Accountants/CSIAs Saidia Peasant

[$$$]

Help me make sense of these figures from the balance sheet of a certain company. Would you buy a company with the figures below if it was being sold for 2 million?? Note that it has retained earnings of 4.5 million . Would I be wrong to assume that if you bought it, you will get 3.89 million for free?? Swali tuu.

Nauziwa a company worth 5.894 million for 2 million if my interpretation is correct. Sivyo??

 

[Okiya]

This information is insufficient. Due diligence review huwa very detailed.

 

[$$$]

This information is insufficient. Due diligence review huwa very detailed.

Williamson Tea. Figure is in "000.

The company keeps paying fat dividends kumbe ina 4.5 billion kwa bank. Saa hii dividend yield ni 17%.

 

[mzeiya]

Williamson Tea. Figure is in "000.

Niaje mbirrionaire

 

[$$$]

Niaje mbirrionaire

Williamson Tea is a listed company Sir. You only need 120k to buy 100 shares of the company at current prices. Sasa hapo kununua ni kulingana na mfuko yako in multiples of 100 shares. The math is the same na sinunui company mzima, just some shares kulingana na uwezo wangu. Sasa nafanya due diligence.

 

[Okiya]

Williamson Tea. Figure is in "000.

The company keeps paying fat dividends kumbe ina 4.5 billion kwa bank. Saa hii dividend yield ni 17%.

What I meant is the financial information umepeana hapo is very scanty to give advice on whether to buy a company or not.

And btw are you talking of acquiring a total control of company or buying shares in a listed company?

 

[$$$]

What I meant is the financial information umepeana hapo is very scanty to give advice on whether to buy a company or not.

And btw are you talking of acquiring a company or buying shares in a listed company?

Same thing. Acquiring a company is the same as buying ALL shares of the company. Hesabu ni ile ile. And NO. I am a peasant looking to grow my nut, so I am definitely not thinking about buying the company siwezi fika bei. Just looking to invest and now crunching the numbers due to lockdown manenos.

 

[Okiya]

Same thing. Acquiring a company is the same as buying ALL shares of the company. Hesabu ni ile ile. And NO. I am a peasant looking to grow my nut, so I am definitely not thinking about buying the company siwezi fika bei. Just looking to invest and now crunching the numbers due to lockdown manenos.

Sawa, let me advice you what I can remember from my experience in 2010

1. Get the entire financial statements.
2. You have to re audit the financial statements. What I mean is if the company has said it had 10 million in the bank, you send confirmation. If it says that it has fixed assets, you go and do verification. If they say they have inventory somewhere you go and count.
3. I can see there is a revaluation surplus which by my guess, it was from fixed assets. So you will need an asset valuer to come with the new asset value.
4. If the company has debtors you need to send confirmation letters to them. You will also need an IFRS 9 expert to give you the value of these debtors
5. You ned to audit the liabilities. Mostly here you will be checking for unrecorded liabilities.
6. You will need to write to lawyers. Maybe the company has a case in court which they are not disclosing
7. You will need to do a subsequent events review. This means auditing the management accounts for the subsequent year.
8. You will need to audit the accounting policies to confirm whether management is aggressive or conservative

I may have forgotten some things since its been long since I was involved in acquisition.

 

[$$$]

Sawa, let me advice you what I can remember from my experience in 2010

1. Get the entire financial statements.
2. You have to re audit the financial statements. What I mean is if the company has said it had 10 million in the bank, you send confirmation. If it says that it has fixed assets, you go and do verification. If they say they have inventory somewhere you go and count.
3. I can see there is a revaluation surplus which by my guess, it was from fixed assets. So you will need an asset valuer to come with the new asset value.
4. If the company has debtors you need to send confirmation letters to them. You will also need an IFRS 9 expert to give you the value of these debtors
5. You ned to audit the liabilities. Mostly here you will be checking for unrecorded liabilities.
6. You will need to write to lawyers. Maybe the company has a case in court which they are not disclosing
7. You will need to do a subsequent events review. This means auditing the management accounts for the subsequent year.
8. You will need to audit the accounting policies to confirm whether management is aggressive or conservative

I may have forgotten some things since its been long since I was involved in acquisition.

Hii due diligence ni ya birrionea looking to acquire the company. I am a simple mwananchi investor so I can only count on the information provided in the financial statements. Now, assume that you have verified that the information is accurate, how would you interpret my initial post??

 

[Okiya]

Hii due diligence ni ya birrionea looking to acquire the company. I am a simple mwananchi investor so I can only count on the information provided in the financial statements. Now, assume that you have verified that the information is accurate, how would you interpret my initial post??

In that case your post is correct. But I would exclude revaluation surplus.

 

[Ramses]

Don't know much about acquisitions but in addition to the company's capitalization I would want to see the working capital section of the balance sheet plus the cash flow statements for the last couple of years.