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PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 4444
Experience:  Tax professional and business consultant for 35 years.
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There, looking expert at reading company financial

Customer Question

Hi there, looking for an expert at reading company financial statements...
Submitted: 2 years ago.
Category: Finance
Expert:  PDtax replied 2 years ago.
Welcome to the site. I'mCustomer and will be helping you today.
Please post the financials and your questions.
Customer: replied 2 years ago.
Hi there: we have attached the financials for a subsidiary company and the parent company: they are spaced from 2013 to 2015 (there are only 4 snapshots of the financials during this time).We would really appreciate a thorough analysis of what would and could be happening in this company based on these statements; we would also like a list of questions we would ask to the parent and/or subsidiary to clarify any anomalies that you might see based on these statements; in other words, if you were to establish a total picture of what has been happening here, what questions would you ask? Would really appreciate your analysis, we may need ongoing analysis of this moving forward. Thanks!
Expert:  PDtax replied 1 year ago.
Hi again.Customerhere.
I can assist, but there are a few issues:
The price offered for the analysis is low.
What you seem to be looking for is a fraud analysis. Concise financials without a statement of cash flows don't open a lot of doors into inquiry.
Some insight into what you are looking for will be needed.
I will post an offer for some professional time to assist. Accept, and you will be provided a private link to offer more insight.
Expert:  PDtax replied 1 year ago.
Hi again.Customerhere.
Our month closes tomorrow, so I wanted to ask if you will be accepting my Offer today, so I can work on your project before month end.
Please advise.
Customer: replied 1 year ago.
Hi there, it's not going to be that intense...it is a landlord who is looking at the financials of its tenant (and tenant's parent company) to determine company strength or if they are possibly restructuring to move - we basically need comprehensive list of questions that we would ask the company to clarify their financial situation.
Expert:  PDtax replied 1 year ago.
Ok. I can assist with this for the posted price.
Is the parent going to guarantee the rent of sub?
The goodwill of the sub looks to be expiring in 5 years or so, and with that the sub will have taxes to pay, and less cash flow, in five years. How long are you planning to lease to the sub?
How much are they paying now in rent?
Sub appears to be set up at tax loss, cash flow positive with very little debt, deferred taxes not withstanding. They appear to be financially sound. I want to know how much is owned by the parent, and how much cash is being sent up to parent, since it is not needed by sub.
12/31/13 financials showed intercompany in 12/31/13 financial, not in 12/31/14.
12/31/14 sub accumulated other comprehensive loss was increased $1,000,000 for 2014, but not on financials. Parent booked some $12,000,000 for 12/31/14 as well. Could be parent's impaired goodwill, but it bears asking.
I would love, and you should ask, to see a statement of cash flows. I suspect sub is sending $$ to parent, which is fine while the tax breaks in the intangibles are there.
I would want to know some off the financials questions, such as the long term plans for the sub, length of lease, parent guarantee if appropriate, but these are things you likely already addressed.
This looks like it was spun off from parent, along with some intercompany goodwill for a customer list or other intangibles, and very little debt remaining. The original purpose of the structure is coming to an end. What is next, and why?
There are more pointed questions about operations, structure of lease if it involves sales volumes at all, build out, but there is not a lot here to provoke those specifics.
Thanks for asking at Just Answer. Positive feedback is appreciated. I'mCustomer