Tag: ORNA
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🔎 How to know if a company’s projection makes sense
When we do a valuation, one of the first things we ask for is the company’s forecast — usually a 5-year outlook of revenue, costs, and profit. But how do we know if those numbers are realistic? We need to see the backup. For example: If sales are projected to grow by XX%, can the…
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Why do some companies pay more dividends than others? 💸
A client recently asked me this, and it’s actually a great question. A listed company usually has a dividend payout policy stated for investors to know what to expect – some pay as high as 60% while some pay very small %. Here are the main factors that influence how much a company decides to…
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💡 “If the company has so much cash, shouldn’t it just pay 100% dividend every year?”
Our customer asked us one day. And it’s a good question — because if you’re the new investor, wouldn’t you prefer to get all the cash back every year? Here’s the thing 👉 In a DCF valuation, whether the company pays 30% or 100% dividend, the value doesn’t change much. Why? Because in valuation theory,…
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Why is cash more important than profit?
When valuing a company, one of the most common methods is Discounted Cash Flow (DCF). And as the name suggests, we look at cash — not profit. A company can show strong revenue and profit margins on paper, but that doesn’t guarantee it has the cash in hand. For example: Customers may take longer to…
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How do you repay debt when you don’t have cash?
At the beginning of this year, Company A borrowed money from Company B.The deal was straightforward: repay the loan plus interest by year-end. But there was a condition.If Company A couldn’t repay in cash, the repayment would be in shares. So the big question became:👉 How much is one share of Company A actually worth?…
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“We’re making 1k a year and we have no debt. How much can we sell our business for?”
That was the first question from one of our clients. On paper, it was the dream company: More than 10 years in business Stable revenue every year No interest-bearing debt Enough cash on hand It was like reading the definition of a cash cow in a textbook. But valuation is never just about the headline…
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Why a company needs specialization
During a recent management interview, we asked about revenue structure and profit margin for each product category. This company distributes two types of goods: Commodities → thin margin, because customers can easily compare prices and switch suppliers. Custom-made products → margin can be 10x higher, because they require unique know-how and are harder to copy.…
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The more you make, the less you earn?
In some business valuations, we’ve seen companies where profits shrink as revenue grows. Sounds strange, right? But it happens. Why? Because the cost of expansion can outweigh the extra margin. For example, a company may need to take on heavy overhead costs to boost production—but if sales volume isn’t high enough, those costs eat up…
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“Should my company go public?”
We often get this question from business owners whose companies are doing well. Here’s the truth: just because you can list your company doesn’t always mean you should. ✅😊 Benefits of being listed Access to cheaper funding sources Easier to raise money when expansion is needed Stronger credibility with customers, partners, and investors ⚠️ Costs…
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Why do we need to break down revenue structure?
Each revenue stream carries its own story. Some lines of business generate higher margins because they require specific know-how, while others face intense competition and are easily replaced — leading to thinner margins. That’s why we can’t simply take total revenue, apply a growth rate, and call it a forecast. When we request for information,…
