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Turnover/Balance Sheet Formula

  • Member PM.Dip
  • Practice Licence
  • 41 posts
  • # 72389

Hello everyone. I hope someone can help with this query.

I have a client who is currently using a freelance mentor/advisor/consultant.  My client has told me that the advisor has suggested that he check on his competitors' performance by looking at their accounts filed at Companies House, usually abbreviated accounts. The advisor says that my client should be able to deduce his competitors' turnover from these abbreviated accounts / balance sheet. The advisor has inferred that he has a method or formula to deduce this. [Inferred but not demonstrated.]  I am not sure if I or my client has misunderstood as he tends to rate business performance by turnover or the P&L sheet alone. 

Have I got hold of the wrong end of the stick?  Does anybody know of a formula to ascertain turnover from the abbreviated accounts filed at Companies House?

Many thanks, Janet

Turnover is vanity - profit is sanity!

  • 698 posts
  • # 72391

> Hi Janet

There is no way to determine the turnover of a business from abbreviated accounts.

You will be able to see the change in the trade creditors balance between the current and prior year but will have no way to ascertain the movement that gave rise to it as you will not be able to determine either the turnover or the customer receipts.

This is why sme's file abbreviated accounts.

Kind regards
Stuart
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  • Member PM.Dip
  • Practice Licence
  • 41 posts
  • # 72393

Hello Stuart.

Thank you for your reply and confirmation that I am not wrong.  I didn't really believe it could be done either but it has been mentioned to me now two or three times so I began to doubt myself.  I think my client has misunderstood his advisor because he does only see things in terms of t/o, or P&L.  He often gets muddled between P&L and cashflow and the balance sheet, doesn't think depreciation should be shown on his P&L but thinks loan repayments [not just interest] should be! I have spent years trying to explain it.  I could go on but I won't.  Still they are lovely people and there is a lot of potential in the business if I can get them to focus.

Thanks for the response.  You've made me feel sane again.  Janet

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