FALBALA CREATIONS : revenue, balance sheet and financial ratios

In 2016, FALBALA CREATIONS achieves revenue of 81 k€. Activity remains stable over the period (CAGR: -1.6%). Slight decline of -1% vs 2015. After deducting consumption (18 k€), gross margin stands at 63 k€, i.e. a rate of 78%. This ratio measures the ability to generate value from commercial activity. EBITDA (= Gross margin - Personnel expenses - Taxes) reaches 3 k€, representing 3.4% of revenue. Positive scissor effect: EBITDA margin improves by +3.0 pts, sign of improved operational efficiency. The operating margin remains fragile, requiring cost vigilance. Ultimately, net income (= EBIT +/- financial result +/- exceptional - corporate tax) amounts to 1 k€, i.e. 1.3% of revenue. This profit can be retained or distributed to shareholders.

The debt ratio (= Financial debt / Equity x 100) stands at 761%. 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 10%. Low autonomy: the company heavily depends on external financing (banks, suppliers). Debt repayment capacity (= Financial debt / Cash flow) indicates it would take 46.1 years of cash flow to repay all financial debt. Beyond 7 years, banks generally consider credit risk as high. Cash flow represents 2.8% of revenue. Cash flow measures resources generated by operations, available for investment and debt repayment.

The liquidity ratio (= Current assets / Current liabilities) stands at 784.03. 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 7.3x. Operating income very largely covers interest expenses: high safety margin.

Working capital requirement (WCR) measures the cash timing gap between customer collections and supplier/inventory payments. Average customer payment term: 39 days (formula: Customer receivables / Revenue incl. VAT x 360). Supplier term: 17 days. The company must finance 22 days of gap between collections and payments. Inventory turnover is 402 days (= Average inventory / Cost of goods x 360). This high level ties up cash and potentially creates obsolescence risk. Overall, WCR represents 557 days of revenue, i.e. 125 k€ to permanently finance.

Based on 145 transactions of similar company sales (all years), the value of FALBALA CREATIONS is estimated at 8 850 € (range 4 030€ - 22 969€). With an EBITDA of 2 715€, the sector multiple of 2.6x is applied. The price/revenue ratio is 0.19x (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.