Turnover or Profit?

Let’s assume an increase of 25% in revenue (net sales) to have occured one year after the firm valuation study. How would this situation affect the firm value in your opinion?

Assumptions that may arise without detailed investigation in the financial statements:

1. Within the framework of CV (Company Value) / Sales multiplier, there will be a positive increase in company value.
2. If the company made concessions from profitability/product price while increasing turnover, profitability will decrease. On the other hand, if there are delays in collection, the collection turnover rate was also negatively affected. In these conditions the value will be negatively affected.

From this point of view; while increasing or targeting turnover is important, positive value increases can be achieved by maintaining at least the profit margins and collection periods of the previous year.  Generally, it is seen that price and maturity concessions are given in growth targets.

Goals:

To increase turnover by 25% instead of …….

Strategic goals:

We may assume the realized operating profit to be 14%, and turnover to be 100 M.
We can set our strategic goal to be to to realize an operating profit of 17%, which is the sector average, and to increase turnover by 25%…