Valuing the business: Investigating the profit and loss account
As part of your investigation you should look at the profit and loss account as
- it may show a deduction for rent which could indicate that the business had a tenancy, the capital value of which may not be shown in the balance sheet;
- it may indicate that assets supposedly used in the business are in fact private investments;
- it may show sources of income that indicate investment activities or assets.
Shares and Assets Valuation also use the profit and loss account to value goodwill.