Business planning. Calculation, evaluation and analysis of financial ratios of a business plan (the most important)

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Business planning. Calculation, evaluation and analysis of financial ratios of a business plan (the most important)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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39. CALCULATION, ASSESSMENT AND ANALYSIS OF FINANCIAL COEFFICIENTS OF THE BUSINESS PLAN

Can highlight several main groups of financial ratios of a business plan.

Liquidity indicators {Liquidity Ratios) characterize the ability of the company in the shortest possible time to cover all short-term liabilities with liquid funds. The higher this indicator, the more stable the company's position. However, recently there has been a tendency to move away from a conservative balance sheet to the use of financial leverage, which allows increasing the level of dividends paid. Thus, liquidity ratios deteriorate significantly.

Liquidity ratios include the following ratios:

1) total liquidity ratio;

2) current ratio;

3) quick liquidity ratio;

4) net working capital.

Business Activity Indicators {Activity ratios) allow you to analyze the activity of the company's operations, the effectiveness of its actions in the market, the level of sales in relation to balance sheet and income statement items.

The business activity indicators include the following ratios:

1) inventory turnover period;

2) receivables turnover period;

3) turnover period of accounts payable;

4) working capital turnover ratio;

5) the turnover ratio of fixed assets;

6) asset turnover ratio.

Capital structure indicators {Gearing ratios), also called solvency indicators, characterize the ability of an enterprise to repay long-term obligations while maintaining its long-term assets. A sufficient level of solvency of the enterprise ensures its protection from bankruptcy.

The indicators of the capital structure include the following indicators:

1) the amount of liabilities to assets;

2) the ratio of long-term liabilities to assets;

3) financial independence coefficient;

4) interest coverage ratio.

Profitability indicators {Profitability ratios) show how profitable the company's activities are, how many costs are incurred per unit of output, and how professionally the company manages its assets (i.e., capital).

Profitability indicators include the following ratios:

1) gross profit margin ratio;

2) operating profit margin ratio;

3) overall profitability ratio;

4) profitability of current assets;

5) profitability of non-current assets;

6) return on total assets ratio;

7) return on equity;

8) return on invested capital.

Investment indicators {investment ratios) characterize the value and profitability of the company's shares. According to these indicators, it is possible to determine the level of capitalization of the company. The indicators of this group are calculated at the end of the year.

Investment indicators include the following ratios:

1) earnings per share;

2) dividends per share;

3) dividend coverage ratio;

4) the ratio of share price and profit.

<< Back: Modified internal rate of return

>> Forward: Liquidity indicators

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