📉 Revenue Down 3 Years in a Row… But Is the Business Actually Weak?

Recently worked on a valuation for a construction company.

On paper, it didn’t look good. Revenue declined three years in a row.

However, the company had a solid backlog — with signed confirmation letters from customers proving they won the bids.

So revenue is coming but will the margins hold?

In this case, valuation depended heavily on:

• Control over COGS (SG&A was minimal and stable — not a major driver)
• Working capital ( Days in: Accounts receivable, Accounts payable, Inventory)

If customers pay slower than expected → cash gets locked.
If suppliers require fast payment → cash drains quickly.

So, not only does the profit need to be acceptable, the cash flow is also important because valuation follows cash — not accounting profit.

Business valuation is never just about trend lines.

Sometimes a “declining” company isn’t weak.

It’s just between projects.

#ORNA #Consult #BusinessValuation #Project #Constructions