When looking to purchase a business, understanding the financial viability of the company is paramount. This can be difficult to assess without the help of a professional, but there are steps you can take to get a better idea of the financial health of the business.

Step 1 – Ask for Financial Statements

The first step in evaluating the financial viability of a company for sale in Canada is to ask for financial statements. This includes the balance sheet, income statement, and cash flow statement. These documents will provide insight into the assets and liabilities of the company and how profitable it is.

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Step 2 – Consider the Business Model

The next step is to consider the business model. Are there any potential weaknesses or risks associated with the business? Is the business competitive in its industry? How does the business generate revenue? These questions can help to identify any potential red flags or areas of concern.

Step 3 – Analyze the Competition

It is also important to analyze the competition to get a better idea of the company's competitive position. Are its competitors larger or smaller? What is their market share? Are there any potential threats from competitors? This can help to identify any areas of concern and potential risks.

Step 4 – Analyze the Financial Ratios

The final step in evaluating the financial viability of a business is to analyze the financial ratios. These ratios provide insight into the company's financial performance and can be used to compare it to its competitors. 

By taking the time to analyze the financial ratios, you can get a better idea of the company's financial strength and identify any potential red flags.