Brian Feroldi on LinkedIn: FINANCIAL RATIOS ➗ Use these 20 ratios to analyze financial statements -… | 39 comments (2024)

Analyze financial health efficiently with 20 key ratios. Assess liquidity using Net Working Capital, Current Ratio, and Quick Ratio. Examine activity through Accounts Receivable Turnover, Average Collection Period, Inventory Turnover, and Total Asset Turnover. Gauge leverage with Debt Ratio, Debt to Equity Ratio, and Times Interest Earned. Evaluate market value using Earnings Per Share, Price/Earnings Ratio, Book Value, Dividend Yield, and Dividend Payout. Scrutinize profitability via Gross Margin, Profit Margin, Return On Total Assets, and Return On Common Equity.#acccounting #financialaccounting

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Saving for quick reference. Very helpful for bookkeeping

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Happy Friday . Smile 😊 3 Financial Statements to Measure a Company's Strength. This is a simple way , and is more into it because you have to look at their current business plan and operations etc. Statement #1: The income statementThe income statement is read from top to bottom, starting with revenues, sometimes called the "top line." Expenses and costs are subtracted, followed by taxes. The end result is the company's net income—or profit—before paying any dividends. This is where the term "bottom line" comes from.Statement #2: The balance sheetThe balance sheet displays:* The portion of those assets financed with debt (liability)* The portion of equity (retained earnings and stock shares)* Assets listed in order from most liquid to least liquid (in other words, assets that can be most quickly converted to cash are listed first)* Liabilities listed in order of immediacy (those that have the most senior claim on a firm's assets are listed first)Statement #3: The statement of cash flowsCash flow from operationsCash flow from investing and financing#finance #business #operationsmanager #corporatefinance #accountingservices #openforbusiness #opentonewopportunities #houstontx

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Accountants 👩🏫 can help you manage cash flow fluctuations in several ways:⏲ Financial PlanningBudgeting and Forecasting ⏳ Expense Management 💰 💳 Credit ManagementCash Flow Statements 📚 💱 Working Capital ManagementDebt Management ↘ 📊Financial Analysis Tax Planning 💶 💸 Emergency FundsProfitability Analysis 📈 Having a proactive relationship with your accountants can be instrumental in navigating cash flow fluctuations, ensuring that your business remains resilient and well-prepared for financial challenges.#CashFlowManagement #FinancialForecasting #ExpenseOptimization #WorkingCapital #BudgetingWisdom #TaxStrategies #FinancialInsights #CreditManagement #CashFlowAnalysis #SmartSpending #StrategicFinance #AccountingSolutions #FinancialControl #MoneyManagement #BusinessAdvisoryAndy Cross

If you run a business and want to see how you could improve your finance strategy then this diagnostic is for you. ✅ See how you score on 3 key areas of Financial Reporting, Profit Improvement and Liquidity & Funding ✅ Receive your personalised report that provides a traffic-light score across 3 sections ✅ Includes a prioritised action summary for immediate action Each score has an explanation so you will understand exactly what it means #finance #diagnostic #BoardroomAdvisors

Ah, as the whispers of November's winds 🌬️ usher in promises of change, it's time for small businesses to set their course with a financial plan for the upcoming year! 🗓️ Let me share with you five strategies that will help you create a financial roadmap to guide you through 2024:Dive into Historical Data: Take a deep dive into your financial records 📚📉 to uncover trends and patterns. This valuable information will enable you to forecast cash flow accurately. It's like having a crystal ball 🔮 for your finances!Account for Seasonal Fluctuations: Consider how seasons 🌷☀️🍂❄️ affect your cash flow and plan accordingly. By understanding variations, you can prepare for both peaks 📈 and troughs 📉.Evaluate Expenses Carefully: Scrutinize every line item 💸 on your budget. Can you predict any cost increases 🔝? Find opportunities to trim expenses ✂️? A lean budget will give you flexibility where it matters most.Set Realistic Revenue Goals: Aim high when setting revenue targets 🎯💰 but also keep one foot firmly grounded in practicality to avoid disappointment or overspending.Make Regular Reviewing a Habit: Turn forecasting into a monthly ritual 📅🔄. By reviewing your forecasts regularly, you can make necessary adjustments, keeping yourself agile and proactive.Remember, forecasting isn't just about crunching numbers; it's an art form that prepares us for prosperity 🎨✨! Do you have any preferred forecasting techniques? Feel free to drop a comment below 👇"Let's dive into the realm of forecasting, exploring strategies for business growth 🚀 and gaining clarity on cash flow 💧."#FinancialPlanning #BusinessStrategy #ForwardThinkingIf you liked this post and would like to see others, please visit mysite’s Blog page here: https://lnkd.in/enfwiUsj

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What is net working capital? Let's unravel the enigma of this confusing finance term. Net working capital (NWC) is a crucial financial metric that assesses a company's liquidity, or its ability to meet its short-term obligations. It's calculated as the difference between current assets (those that can be converted into cash within a year) and current liabilities (debts that must be paid within a year).Why is NWC Important?NWC serves as a key indicator of a company's financial health. A positive NWC indicates that a company has sufficient resources to cover its short-term debts and maintain operations smoothly. Conversely, a negative NWC suggests that a company may struggle to meet its obligations and may face potential financial difficulties.There are three main ways to calculate net working capital (NWC):Current Assets - Current LiabilitiesThis is the most common method and is also the one that is used in financial statements. Current assets are assets that can be converted into cash within one year, while current liabilities are debts that must be paid within one year.Accounts Receivable + Inventory - Accounts Payable: This method is more focused on the operating cycle of a business, which is the time it takes to convert cash into inventory, sell inventory, and collect cash from customers. Accounts receivable are the amounts owed to the company by its customers, inventory is the goods that the company has on hand for sale, and accounts payable are the amounts owed to the company by its suppliers.Non-cash Working Capital:This method excludes cash from the calculation of net working capital. This can be useful for comparing the financial health of companies that have different levels of cash on hand.Here is an example of how to calculate net working capital using each of the three methods using as our guinea pig, all numbers in billions.Current Assets - Current Liabilities💰Current assets: $176.3💵Current liabilities: $86.3 = Net working capital: $90Accounts Receivable + Inventory - Accounts PayableAccounts receivable:💰Accounts Receivable: $41🛒Inventory: $2.9💵Accounts payable: $5.8= Net working capital: $38.1Non-Cash Working Capital💰Current assets: $176.3 (minus cash) $119.9 💵Current liabilities: $86.3 (minus debt) $3.1 = Net working capital: ($27.2)The choice of which method to use depends on the specific circ*mstances of the company being analyzed. These are the foundations of the formulas, but of course you can adjust as needed. However you choose to go, all three methods provide a useful measure of a company's liquidity, which is its ability to meet its short-term obligations.

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