G.E.M : revenue, balance sheet and financial ratios

In 2016, G.E.M achieves revenue of 739 k€. Significant drop of -30% vs 2015. After deducting consumption (367 k€), gross margin stands at 371 k€, i.e. a rate of 50%. This ratio measures the ability to generate value from commercial activity. EBITDA (= Gross margin - Personnel expenses - Taxes) reaches 49 k€, representing 6.7% of revenue. Warning negative scissor effect: despite revenue change (-30%), EBITDA varies by -64%, reducing margin by 6.1 pts. This reflects costs rising faster than revenue. The operating margin remains fragile, requiring cost vigilance. Ultimately, net income (= EBIT +/- financial result +/- exceptional - corporate tax) amounts to 15 k€, i.e. 2.0% of revenue. This profit can be retained or distributed to shareholders.

The debt ratio (= Financial debt / Equity x 100) stands at 191%. 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 26%. The balance between equity and debt is satisfactory. Debt repayment capacity (= Financial debt / Cash flow) indicates it would take 16.4 years of cash flow to repay all financial debt. Beyond 7 years, banks generally consider credit risk as high. Cash flow represents 4.3% of revenue. Cash flow measures resources generated by operations, available for investment and debt repayment.

The liquidity ratio (= Current assets / Current liabilities) stands at 366.98. 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: 55 days (formula: Customer receivables / Revenue incl. VAT x 360). Supplier term: 86 days. Excellent situation: suppliers finance 31 days of the operating cycle (retail model). Inventory turnover is 281 days (= Average inventory / Cost of goods x 360). This high level ties up cash and potentially creates obsolescence risk. Overall, WCR represents 358 days of revenue, i.e. 735 k€ to permanently finance.

Based on 356 transactions of similar company sales (all years), the value of G.E.M is estimated at 81 348 € (range 36 379€ - 188 615€). With an EBITDA of 49 295€, the sector multiple of 1.5x 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.