal assets....................................................................................................9
Qualification..................................................................................................................................10
Registered as private limited company with status........................................................................10
Market analysis and strategy.........................................................................................................10
Overview of acquired business......................................................................................................10

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Conducting a due diligence process..............................................................................................11
SWOT Analysis and 360 degree feedback....................................................................................13
Financial analysis...........................................................................................................................15
Comprehensive review on financial statement..............................................................................17
Business relation to the targeted market........................................................................................21
Business relation to customer base................................................................................................22
Completed and current projects of the business............................................................................23
Future prospects of the business....................................................................................................23
Risk that are associated with the business.....................................................................................25
Recommendation...........................................................................................................................26
Conclusion.....................................................................................................................................26
Critical reflection...........................................................................................................................27
References......................................................................................................................................30
Appendices....................................................................................................................................35

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Introduction
Financial report is a type of financial statement or financial health of a company that
mainly points out the financial position of the company along with reflecting the profit and loss
that has been earned by the company. The role of business is directly associated with the
business which is constituted with the sale of projects. The legal obligation has been included
with the projects which includes the procedures that are legal in nature and application of
voluntary has been taken place in the process of comprehensive review of the statement.
It also includes the comprehensive review of the financial statement that includes the
balance sheet, profit and loss statement and cash flow statement of the company. In this study, a
building construction is for sale by a successful family owned business construction which has
been established for more than thirty years. The overall outcome of the report is valuable which
would be identified by the financial institution as well as by the investors. The most important
part is to identify the risks as it helps the company to deal with it along with mentioning the
nature of risk that would be dealt by the company.
Background and structure of the business
The business that is associated with the overall process of business construction has
owned a business that makes it available for sale. A small office and business has been
established for more the thirty years and the business is profitable ever since then. The business
also includes the benefitting from the strong base of the customers that are mainly recurring in
nature which would be intended by the hardworking of the aged couple.
The aged couple generally intends to retire along with providing basis training to the new
owner of the business. The aged couple has asked the price for the business is around $ 300000

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that is mainly non-negotiable which means the customers would not be allowed to negotiate with
the price that has been offered by the aged couple. The name of the organisation that has been
owned by the couple is Rapid Building Construction and the contact number of the business has
also been provided by the existing owner. The main challenge is to convince the bank for
approving the loan for making different kind of changes that makes the business more effective
to the customers. The hours of operation is eight hours a day and the business is located in the
city of Perth, Australia.
Methodology of the business
The methodology of business starts with allocation of funds which is the primary step
that also includes the collection of minimum paid up capital. The preregistration process includes
several steps that are required to be followed during formation of any business. The registration
process includes several paper works which would be highlighted in their business and business
would be commenced as usual. The post registration process of the business includes the
procedures that would be followed after the paper work. Different financial statement is to be
prepared which shows the total amount of profit and loss that would earned or incurred by the
company in future years.
Scope of the report
The company that is Rapid Building Construction is to provide construction services to
the customers and the scope of the report is to provide comprehensive report on the company
along with their services. It includes the ingredients of the comprehensive report that mainly
focuses on the characteristics of the business.

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Mission statement - The mission statement of the company is to maintain their
performance at the highest level of quality of their construction and complete the construction at
fair value within the competitive market price. It also includes the satisfaction of the clients for
whom the services are mainly provided.
Vision statement - The vision statement of the company also focuses to maintain the
highest level of professionalism, integrity, honesty, and fairness in their relationship with the
customers, suppliers and professional associates. Maintaining the above qualities would help the
company in maintaining their business at utmost level.
Business size
The size of the business is small and medium sized business which has the main motive
to acquire another company with the total amount of allocated budget for the business of Rapid
business Construction.
Publicity of business
The publicity of the company is based on their effective communication that is associated
with the business through different medium for the business of Rapid business Construction.
Previous sub-contractors
The previous subcontractors of the company has been associated with the company which
provides different kinds of benefits in their normal course of business. Some of the previous sub-
contractors of the company are painters, air-conditioners, plumbers, electrician, carpenters and
others for the business of Rapid business Construction.

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Insurance coverage of the company
The Company also consist of coverage of insurance which helps the company to cope up
with certain kind of losses in a financial year. Insurance provides financial support to the
company in any case of contingencies that might hamper the business structures and their
financial structures. Certain types of risk are associated with construction companies such as
property damage and income that mainly focuses on loss of income for business interruptions
from natural calamities.
Injuries of employees is also covered under the insurance of Construction Company
along with risk of liability that might cause property damage which are not associated with the
company. As the new owner would change the name of the business along with its ownership so,
the ownership as well as the areas of insurance covered would also change. The new owner
would like to contact the insurance agent who would assist in changing the name to the new
owner. The warranties is to be provided for the previous work and it would b also be transferred
to the new owner by the overall process for the business of Rapid business Construction.
Change of ownership and services
Change of owner of the business might affect the overall business procedures which
might reflect in their financial statement. The relationship with the customers and other
stakeholders also gets affected by the change of ownership along with its services. Quality of
services would get effected with the change of ownership and the retention of employees is vital
part in case of ownership transfer. Sale value of enterprises is required to be increased along with
maximizing the tax obligation for the business of Rapid business Construction.

