Assets vs Liablities of a small business

[mubasher23]

I would like to determine the equity of a small business however I do not have access to there complete assets or liabilities, however I do have all the revenues and expenses of the business such as GROSS PROFITS, TOTAL OPERATING EXPENSES, OPERATING INCOME and NET INCOME. Is there a formula to derive assets and liabilities from any of this? Thank you so much

 

[bklynboy]

Simple answer - No.

 

[[email protected]]

Tell them to show you all their receipts for sales and payments made to suppliers and make an incomplete record by making a spreadsheet format of a cashbook which I have a ready made to hand.

 

[Samir]

Short answer, no.

Long answer--you can estimate some of it. But not with any real accuracy. You can find out how much the initial loan was and the down payment. Down payment=equity. You can take all of the net income and add that up=equity.

The bank would have needed an asset to secure the loan, and that asset would probably be at least as valuable as the principle of the loan=asset. You can also get a copy of their federal tax return and look at the depreciation schedule for a list of assets=assets.

It sounds like you're trying to evaluate a business to buy. Buyer beware with businesses with incomplete records as they can be mismanaged, operated unethically, or worse, be an outright scam. It's a buyers market--find something really worth buying.