---
title: Financial Due Diligence Checklist (Free CSV) | HelpRange
url: https://www.helprange.com/due-diligence-checklist/financial
---

[Due diligence checklists](https://www.helprange.com/due-diligence-checklist)

# Financial due diligence checklist

The financial information buyers, investors and lenders request to test earnings, cash and debt before they agree a price – organised as a numbered data room index.

 [See the checklist](#checklist)

Financial due diligence is where the valuation is tested. The buyer's accountants rebuild the target's earnings from the ledgers, remove one-off and non-recurring items to arrive at an adjusted EBITDA, define the normal level of working capital and identify every item that should be treated as debt. Each of those findings can move the price directly, especially in deals priced on a multiple of EBITDA with a cash-free, debt-free adjustment.

Most of the requests below can be prepared from your accounting system before a buyer appears. The biggest time savings come from reconciliations: monthly management accounts that tie to the audited statements, revenue by customer that ties to the ledger and a clear bridge from reported to adjusted EBITDA. A seller who provides those up front controls the narrative; a seller who does not will spend weeks answering follow-up questions.

## Financial due diligence checklist – 7 folders, 43 documents

Numbered like a data room index: use the sections as folders and keep the numbers in file names.

### 1. Historical financial statements

1. 1.1Audited or reviewed financial statements (last 3 years)
2. 1.2Auditor management letters and responses
3. 1.3Monthly management accounts (last 24–36 months)
4. 1.4Trial balances and general ledger exports
5. 1.5Reconciliation of management accounts to statutory accounts
6. 1.6Accounting policies and changes in estimates

### 2. Quality of earnings

1. 2.1Reported to adjusted EBITDA bridge
2. 2.2Schedule of one-off and non-recurring items with support
3. 2.3Owner and related-party costs and transactions
4. 2.4Revenue recognition policy and cut-off analysis
5. 2.5Capitalised costs (development, software, interest)
6. 2.6Provisions and reserves movements
7. 2.7Seller-prepared (vendor) quality of earnings report, if any

### 3. Revenue & customers

1. 3.1Revenue by customer, product, channel and geography
2. 3.2Customer concentration and cohort / churn analysis
3. 3.3Recurring revenue metrics (ARR, MRR, net revenue retention) for subscription businesses
4. 3.4Deferred revenue and contract liabilities schedule
5. 3.5Pricing changes and discounts in the period
6. 3.6Credit notes, refunds and bad debts

### 4. Costs & margins

1. 4.1Cost of sales breakdown and gross margin by product
2. 4.2Payroll costs and headcount by month
3. 4.3Top suppliers by spend
4. 4.4Overhead analysis and cost-saving initiatives
5. 4.5Foreign exchange exposure and hedging
6. 4.6Marketing and customer acquisition spend by channel

### 5. Working capital

1. 5.1Monthly net working capital (last 24 months)
2. 5.2Aged debtors and aged creditors
3. 5.3Inventory listing, ageing and obsolescence provisions
4. 5.4Accruals and prepayments schedules
5. 5.5Seasonality analysis
6. 5.6Customer and supplier payment terms and any changes

### 6. Net debt & cash

1. 6.1Bank statements and reconciliations
2. 6.2Loan, overdraft, lease and hire-purchase agreements
3. 6.3Debt-like items (deferred consideration, unpaid bonuses, tax liabilities, customer deposits)
4. 6.4Guarantees, letters of credit and off-balance-sheet commitments
5. 6.5Cash flow statements and cash conversion analysis
6. 6.6Covenant compliance certificates

### 7. Forecasts & budget

1. 7.1Current-year budget and year-to-date performance against it
2. 7.2Financial model and forecast (3–5 years) with assumptions
3. 7.3Pipeline supporting the revenue forecast
4. 7.4Capex plan and maintenance versus growth capex
5. 7.5Hiring plan and headcount assumptions
6. 7.6Track record of past budgets against actuals

   [Interactive checklist](https://www.helprange.com/tools/due-diligence-checklist)

The CSV opens in Excel, Numbers or Google Sheets. A practical starting point – adapt it to your deal and jurisdiction with your advisers.

** Who asks**

The buyer's transaction services accountants, the investor's finance team or a private equity fund's advisers; lenders financing the deal rely on the same report.

** Typical timeline**

Often 3–6 weeks of fieldwork after the letter of intent, longer if the accounts need restating or the data is spread across several systems.

** Red flags**
- Large or recurring "one-off" adjustments
- Revenue recognised before delivery or cut-off errors at year end
- Working capital unusually low just before the deal
- Capitalised costs that inflate EBITDA
- Debt-like items not disclosed in the net debt schedule
- Forecast hockey stick not supported by the pipeline
- Management accounts that cannot be reconciled to the audit

### Turn this checklist into a data room

Generate the folder structure, upload documents under the same index numbers and share them with NDA acceptance, per-folder permissions, watermarks and page-level tracking. Unlimited plan $174 per team per month with data rooms, or a one-off Deal Room Pass for $199 (90 days).

 [Generate a data room index](https://www.helprange.com/tools/data-room-index-generator) [Deal Room Pass – $199](https://www.helprange.com/deal-room-pass)

FAQ

## Financial due diligence – questions

What is a quality of earnings report?

An analysis, usually by independent accountants, that adjusts reported EBITDA for one-off, non-recurring and non-operating items to show sustainable earnings. Buyers use it to test the earnings multiple; sellers sometimes commission one in advance (a vendor QoE).

What financial documents are needed for due diligence?

Audited statements for about three years, monthly management accounts, general ledger and trial balances, revenue and cost analyses, working capital and debt schedules, bank statements, and the budget and forecast with assumptions.

Why does working capital matter in a deal?

Most purchase agreements set a target ("peg") for normal working capital; the price goes up or down if actual working capital at closing differs. The historical monthly analysis is used to set that peg.

What are debt-like items?

Liabilities that are not bank debt but reduce the value to the buyer, for example deferred consideration, unpaid tax, accrued bonuses, customer deposits or underfunded pensions. They are negotiated into the net debt deduction.

How far back should financial data go?

Three years of annual data and 24–36 months of monthly data is a common request; younger companies provide everything since incorporation.

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All checklists: [M&A due diligence](https://www.helprange.com/due-diligence-checklist/m-and-a) · [Legal due diligence](https://www.helprange.com/due-diligence-checklist/legal) · [Tax due diligence](https://www.helprange.com/due-diligence-checklist/tax) · [Real estate due diligence](https://www.helprange.com/due-diligence-checklist/real-estate) · [Startup fundraising due diligence](https://www.helprange.com/due-diligence-checklist/startup-fundraising) · [Vendor due diligence](https://www.helprange.com/due-diligence-checklist/vendor) · [overview](https://www.helprange.com/due-diligence-checklist)
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 [Interactive due diligence checklist](https://www.helprange.com/tools/due-diligence-checklist)[Data room index generator](https://www.helprange.com/tools/data-room-index-generator)[Due diligence cost calculator](https://www.helprange.com/tools/due-diligence-cost-calculator)[M&A data room](https://www.helprange.com/virtual-data-room-for-ma)[Fundraising data room](https://www.helprange.com/fundraising-data-room)[Data room with NDA](https://www.helprange.com/data-room-nda)[Best virtual data rooms](https://www.helprange.com/best-virtual-data-room)