ERETZ DEVELOPPEMENT : revenue, balance sheet and financial ratios

In 2020, ERETZ DEVELOPPEMENT achieves revenue of 383 k€. Revenue is growing positively over 5 years (CAGR: +2.3%). Vs 2019, growth of +126% (169 k€ -> 383 k€). After deducting consumption (178 k€), gross margin stands at 205 k€, i.e. a rate of 54%. This ratio measures the ability to generate value from commercial activity. EBITDA (= Gross margin - Personnel expenses - Taxes) reaches 47 k€, representing 12.2% of revenue. Positive scissor effect: EBITDA margin improves by +5.8 pts, sign of improved operational efficiency. This level of operating margin is satisfactory for the sector. Ultimately, net income (= EBIT +/- financial result +/- exceptional - corporate tax) amounts to 40 k€, i.e. 10.3% of revenue. This profit can be retained or distributed to shareholders.

The debt ratio (= Financial debt / Equity x 100) stands at 632%. Critical situation: debt significantly exceeds equity, severely limiting borrowing capacity and exposing the company to default risk. Financial autonomy (= Equity / Total assets x 100) reaches 50%. This high autonomy means the company finances most of its assets through equity, a sign of strength. Debt repayment capacity (= Financial debt / Cash flow) indicates it would take 1.3 years of cash flow to repay all financial debt. This short period demonstrates excellent debt sustainability. Cash flow represents 12.0% of revenue. Cash flow measures resources generated by operations, available for investment and debt repayment. This high level provides strong self-financing capacity.

The liquidity ratio (= Current assets / Current liabilities) stands at 118.03. Concretely, the company has €2 of liquid assets for every €1 of short-term debt: no cash risk within 12 months. The interest coverage ratio (= EBIT / Interest expenses) is 1.8x. Coverage is limited: any activity downturn would jeopardize interest payments.

Working capital requirement (WCR) measures the cash timing gap between customer collections and supplier/inventory payments. Average customer payment term: 101 days (formula: Customer receivables / Revenue incl. VAT x 360). Supplier term: 77 days. The company must finance 24 days of gap between collections and payments. Inventory turnover is 390 days (= Average inventory / Cost of goods x 360). This high level ties up cash and potentially creates obsolescence risk. Overall, WCR represents 81 days of revenue, i.e. 86 k€ to permanently finance. Over 2016-2020, WCR increased by +1934%, requiring additional financing.

Based on 109 transactions of similar company sales (all years), the value of ERETZ DEVELOPPEMENT is estimated at 88 783 € (range 53 265€ - 224 809€). With an EBITDA of 46 733€, the sector multiple of 2.0x is applied. The price/revenue ratio is 0.17x (conservative valuation). This multiples method compares the actual sale price of similar companies to their financial indicators (Revenue, EBITDA, Net Income). It provides a market-based indicative estimate.