There are some factors that should be considered with regards to the profitability, the future inflation rates and the competitors in the market. The company should ensure that before it sells out, the profitability issue will be included in the part of goodwill which will add on the valuation price.
The workers of the company are underpaid so as to cut on costs of the company. That may not be the trend in the future because the workers may form a labor union that will fight for their rights. That means that the profits will reduce in the future if the workers demand for a pay rise. The person or persons who are interested in the purchase of the company should therefore consider that fact because it will affect the future profitability of the company.
The sales volume has increased as a result of as number of factors. The sales volume has increased because of the great advertising skills that have lead to brand loyal for the company. The brand loyal usually makes repeat purchase and that adds on the sales volume and profitability of the company. The sales volume has also increased as a result of the diversification of the company. Therefore, in the valuation of the company, the investment that has been made in the advertising and diversification of the operations should be considered. The company should ensure that such money ploughed in such ventures is recovered.
The costs of the company are increasing at a reducing rate over the years. That shows that the efficiency of the company has been increasing over the years. The efficiency may be as a result of improved processes, improved equipment and motivated employees. All the above factors happen at a cost and that cost should be considered in the valuation of the business. The valuation should ensure that the company does not result at a loss.
The brand loyal adds on the profitability of the company. That shows that the company has a good reputation among the customers.