Making adjustments for S Corp that owner ensured reported losses annually

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September 28, 2023

by a searcher from Harvard University - Harvard Business School in Boston, MA, USA

I'm looking at a company in an industry attractive to me. The company has a great reputation and differentiated products. However, it's an S Corp and the owner has ensured they report a loss nearly every year. Does anyone have advice on where to start to get a clearer picture of what margins should be? Do I have to get the Quickbooks and go line by line here?

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Reply by a searcher
from Harvard University in Boston, MA, USA
Thanks John. I ended up simply asking him to break down each line of his expenses by discretionary vs. not and then I will have to validate it.
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Reply by an investor
from Harvard University in Santa Fe, NM, USA
I would ask for a schedule of proposed EBITDA addbacks (i.e., extraordinary and/or non-recurring expenses) and try to validate those
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