Red flag explained · Numbers that disagree
Monthly revenue times 12 does not match annual revenue
Short answer: Average monthly revenue times 12 should be close to annual revenue. A gap of more than 10% usually means the two figures cover different periods, often a recent average next to an older annual total. Ask which months each figure covers, then decide which one the price is based on.
When the checker raises it
Raised as low severity when monthly revenue × 12 differs from trailing 12-month revenue by more than 10%.
Why it matters
This is usually a labelling issue rather than a problem with the business. But it tells you the seller chose different windows for different numbers, and the price may be set on whichever looks better.
If the monthly average is higher, the business may be growing, or the average may cover only its best months.
A worked example
Composite example, not a real listing
Asking price: $25,000
Average monthly revenue: $1,600
TTM revenue: $15,000
Average monthly profit: $1,000
Business age: 2 years
Owner hours: 4 hours per week
Traffic or revenue sources typed in: Organic search 40%, Social 40%, Email 20%.
What the red-flag checker returns: payback of 25 months on average monthly profit, and this flag:
Low Monthly revenue × 12 does not match annual revenue
$1,600 × 12 = $19,200 against $15,000 annual. The two figures may cover different periods.
Ask: Which months does each revenue figure cover?
The same example also raises: No connected data source mentioned, Concentration not disclosed.
What to check
- Ask which months each revenue figure covers.
- Ask for monthly revenue for the last 12 months.
- Use the trailing 12 months for payback unless you have a reason not to.
Questions to send the seller
- Which months does each revenue figure cover?
- Can you share 12 to 24 months of monthly revenue and profit, not only the recent average?
- Which months does each revenue figure in the listing cover?
- Is the P&L on a cash or accrual basis, and how are annual plans and prepayments counted?
Related flags
Useful next
- How to verify Flippa revenue
- Free red-flag checker: paste a listing and see which flags it raises.
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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.