Is this unusual for a small business?

Snugglebunnies · 20-09-2017 7:44pm #1

I know of a small business with 1 premises and under 10 employees who have over half a million in cash. Is this unusual for a small company?

L.Jenkins · 20-09-2017 9:17pm

I don't see how that would be unusual. Do they have the cash on premises?

Snugglebunnies · 20-09-2017 9:42pm

L.Jenkins wrote:

I don't see how that would be unusual. Do they have the cash on premises?

Doubt its on the premises. I've just been looking at similar sized businesses in the same industry online using one of those credit check websites and none of them have anywhere near the same amount of cash in their hands.

harr · 20-09-2017 9:51pm

Snugglebunnies wrote: »

Doubt its on the premises. I've just been looking at similar sized businesses in the same industry online using one of those credit check websites and none of them have anywhere near the same amount of cash in their hands.

All depends on the nature of the business....half a million might seem like a huge amount to a regular jo soap but probably not a huge amount to certain businesses..
A business that might sell farm machinery or other large items or even a jewellers half a mil might be normal enough.
If it's a tiny corner shop it sounds on the high side...

BorneTobyWilde · 20-09-2017 10:27pm

What does in cash mean. It's physical money, not just numbers on a screen like most money.

Snugglebunnies · 21-09-2017 9:57am

harr wrote:

All depends on the nature of the business....half a million might seem like a huge amount to a regular jo soap but probably not a huge amount to certain businesses.. A business that might sell farm machinery or other large items or even a jewellers half a mil might be normal enough. If it's a tiny corner shop it sounds on the high side...

Cash though, in hand and in the bank, not the amount of assets that could be huge in those type of industries. Other similar businesses in close proximity have about 500,000 less in cash than this particular company.

ACADasltiv · 22-09-2017 2:31pm

The obvious port of call is to check previous years accounts and see how the cash balance has fluctuated. If the bank balance has risen by €40k every year for the last 10 years then its obvious some of the profits are being held in cash rather than being withdrawn.

Remember, the balance sheet is a snapshot of the Company at that date, unlike the statement of profit or loss which records the activity for that year.

Is this unusual for a small business?

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