On the topic, I would like to call attention to the fact that Wisdom Publication’s 2016 financial statements are already public and available. See below my updated highlights from these latest financial statements.
WISDOM PUBLICATIONS INC (EIN 04-2979113)042979113_201612_990.pdf (1016.3 KB)
In 2016, Wisdom Publications made $2.405 million in gross book sales, at a gross profit of $991 k - a meaningful 41% gross margin. On top of that they received donations of $126.4 k, royalties of $427 k and other book related revenues of $12k.
Wisdom Publications’ functional expenses were $1.56 million in 2016. Some $731 k out of this total were spent in wages, compensations and employment-related expenses. The second largest functional expense item was related to compensation of officers and directors, with one single individual (WP’s president) earning a total of $157k as reportable compensation and $29k of other compensations in the period. The third largest item was advertisement, $239k or roughly 10% of the book sales amount.
As a result of the above, Wisdom Publications made in 2016 $204k out of selling Dhamma-related stuff (books mostly) after all functional expenses were deducted. Their cash and investments position ended 2016 at $1.25 million by 31 Dec 2016. On top of that their inventory position (Dhamma-related stuff waiting to be sold) ended the year at $1.4 million.
Last but not least, it called my attention the fact that Wisdom Publications apparently made very little dana itself in that year. In 2016, the reported total made amount of donation and gifts given/offered was of only $12,400 (twelve thousand and four hundred dollars) . This is a very small figure when compared to to the $113 k spent in travel, accommodation/occupancy, conferences, conventions and meetings in that same year.
How much is Wisdom Publications worth?
There are many ways the value of a positive cash flow business such as Wisdom Publication can be assessed. On a conservative basis, we may approach it by its current outstanding cash and cash equivalents position ($1.25 million) and of course the operating cash flow stream selling Dhamma-related stuff yields (~200k / year). A simple net present value calculation over this cash flow stream assuming it to remain at this level in the long term and a reasonable risk-adjusted capital cost of opportunity of 10% would result in $2 million. Hence, it is worth at least $3.2 million in total.
We may as well tackle the question from a simpler end and use instead the average Price to Earnings ratio of ~54x for the Publishing & Newspaper industry found at this link. This means that Wisdom Publications could be worth as much as $11 million, or 54 times the net profit of $204 k reported in 2016 ( “Revenue less expenses” in the document above).
You may add as well to both the above measures the net-of-depreciation value of Wisdom Publications’ fixed assets - land, buildings, and equipment- booked at $355k as of year end 2016.