The Same Numbers, Different Questions: Looking at a Business Through a Transaction Lens

By Tanishq Agrawal, CA

Financial statements are a common language for a business, but what you take from them depends on what you're asking. The same revenue, earnings, receivables, or debt balance can look very different through an audit, buyer, or lender lens. In a transaction, the goal isn't only to confirm the numbers are accurate. It's to understand what they reveal about a business someone is about to buy or finance.

My audit background taught me an important discipline: never look at a number in isolation.

A revenue balance is only meaningful once you understand how the revenue was generated, when it was recognized, and what supports it. The same applies to expenses, assets, liabilities, and estimates. That habit of reading past the reported figures carries directly into deal work.

Transaction analysis takes it a step further. The question is no longer whether the historical numbers hold up. It becomes what those numbers reveal about the business as an investment.

Consider EBITDA, or earnings before interest, taxes, depreciation, and amortization.

Two businesses can report identical EBITDA while the quality of those earnings is very different. One may have recurring revenue, stable margins, and a diversified customer base. The other may have leaned on a large one-time project, temporary cost cuts, or unusually favorable pricing. The reported profitability looks similar. The earnings a buyer can reasonably expect to carry forward may not be.

Working capital tells a similar story.

Revenue growth is usually a good sign, but if receivables and inventory are growing faster than sales, that growth may be consuming cash rather than producing it. In a deal, understanding normal working capital needs affects more than cash flow expectations. It feeds directly into purchase price mechanics and financing.

Customer concentration and backlog add yet another layer.

A strong revenue history is less reassuring if much of it rests on a handful of customers. A large backlog can offer real revenue visibility, but only once you understand its composition, timing, margins, contractual strength, and exposure to cancellation or delay.

For lenders, the lens shifts toward repayment. EBITDA matters, but debt is serviced with cash, not earnings. Cash conversion, capital expenditure, seasonality, leverage, and downside resilience can matter as much as reported profit.

This is what makes the transaction lens valuable.

It doesn't replace accounting accuracy; it builds on it. The point is to understand not just what a business has reported, but what those numbers imply about earnings sustainability, cash generation, risk, financing capacity, and future performance.

The numbers may be the same. The questions, and so the conclusions, can be very different.