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calculating turnover

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  • 25-03-2008 2:20pm
    #1
    xertpo
    Registered Users Posts: 330 ✭✭


    Hi,

    I'm looking into investing in a small deli/shop. I've looked at the certified turonver figures and the accountants say that they are all above board. However, the shop currently uses an old fashioned till, and I am still a bit dubious as to whether the turnover figures good have been exaggerated - they seem too high to be using a simple old fashoined till. Are there any resources where you can look at similar businesses in similair areas, to see what they are turning over.


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    #2
    djk1000
    Closed Accounts Posts: 899 ✭✭✭djk1000


    Have you looked at their bank lodgement receipts and how they tally with the till?


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    #3
    ImDave
    Registered Users Posts: 1,096 ✭✭✭ImDave


    I presume by saying certified figures it means you are dealing with sets of audited accounts. If this is the case, you can trust to a reasonable degree that the figures are accurate, as the auditors would not have signed off on the accounts unless they believe the figures to have been compiled in an honest manner.


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    #4
    xertpo
    Registered Users Posts: 330 ✭✭xertpo


    thanks for the replies. auditiors have certifed the accounts but maybe I'll compare bank lodgements too.


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    #5
    MortgageBroker
    Registered Users Posts: 60 ✭✭MortgageBroker


    check till receipts versus the lodgements, if they don't resolve then ask a lot of questions, if you have an accountant yourself get them to look into it and ask to see personal bank statements of the sellers, if they pay themselves in cash then that may explain the discrepency if the two don't match, as well, if they dont' have much in their accounts then maybe the business is not doing as well as you think, turnover is relative to costs, or maybe they live off cash and the till receipts are below what they should be and they keep the cash difference.


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    #6
    Bandara
    Registered Users Posts: 3,282 ✭✭✭Bandara


    I'd be in agreement with mortgage broker here. In my experience if the owner has any cop on he'll be siphoning off about 200 quid a week. Also if its a small unit and he is paying the staff cash wages (a lot of small operators do this with foreign staff) to save on employers prsi, this also will be lowering the till receipts as he can;t have it traceable. In general the till receipts will most likely be a lower reflection than what they should be.

    check the till software out, if its SAMI systems (very common with smaller retailers) the owners can access a ghost training mode that allows the till to be used perfectly normally but nothing is reported to the backoffice. With Station Master, another common system, the day reports can simply be edited in the backoffice to show whatever figures you require.

    Get your hands on a scanning report, it will show up and dodgy stuff going on.

    Finally, with a deli business be aware that the turnover may be slightly dodgy with respect to hot food being put though as cold food. So be careful when looking at the margins here, it could be out as much as 12-15k a year easily.

    However I think asking for copies of bank statements and lodgement books is going to be met with a firm no, it goes beyond the bounds of what the seller is expected to provide to someone who may or may not be intending to buy the site

    hope some of this is useful


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