GREEN WORLD : revenue, balance sheet and financial ratios

In 2018, GREEN WORLD achieves revenue of 121 k€. Activity remains stable over the period (CAGR: -3.2%). Vs 2017, growth of +51% (80 k€ -> 121 k€). After deducting consumption (22 k€), gross margin stands at 99 k€, i.e. a rate of 82%. This ratio measures the ability to generate value from commercial activity. EBITDA (= Gross margin - Personnel expenses - Taxes) reaches 7 k€, representing 5.6% of revenue. Positive scissor effect: EBITDA margin improves by +25.3 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. 0.9% of revenue. This profit can be retained or distributed to shareholders.

The debt ratio (= Financial debt / Equity x 100) stands at 391%. 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 60%. 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 5.6 years of cash flow to repay all financial debt. This ratio remains within usual banking standards. Cash flow represents 5.2% of revenue. Cash flow measures resources generated by operations, available for investment and debt repayment. Satisfactory level allowing partial financing of growth.

The liquidity ratio (= Current assets / Current liabilities) stands at 235.20. 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 9.2x. 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: 13 days (formula: Customer receivables / Revenue incl. VAT x 360). Supplier term: 22 days. Favorable situation: supplier credit is longer than customer credit by 9 days. Inventory turnover is 85 days (= Average inventory / Cost of goods x 360). Overall, WCR represents 60 days of revenue, i.e. 20 k€ to permanently finance. Over 2016-2018, WCR increased by +43%, requiring additional financing.

Based on 177 transactions of similar company sales in 2018, the value of GREEN WORLD is estimated at 60 650 € (range 47 231€ - 84 055€). With an EBITDA of 6 840€, the sector multiple of 9.1x is applied. The price/revenue ratio is 0.74x (in line with sector norms). 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.