Tag: valuations
Valuations: Create more cash to improve value
October 25, 2013Craig Hittle
A. Being a financially sound and healthy company involves a lot more than simply turning a profit on paper. For-profit businesses shouldn't simply strive for a positive net income. They should strive for positive cash flow and a strong balance sheet in order to maximize the value of their business. Profit on the income statement is relatively meaningless if, at the end of the accounting period, the business has less cash in the bank than it did at the beginning. It is therefore critical to...
Valuations: Look at five year projected cash flow
August 23, 2013Craig Hittle
A. If you are purchasing the entire company, of which the bid contracts are part and parcel, then you will need to value both the existing business and the incremental cash flows the business will generate as a result of having won a bid contract(s). In most cases, the appropriate way to determine the potential net present value (i.e. the purchase price you may be willing to pay today for the rights to future benefits) is to look at a five-year net cash flow projection (and terminal/long...
Valuations: Use cost approach
August 23, 2013Craig Hittle
A. Many HME companies that provide PAP products and supplies are looking for ways to expand their customer base and catchment area without having to invest directly in new facilities, locations and staffing. For example, some HME companies contract with sleep centers to use their employees for PAP patient education and equipment set-up. Qualified specialists from the HME company train the sleep centers/contractors and consistently follow up to continue training. The HME company provides PAP...