WEST HIFI : revenue, balance sheet and financial ratios

In 2021, WEST HIFI achieves revenue of 1.6 M€. Over the period 2017-2021, the company shows strong growth with a CAGR (compound annual growth rate) of +11.5%. Vs 2020, growth of +38% (1.2 M€ -> 1.6 M€). After deducting consumption (1.0 M€), gross margin stands at 550 k€, i.e. a rate of 34%. This ratio measures the ability to generate value from commercial activity. EBITDA (= Gross margin - Personnel expenses - Taxes) reaches 189 k€, representing 11.8% of revenue. Positive scissor effect: EBITDA margin improves by +4.6 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 131 k€, i.e. 8.2% of revenue. This profit can be retained or distributed to shareholders.

The debt ratio (= Financial debt / Equity x 100) stands at 88%. Debt level is high: negotiating margin with banks is reduced. Financial autonomy (= Equity / Total assets x 100) reaches 33%. The balance between equity and debt is satisfactory. Debt repayment capacity (= Financial debt / Cash flow) indicates it would take 2.3 years of cash flow to repay all financial debt. This short period demonstrates excellent debt sustainability. Cash flow represents 9.5% 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 250.94. 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 2.4x. Financial charges are adequately covered by operations.

Working capital requirement (WCR) measures the cash timing gap between customer collections and supplier/inventory payments. Average customer payment term: 41 days (formula: Customer receivables / Revenue incl. VAT x 360). Supplier term: 62 days. Favorable situation: supplier credit is longer than customer credit by 21 days. Inventory turnover is 163 days (= Average inventory / Cost of goods x 360). This high level ties up cash and potentially creates obsolescence risk. Overall, WCR represents 171 days of revenue, i.e. 758 k€ to permanently finance. Over 2017-2021, WCR increased by +80%, requiring additional financing.

Based on 109 transactions of similar company sales (all years), the value of WEST HIFI is estimated at 343 674 € (range 207 389€ - 868 095€). With an EBITDA of 188 829€, 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.