---
title: "Last month's profit was zero or negative: the average is hiding something"
url: https://firstpassmemo.com/flags/last-month-profit-zero-or-negative/
updated: 2026-10-07
publisher: FirstPass Memo (hello@firstpassmemo.com)
---

Red flag explained · Trend

# Last month's profit was zero or negative: the average is hiding something

Short answer: If the average profit is positive but last month was zero or a loss, the average is describing a business that may not exist any more. It can be a one-off cost or the start of a decline. Ask what happened and for this month's numbers so far before you rely on the average.

Updated 7 October 2026 · Checker rule LAST_MONTH_ZERO

## When the checker raises it

Raised as high severity when last month's profit is zero or below while the monthly or annual profit figure is positive.

## Why it matters

Prices are usually set on a 12-month or shorter average. A buyer pays for future months, and the most recent month is the best single guide to the next one.

A one-off cost, such as an annual software renewal or a stock order, can explain a bad month. So can a loss of traffic, a lost customer or a platform change, and those carry on.

## A worked example

Composite example, not a real listing

Online store selling pet grooming tools Asking price: $38,000 Average monthly revenue: $8,000 Average monthly profit: $1,400 Last month profit: $0 Business age: 3 years Owner hours: 10 hours per week

Traffic or revenue sources typed in: Paid 50%, Organic search 25%, Direct 25%.

What the red-flag checker (https://firstpassmemo.com/checker/) returns: payback of 27.1 months on average monthly profit, and this flag:

High Last month's profit was $0

The average looks positive, but the most recent month broke even or lost money. Recent months matter more than the average.

Ask: Why was last month break-even or loss-making, and what do this month's numbers show so far?

The same example also raises: No connected data source mentioned (https://firstpassmemo.com/flags/no-connected-data-source/), Concentration not disclosed (https://firstpassmemo.com/flags/concentration-not-disclosed/).

## What to check

- Ask what pushed last month to break-even or a loss, and for the invoice or event behind it.

- Ask for this month's revenue and costs so far.

- Look at the last six months one by one, not as an average.

## Questions to send the seller

- Why was last month break-even or loss-making, and what do this month's numbers show so far?

- Is the business profitable today, and what do this month's numbers show so far?

- Why was last month break-even or loss-making, and has that happened before?

## Related flags

- Last month below the average (https://firstpassmemo.com/flags/last-month-profit-below-average/)

- Revenue declining (https://firstpassmemo.com/flags/revenue-declining/)

- Short averaging window (https://firstpassmemo.com/flags/earnings-averaged-over-short-period/)

- All red flags explained (https://firstpassmemo.com/flags/)

## Useful next

- True payback calculator (https://firstpassmemo.com/tools/payback-calculator/)

- Free red-flag checker (https://firstpassmemo.com/checker/): paste a listing and see which flags it raises.

The checker is a set of plain rules, not an AI model, and its flags are prompts for questions, not verdicts. Composite examples are invented. Informational screening only, not investment, legal or tax advice.

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FirstPass Memo is informational screening, not investment, legal, tax, accounting or valuation advice, and not an audit. Seller figures are not independently verified. HTML version: https://firstpassmemo.com/flags/last-month-profit-zero-or-negative/