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Cash flow - month, year, etc?

The cash flow calculation provided on this site doesn't state whether it is for the most recent month, year, or for the entire duration the business has been operating. Can anyone clarify this?
Thanks,
Mike

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Answers (2)
William A. Price
www.growthlaw.com
Business Lawyer
DuPage County, IL

"Cash Flow" doesn't mean anything when business valuation is at issue. What you want to know is how much profit can be generated if you buy the business and no longer have current management in place to help you sell and run the operation. This will require contact with current owners, analysis of their statements and supporting proof, and then a business plan that you do for yourself so you can verify the EBITDA (a profit measure) over whatever period of analysis you or your finance sources (lenders, investors, partners, etc...) need to know when determining return on this asset as opposed to return on other possible deals.

Jan 8, 2014
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The BAF Group LLC
MD

MOST of what you read in the ads on these sites cannot be clarified with a generalized definition. Even Cash Flow as a generalized term must be clarified: What is included and what is not, in Expenses that have been used to compute Cash Flow. One of the biggest areas of dispute is whether an amount for the Owner's Income has been included in the Expense area. Most of the Cash Flow numbers you get are annual. But they may be the most recent year, an average of several years or, as we do, use a weighted average of the last three (3) years. Your best bet is to clarify with each Broker or Seller; never assume anything.

Jan 7, 2014

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