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List of suppliers
The supplier of Construction Company are those who assist the company with raw
material and labours for running their business in a smooth way. Some organisations are
contracted for providing physical supplies such as goods, materials, plants and others for the
business of Rapid business Construction.
Previous project of the company
Certain projects has been completed by the company which includes proper allocation of
raw materials with utilisations of assets. Projects in Australia is being completed by the company
that required assistance in their construction work. The project that has been completed by the
company are Pergola, Timber decking and Wall to ceiling cupboard. The current project of the
company is to complete the smaller works that are related to the business and extension along
with alteration to existing dwellings for the business of Rapid business Construction.
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2
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0 0.5 1 1.5 2 2.5 3
Projects
Projects
Figure 1: Project completed by the company
(Source: Created by author)

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Tax and license under VBA
It is the amount that is paid by the company to the government on their income. The
Construction Company has paid certain amount of tax for specific financial year. The amount of
tax is required to be deducted from the total amount of income that has earned by the company.
The construction company is to be registered under Victorian Building Authority (VBA) that
mainly regulates the plumber along with its standards. License is to be applied after paying
certain amount as license fees. Rapid Construction Company has registered their business under
VBA and a license has also been applied for the business of Rapid business Construction.
Previous employee benefits of the company
The previous employees of the company has provided benefits to the company in
completion of projects which helps the company to grow and develop. The company has
provided fringe benefits to its employees along with gratuity. Different types of fringe benefits is
provided by the company to the employees such as timely payment, security of employee, health
and safety, voluntary arrangements and others. Moreover, gratuity is the lump sum amount that
is paid to the employee only if the employee has completed five or more years for the business of
Rapid business Construction.
Loan security and personal assets
The security loan of the company helps in running of business in a smooth manner which
includes their personal assets that mainly provides benefits the company in their normal course
of business. The company is required to keep certain assets in their mortgages for approving the
loan from the bank. Rapid Construction Company would like to keep their bonds which worth $
50000 as security to get loan from the bank and certain assumptions include acquiring of
machinery is required to be made.

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Qualification
The qualification includes bachelor’s degree from a recognised university in construction
and management along with economics which would help the company in applying as well as
receiving of several permits that would be beneficial for the business of Rapid business
Construction.
Registered as private limited company with status
The company is to be registered as private limited company as it would have the limited
liability to the shareholders of the company. It also increases the overall status of the company in
their targeted market. The company is required to implement with article of association for
registering the company. Formation of company applied to the register of company and proper
process would be held before declaring it as a private limited company for the business of Rapid
business Construction.
Market analysis and strategy
The current state of the residential housing industry is based on the current marketing condition.
The cost of materials has increased along with the cost of labours which puts certain impact on
the business along with their profitability for the business of Rapid business Construction.
Overview of acquired business
A comprehensive report is required to be provided to the of the bank in order to secure
the allocated funds that is required to acquire the business at the asked price. In addition to this,
most of the funds that are associated with the business includes the effective criteria for
managing the funds (Zhou, Goh and Li 2015). The appointed personnel for the fund required to
have a close attention on the risk of capitalising the opportunities of the cash flow that has the

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ability to offer credit to the customers along with ensuring the liquidity that plays a crucial
aspects in the funds.
The management of funds includes the overall process of financial management that
would be required for better as well as effective managing the investments for fixing the assets
on the books of accounts of the investors (Hwang, Zhao and Toh 2014). The management of
fund includes the effective financial sectors that manages the investment funds along with
account clients that requires a certain financial goals along with creating a plan for investment
(Fulford and Standing 2014). The management of funds by the bank includes the personal funds
that includes certain percentage along with the incentives for finding the abilities of the financial
performance.
Conducting a due diligence process
Due diligence process is a typical process that mainly focuses on the process of
investigation on an investment that is potential in nature along with delivering the confirmation
call on it. These are the facts that are required to be reviewed by all of the financial records that
has been created or recorded in the past years (Oesterreich and Teuteberg 2016). It mainly helps
the party who are interested in buying any business and other investors that are directly
associated with the business. The due diligence process is a type of voluntary actions which
includes the effective performances of the overall process of due diligence.
There are different types of due diligence process that includes different type
implementation processes that would be conducted in the overall process (Shehu et al. 2014).
Administrative due diligence includes the process of verifying the admin related facilities such as
workstation and rate of occupancy that verifies the overall ownership. Due diligence process of