Sample report
A real quality of earnings report, redacted.
Not a brochure and not a template. A report from a completed engagement with the company, the people and the figures removed, so you can see the structure and the depth of the work before you commission any.
Name and email. That is the entire form.
What is in it
The sample follows the structure every report follows.
Notice to readers
What the engagement is and is not. A quality of earnings engagement provides no assurance opinion and is not an audit. It is the first page, in the sample as in a live report.
Glossary, background and transaction overview
The company, the deal structure and what was being bought.
Executive summary, written as points of interest
A plain list of findings, each with what it means for the price. This is the section an investment committee reads and the fastest way to judge whether the rest is any good.
Accounting process
Whether the target was on cash or accrual, how revenue was recognized, how cost of sales was built. The unglamorous section that determines whether anything after it can be trusted.
Quality of earnings
The core exhibit, in three tiers. Management’s proposed adjustments tested against documentation, the adjustments we added, and the potential adjustments where the facts were not clear enough to quantify. Three EBITDA figures rather than one.
Net working capital and the cash conversion cycle
The peg, calculated cash-free and debt-free, with the receivable, payable and inventory turnover that sits underneath it.
Income statement and balance sheet analysis
Revenue trends, customer concentration, margin by line, receivable aging, unrecorded liabilities, related party transactions.
Appendix A, due diligence procedures
The full list of procedures performed. This is the part people print. It works as a checklist against any diligence proposal, including one that is not ours.
Appendix B, proof of cash
Reconciled by month and by bank account, with receipts and disbursements shown separately rather than netted.
Appendix C, supporting schedules
The workings behind the exhibits.
What has been taken out
The company name, the buyer, the individuals, and the figures that would identify any of them. Confidentiality obligations under the CPA Code do not expire when a deal closes, so this is not negotiable and no amount of asking will produce an unredacted version of somebody else’s file.
What survives redaction
The thing worth looking at: how a finding is stated, how it is sourced, and how far the analysis goes before it stops.
Would rather talk it through instead?
Send the letter of intent on your live deal and we will give you a view on the purchase price, which is more useful than a sample.
Download a sample quality of earnings report.
See the structure, the depth of testing, and how findings are presented. We will email you a copy straight away.
If you would rather just ask
If you have a live deal and a letter of intent, the sample report is the slower route. Send us the LOI instead and Avnit will give you a view on the purchase price at no cost, back within one business day.