Before purchasing a business, one of the most critical aspects to examine is its financial health. This includes reviewing financial statements such as profit and loss reports, balance sheets, and cash flow statements for at least the past three years. You should assess revenue trends, profit margins, debts, and liabilities. Additionally, verify the accuracy of these documents through professional due diligence or a certified accountant. A clear understanding of the business’s valuation and how the asking price compares to its real worth ensures you don’t overpay or invest in a financially unstable enterprise.