General settings. Financial analysis
Financial (ratio) analysis reflects the picture of the financial condition of the company. The result of the analysis is displayed on the “financial analysis” page, where groups of indicators are calculated - liquidity, profitability, turnover, and so on.
There is a color interpretation by month, it is well perceived in reports: green for good indicators, yellow for average, and red means high risks.
Recommended values (risks) for each indicator are “hardwired” into the program, i.e., when calculating financial indicators, the program itself will “color” the table. However, if necessary, these values can be adjusted here in accordance with the specifics of a particular project - depending on the industry, scale, etc.
Tab «Financial analysis»
The "Financial analysis" tab contains the settings interface for performing the coefficient analysis. Here you can set the parameters of the normative values of financial and economic indicators.
Tab «Financial analysis»:
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The structure of the financial-economic indicators
The structure of the financial-economic indicators is very extensive character, in Budget-Plan Express includes standard coefficients used in economic and financial (ratio) analysis, consisting of five analytical groups:
- Liquidity indicators (Liquidity Ratios)
- Debt Management Indicators (Debt ratios)
- Profitability indicators (Profitability ratios)
- Efficiency indicators (Asset management ratios)
- Indicators of market activity (Market value ratios)
In order to calculate the financial and economic indicators, you need to perform the final evaluation of the project: "Main menu → Data → Calculate → to select "Financial analysis" from the list" or - the same F9.
Before performing the calculation, you need to configure a table of normative values.
Customize a table of normative values – default
To set the default values (or to "zero" all values), you need to click the button and choose one of the options:
- set default values
- reset all current table values (the color interpretation will be disabled).
Table of normative values of financial and economic indicators - by default:
| Coefficient analysis | Normal | Satisfactory | Unsatisfactory | |||
| от (>) | до (<) | от (>) | до (<) | от (>) | до (<) | |
| Liquidity indicators (Liquidity Ratios): | ||||||
| Absolute liquidity ratio | 0,2 | - | 0,1 | 0,2 | - | 0,1 |
| Coefficient of urgent liquidity (QR) | 1,0 | - | 0,5 | 1,0 | - | 0,5 |
| Coefficient of current liquidity (CR) | 2,0 | - | 1,0 | 2,0 | - | 1,0 |
| Net working capital (NWC) | 0,1 | - | -0,1 | 0,1 | - | -0,1 |
| Debt Management Indicators (Debt ratios): | ||||||
| Coefficient of financial leverage (TD/EQ) | - | 1,0 | 1,0 | 2,0 | 2,0 | - |
| Interest Coverage Ratio (TIE) | 3,0 | - | 1,0 | 3,0 | - | 1,0 |
| Ratio of debt to EBITDA ratio | - | 3,0 | 3,0 | 5,0 | 5,0 | - |
| Profitability indicators (Profitability ratios): | ||||||
| Profitability of sales (ROS), % | 10,0 | - | 1,0 | 10,0 | - | 1,0 |
| Profitability of equity capital (ROE), % | 25,0 | - | 1,0 | 25,0 | - | 1,0 |
| Return on assets (ROA) , % | 20,0 | - | 1,0 | 20,0 | - | 1,0 |
| Return on invested capital (ROIC), % | 15,0 | - | 1,0 | 15,0 | - | 1,0 |
| Efficiency indicators (Asset management ratios): | ||||||
| Inventory turnover (IT), days | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| Turnover of receivables (RT), days | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| Turnover of accounts payable (PT), days | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| Asset turnover (AT), times | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 | 0,0 |
| Indicators of market activity (Market value ratios): | ||||||
| Earnings per share (EPS) | no | no | no | no | no | no |
| Dividend coverage ratio (ODS) | no | no | no | no | no | no |
| The ratio of the cost of shares to profit (P/E) | no | no | no | no | no | no |
"Dash" – the cell is not editable.
For net working capital (NWC) the NWC values = "0,1", "-" or "-0,1" – practically mean: a positive value, zero or a negative value.
Note that some of the ratios are very conventional, especially in terms of profitability and business performance (turnover). Business activity indicators are not specified by default. They can depend on the industry, the specifics of the business and the competitive environment. Assessments of these standards need to be adjusted independently. Also, there are no color settings for market activity indicators.
The algorithm for checking the correctness of data and the conditions for calculating the standards:
| Coefficient analysis | Normal | Satisfactory | Unsatisfactory | |||
| a | b | c | d | e | f | |
| Validation of data and calculation conditions: | ||||||
| Calculations - from a larger value to a smaller one | ≥a → (a=d) | - | ≥c | d → (d=a) | - | f → (f=c) |
| Calculations - from a lower value to a larger one | - | ≤b → (b=c) | >c → (c=b) | d → (d=e) | >e → (e=d) | - |
Risk zones - in the color interpretation of Budget-Plan Express
From the levels of risks can be identified:
- Market risk
- Liquidity risk
- Operational risk
- Reputational risk
- Credit risk
The risk zones in the Budget-Plan Express are defined in three conditional boundaries. These three boundaries have color interpretations - similar to the "traffic light" :
- Red - high risk (unsatisfactory values)
- Yellow - medium risk (satisfactory values)
- Green - low risk (normal values)
When calculating financial and economic indicators, the table will take colors in accordance with the risks defined in the settings: "Red", "Yellow" or "Green". In addition, when calculating indicators, two additional "borderline" colors can be established: at the borders of medium and high risk - "orange", at the borders of low and medium - "light green"
Adjustment of indicator values - according to industry standards
In this case, set up the table of normative values of Budget-Plan Express in accordance with the methodical recommendations that you consider acceptable for your project.
At the same time, it should be understood that when evaluating indicators, industry characteristics, the scale of the company (market), and the levels of risks associated with the company's economic activities should be taken into account. Most of the experts' recommendations in financial analysis focus on comparative analysis. Simply put, it is proposed to choose companies similar in scale and type of activity, and establish close to them regulatory values.
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