Financial Due Diligence Checklist ( FINANCE )

This checklist is designed to ensure that all necessary financial information and assessments are completed before a major financial transaction or investment decision is made. It provides a systematic approach to evaluate financial health and identify potential risks.

• Gather Financial Statements

  Collect the most recent financial statements, including balance sheets, income statements, and cash flow statements for the last three years.

• Review Financial Ratios

  Calculate and analyze key financial ratios such as liquidity ratios, profitability ratios, and solvency ratios to assess the financial health of the entity.

• Assess Revenue Streams

  Identify and evaluate the different sources of revenue, including trends and sustainability to understand the business model.

• Examine Tax Compliance

  Ensure that the entity is compliant with tax obligations and review any potential tax liabilities or pending issues.

• Evaluate Outstanding Liabilities

  Review all outstanding debts, loans, and other financial obligations to assess the financial risk.

• Perform Market Analysis

  Conduct an analysis of the market conditions and competitors to understand the external factors impacting the business.

• Identify Contingent Liabilities

  Look for any potential future liabilities that may arise from lawsuits, warranties, or other obligations.

• Review Internal Controls

  Assess the effectiveness of internal controls and compliance procedures to mitigate risks of fraud and financial misreporting.

• Compile Due Diligence Report

  Prepare a comprehensive report summarizing findings, potential risks, and recommendations for stakeholders.