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Financial analysis

Coefficient analysis
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)

Financial analysis. Coefficient analysis

«Do not even try to read this section without
reporting your company and calculator»
(Financial Handbook for Non-Financial Managers,
Paul McCoyne and Leo Goh)

Coefficient analysis is aimed at reflecting the picture of the financial condition of the company by some standard coefficients. This section of the standard analysis of the business plan of the project (the company's budget plan) is called a financial or "coefficient" analysis.

Coefficient analysis

To calculate the financial and economic indicators, you need to perform a general calculation: Main menu → «Data → Calculate» – choose from the list of calculations "Financial analysis" (same thing: F9).

However, before you perform the calculation, you need to set up a table of normative values.

In performing the coefficient analysis, structured (for example, liquidity) data of the balance sheet and profit report are used. Below is the structure of the balance in Budget-Plan Express:


Balance sheet structure


ASSETS:

    CURRENT ASSETS = Cash and cash equivalents + Prepaid expenses + Receivables + Inventories

    LONG-TERM ASSETS + Fixed assets + Goodwill + Intangible assets + Investments in associates + Other assets

    TOTAL ASSETS = CURRENT ASSETS + LONG-TERM ASSETS

CAPITAL AND LIABILITIES

    CURRENT LIABILITIES = Short-term loans + Accounts payable + Taxes payable + Reserves + Other current liabilities

    LONG-TERM LIABILITIES = Long-term loans + Deferred taxes + Other liabilities

    CAPITAL = Authorized capital + Reserve capital + Additional capital + Accumulated profit (loss)

    Minority interest - minority interest indicated

    TOTAL CAPITAL AND LIABILITIES = CURRENT LIABILITIES + LONG-TERM COMMITMENTS + CAPITAL


For detailed information about the settings, see «General settings. Financial analysis».

Analysis based on financial ratios (coefficient analysis) allows you to examine the financial condition, performance and investment potential of the organization, and includes the following groups of indicators:

Liquidity indicators (Liquidity Ratios):

Absolute liquidity ratio (Cash ratio);
Coefficient of urgent liquidity (QR);
Coefficient of current liquidity (CR);
Net working capital (NWC).

Debt Management Indicators (Debt ratios):

The coefficient of financial leverage (TD / EQ), sometimes (Leveraged);
Coefficient of interest coverage (TIE);
Ratio of debt to EBITDA.

Profitability indicators (Profitability ratios):

Profitability of sales (ROS),%;
Return on equity (ROE),%;
Return on assets (ROA),%;
Profitability of invested capital (ROIC),%.

Efficiency indicators (Asset management ratios):

Inventory turnover (IT), days;
Turnover of receivables (RT), days;
Turnover of accounts payable (PT), days;
Asset Turnover (AT), times.

Indicators of market activity (Market value ratios):

Earnings per share (EPS);
Earnings per share (EPS);
The ratio of the value of the stock to the profit (P / E).


See also - calculations of investment performance indicators in Budget-Plan Express:

  1. payback period - РВ, months;
  2. discounted payback period - DPB, months;
  3. net discounted income - NPV;
  4. profitability index - PI;
  5. internal rate of return - IRR, %;
  6. average rate of return - ARR, %;
  7. modified internal rate of return - MIRR, %;
  8. other indicators based on the data calculated in the program.




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