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Evaluate Financial Risk

The one page scorecard presents financial information that is understandable to banks and investors and creates a common financial language between SMEs and banks.

 


Expand the key performance indicators by clicking on

  • Key Performance Indicators
  • Profitability
  • Working capital
  • Cash Flow / Funding
  • ROCE
  • Valuation
  • Other


Working Capital (Evaluate Financial Risk)

Indicator
Definition
Analysis
Days Receivable
Average time to collect the Accounts Receivable.
Increased trend may indicate poor collection
of money from sales.
Days
Inventory
Average time entity holds its Inventory for resale.
Increased trend may indicate redundant or excessive inventories.
Days Payable
Average time to make payments to creditors.
An increasing trend may indicate a better management of payments.
Investment in working capital required to meet the current revenue.
An increase from one period to the other indicates a higher requirement for working capital and thus a greater need for additional borrowings or profit.

 

Cash Flow (Evaluate Financial Risk)

Indicator
Definition
Analysis
Working Capital Efficiency $
Defines the effectiveness of working capital management.
A positive result is an indicator of good working capital management.
Operational Cash Flow
The amount of cash created (or absorbed, if negative) by the operations.
If this is positive then a company will often be deemed to be healthy in the short term.
Net Cash Flow
A measure of a company's financial health.
If this is positive then a company will often be deemed to be healthy in the short term.



Return on Capital Employed – ROCE (Evaluate Financial Risk)

Indicator
Definition
Analysis
Operating Asset Turnover

Measures how well you are deploying your business assets. Example: Operating Asset Turnover of 2 can be interpreted: For every 1 $ of operating assets invested in my business I am delivering 2 $ or revenue. 
A positive result is an indicator that management team is doing a good job.

Other – (Evaluate Financial Risk)

Indicator
Definition
Analysis
Current
Ratio

Comparison of Current Assets to Liabilities. 
A ratio of 2 is considered to be normal. 1 or greater is acceptable.



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