VALCO VALVES SERVICES : revenue, balance sheet and financial ratios

In 2019, VALCO VALVES SERVICES achieves revenue of 5.6 M€. Over the period 2016-2019, the company shows strong growth with a CAGR (compound annual growth rate) of +5.8%. Vs 2018: +10%. After deducting consumption (449 k€), gross margin stands at 5.2 M€, i.e. a rate of 92%. This ratio measures the ability to generate value from commercial activity. EBITDA (= Gross margin - Personnel expenses - Taxes) reaches 914 k€, representing 16.2% of revenue. Positive scissor effect: EBITDA margin improves by +5.5 pts, sign of improved operational efficiency. This high EBITDA margin provides strong self-financing capacity and resilience to uncertainties. Ultimately, net income (= EBIT +/- financial result +/- exceptional - corporate tax) amounts to 514 k€, i.e. 9.1% of revenue. This profit can be retained or distributed to shareholders.

The debt ratio (= Financial debt / Equity x 100) stands at 50%. Debt remains under control: the company retains capacity to raise new debt if needed. Financial autonomy (= Equity / Total assets x 100) reaches 43%. 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 2.6 years of cash flow to repay all financial debt. This short period demonstrates excellent debt sustainability. Cash flow represents 8.9% 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 271.79. 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 0.7x. Danger: operating income does not cover interest charges, unsustainable situation.

Working capital requirement (WCR) measures the cash timing gap between customer collections and supplier/inventory payments. Average customer payment term: 267 days (formula: Customer receivables / Revenue incl. VAT x 360). Supplier term: 176 days. The gap of 91 days means the company finances its customers for over a month before being paid relative to supplier payments. This weighs on cash flow. Inventory turnover is 8 days (= Average inventory / Cost of goods x 360). Fast turnover, sign of good inventory management. Overall, WCR represents 297 days of revenue, i.e. 4.7 M€ to permanently finance. Over 2016-2019, WCR increased by +108%, requiring additional financing.

Based on 104 transactions of similar company sales (all years), the value of VALCO VALVES SERVICES is estimated at 1 058 039 € (range 654 682€ - 3 169 260€). With an EBITDA of 913 948€, the sector multiple of 1.0x is applied. The price/revenue ratio is 0.27x (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.