Filing abbreviated accounts at Companies House means people don’t know what your Turnover is… or do they?
Old accounting lags like me and credit agencies have their own ways to estimate a company’s Turnover from just a Balance Sheet… here are a few… and they can be surprisingly accurate
Estimating Turnover from Debtor Days
Debtor Days is an accounting ratio that can be used to figure out a competitor’s Turnover…
Work out your own Debtor Days… and apply it to your competitor’s Debtors… et voila you have a good estimate of their Turnover if their business is similar to yours
Apply your industry standard* Debtor Days to their Debtors and you’ll get yet another estimate of their Turnover
Take care though… dig around in the notes to the accounts and try to use only Trade Debtors in the calculations
And for any of you GS10k guys I have a spreadsheet that does it for you I’ll send you if you drop me an email…
Times by Six
One of the world’s largest credit agencies simply takes a company’s Debtors and multiplies that figure by 6 to estimate Turnover…
The logic is that globally Debtors take roughly 60 days or 2 months to pay… and there are 6 lots of 2 months in a year
mmmm… sophisticated or what?
And the Rest
Lots of Credit Agencies have a go at estimating a company’s Turnover using their own weird ways… and some even let you know what that estimate is (eg FAME database let you turn on a tab to show a company’s estimated Turnover)
Just because you don’t file your Turnover doesn’t mean people can’t and aren’t guessing what it is… and they’ll typically underestimate… because they’re cautious finance guys…
*industry standard Debtor Days can often be found in a Credit Agency report