Car Wash Proforma Cash Flow Analysis

Proforma Cash Flow Analysis

for the purchase or refinance of an existing car wash

Experienced buyers of car washes do a proforma cash flow analysis for each purchase. When buying a car wash, or any other business really, the buyer and his CPA and/or car wash consultant needs to do a proforma cash flow analysis to determine whether the cash flow under the buyer's ownership will be satisfactory to that buyer. The proforma shows adjustments to revenues and expenses for historical periods to arrive at an adjusted Net Operating Income (also known as EBITDA, or Earnings Before Interest, [Income] Taxes, Depreciation, and Amortization).

A proforma cash flow analysis is also useful when your are considering refinancing an existing car wash..

The normal procedure begins with preparing a common-size spreadsheet of the historical data, usually showing the financial information from the last three years of federal income tax returns and the most recent year-to-date period. Then the prospective buyer makes adjustments under each of the 'actual' columns. So, if you have four periods of financial data you'd have four periods of revenue and expense adjustments in columns directly under that financial data. The result is a new (pro-forma) Net Operating Income amount for each of the four columns (four accounting periods).

If you are buying or refinancing an existing car wash virtually all lenders, including us, will independently do an analysis of (at least) the last three years of car wash financial statements to determine the "normalized" cash flow of the car wash business. We do a detailed proforma cash flow analysis with every car wash loan to see whether the business cash flow can comfortably repay the loan.

Lenders general require that the last three years of financial statements be in the form of the seller's (if buying) or owner's (if refinancing) business federal income tax returns. No bank or finance company will accept unaudited seller prepared financial statements in lieu of the tax returns.

If the financial results of the car wash to be purchased/refinanced are commingled with other businesses on the seller's/owner's tax return it is possible that the lender will accept "CPA Audited" or "CPA Reviewed" financial statements solely of the subject car wash business. If the financial results of the car wash that you plan to buy/refinance are commingled with other businesses on the sellers'/your tax returns please discuss this with us early.

For the lowest down payment lenders require that they receive the tax returns from the seller/you that includes the car wash results whether or not the results are commingled on the tax return with other businesses. In many cases the lender requires that the tax returns provided by the seller/owner be compared with the tax returns as filed with IRS. The lenders request from IRS the tax return transcripts using a form that we will prepare for the seller's/your signature.

Very little, if any, weight is given to verbal claims from the seller, business broker, or real estate broker that the car wash has more revenue and/or cash flow than is strictly shown on the tax returns. The car wash sellers and brokers understand this. You should be wary of any claims that the car wash is making more money than is shown on the tax returns, or on CPA Reviewed or CPA Audited financial statements. It is also wise to make sure that all EXPENSES have been reported and are reasonable for the subject car wash.

Below, we provide an easy-to-use Proforma Cash Flow Analysis software for applicants (you) to do the proforma cash flow analysis. Like the projections software, you can use the Proforma software to create a variety of "what if?" scenarios, such as "Best Case", "Expected Case", and "Worst Case". We compare our Proforma to the one prepared by you to make sure that we understand the situation as you do.

For those people investigating the purchase of a specific car wash and who have the historical financial data please feel free to use the following Excel workbook. This is an easy-to-use pre-formatted proforma cash flow analysis template. It is in Excel. Everything is already set up. All that you have to do is enter the car wash name, the ending date of each accounting period, fill in the historical revenue and expense dollar amounts, then make your adjustments. The addition and subtraction is done for you. The template is easy to use. If you have any questions on this, please call us.

Here is the link: Proforma Cash Flow Analysis for a Car Wash to be Purchased or Refinanced

All that we ask in return for providing this Proforma Cash Flow Analysis template is that you allow us the opportunity to finance your car wash purchase or to refinance your existing car wash.

We want to finance your car wash !