Estimation of financial "health"
Financial due diligence is a complex check of a financial condition of the
company and prospects of its development. Thus, it is possible to speak, that
the given procedure consists actually of several blocks. The first block ??“ the
audit, the second block ??“ an estimation of financial prospects, the third block
??“ an estimation of marketing prospects. Thus it is necessary to consider, that
by the nature financial due diligence is not only a method of detailed
estimation of cost of business. The given procedure is directed first of all on
definition of prospects of development of business, an estimation of its
opportunities in the financial plan. Financial due diligence estimates not only
and not so much the basic company's resources, presence at it any property and
liquidity. The position of the organization in the market, prospects of
development, ability to bring real incomes is a subject to an estimation also.
In the given block it is possible to allocate some directions of an estimation.
First, an estimation of property belonging the company. That is comparison of
residual cost of the basic means and their real market cost. They practically
always differ. Secondly, an estimation of stability of a financial position (a
parity and creditor debts, terms and the sizes of repayment of available credits,
etc.). Thirdly, an estimation of profitability business-project (a time of
recovery of outlay, the size of necessary investments and so forth). Fourthly,
marketing research of a position of the organization in the market, an
estimation of trade marks belonging it. In last turn marketing research of the
market on which the organization operates is carried out.
Actually financial due diligence is the complex analysis of all set of internal
and external financial mutual relations of the company.
Tax due diligence ??“ the analysis of tax position of business. The estimation of
tax burden of the company is spent, opportunities of tax optimization are
estimated. A necessary element is the analysis of the transactions concluded by
the company from the point of view of tax risks, infringementsof the tax laws.
The estimation of risk of presentation of claims from tax bodies is
simultaneously spent. Sometimes this kind due diligence distribute between
financial and legal blocks.
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