The Business Your basic mountain-cuddled, village-green-side, Vermont country inn -- a living cliché. White clapboards, pumpkin-pine floors, a porch full of rocking chairs. Once a stagecoach stop, the inn now houses 34 guest rooms, a 60-seat restaurant, a separate lunch and breakfast room, and a tavern. Rates are $160 a night for two, MAP -- midprice for the area.

Financial Summary
(in $ thousands) 1988 1989 1990
Gross sales $844 $1,024 $1,066

Net profit before taxes, 131 272 295*depreciation, andowner compensation *projected

Price $2.15 million

Outlook There's plenty to be happy about. The property is charming, the location popular, and the restaurant strong and profitable. The inn's cost of goods sold in the food-and-beverage category -- often a sinkhole for cash -- is running at an excellent 24%. Downsides? A room occupancy rate that's off-the-chart bad at 21% (closer to 40% would be normal for this area) and a regional economy that may or may not pillage such retreats as this.

Price Rationale Potential is what's being sold here, plus an existing trade that appears solidly -- if not remarkably -- in the black. Pump up the occupancy rate, which the owners claim to have ignored, and the bottom line sparkles; like incremental airplane-seat sales, incremental room sales are almost pure profit. The price-earnings multiple of 7.29 isn't out of line for an industry that can fetch multiples of 8 to 10.

Pros Most of the above, especially if you believe the occupancy glass is half full instead of half empty.

Cons Food and drink sales amount to a disproportionate 75% of total sales, compared with 40% at most inns. Given that the current owners are also the chefs -- and are leaving -- that imbalance could prove fateful. And do you really want to count on increasing occupancy while the economy around you slumps?

Inc. has no stake in the sale of the business featured and cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Country Business Inc., Manchester Center, Vt. n