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Understanding financial ratios презентация
Содержание
- 1. Understanding financial ratios
- 2. WHY RATIOS HELP YOU COMPARE as a
- 3. WHY RATIOS HELP YOU COMPARE you know, like…
- 4. WHY RATIOS HELP YOU COMPARE you know,
- 5. WHY RATIOS HELP YOU COMPARE you know,
- 6. WHY RATIOS HELP YOU COMPARE you know,
- 7. WHY RATIOS HELP YOU COMPARE but, while
- 8. WHY RATIOS HELP YOU COMPARE let’s look
- 9. WHY RATIOS HELP YOU COMPARE pretty much just that . what is your revenue
- 10. WHY RATIOS HELP YOU COMPARE but it does not tell you if that is…‘good’
- 11. WHY RATIOS HELP YOU COMPARE that’s where ratios come in
- 12. WHY RATIOS HELP YOU COMPARE but let’s look at a concrete example
- 13. WHY RATIOS HELP YOU COMPARE here is a hypothetical business that makes concrete for buildings
- 14. WHY RATIOS HELP YOU COMPARE you happy
- 15. WHY RATIOS HELP YOU COMPARE not really
- 16. WHY RATIOS HELP YOU COMPARE what if
- 17. WHY RATIOS HELP YOU COMPARE but, can you see the problem?
- 18. WHY RATIOS HELP YOU COMPARE this business is making money now, but it cannot scale
- 19. WHY RATIOS HELP YOU COMPARE you can
- 20. WHY RATIOS HELP YOU COMPARE profit margin
- 21. WHY RATIOS HELP YOU COMPARE now look
- 22. WHY RATIOS HELP YOU COMPARE where you
- 23. WHY RATIOS HELP YOU COMPARE why?!?
- 24. WHY RATIOS HELP YOU COMPARE why is your margin shrinking? is it revenue?
- 25. WHY RATIOS HELP YOU COMPARE we can
- 26. WHY RATIOS HELP YOU COMPARE hmmmm, despite
- 27. WHY RATIOS HELP YOU COMPARE so if
- 28. WHY RATIOS HELP YOU COMPARE let’s look
- 29. WHY RATIOS HELP YOU COMPARE a-ha. something
- 30. WHY RATIOS HELP YOU COMPARE do we
- 31. WHY RATIOS HELP YOU COMPARE let’s break
- 32. WHY RATIOS HELP YOU COMPARE uh…were we too quick to congratulate sales?
- 33. WHY RATIOS HELP YOU COMPARE so while
- 34. WHY RATIOS HELP YOU COMPARE but they’re useful for one other thing as well
- 35. WHY RATIOS HELP YOU COMPARE because ratios
- 36. WHY RATIOS HELP YOU COMPARE why are
- 37. WHY RATIOS HELP YOU COMPARE you can
- 38. WHY RATIOS HELP YOU COMPARE please ensure
- 39. liquidity ratios tell you how much of
- 40. how efficient is a firm at using its assets to generate revenue APPENDIX ACTIVITY RATIOS!
- 41. what % of a firm’s assets are
- 42. how well are we doing APPENDIX PROFITABILITY RATIOS!
- 43. used to compare firms in a similar industry APPENDIX MARKET RATIOS!
- 44. SHARE THIS DECK & FOLLOW ME (please-oh-please-oh-please-oh-please)
- 45. CLICK HERE FOR MORE!!!!
WHY RATIOS HELP YOU COMPARE as a start-up founder, it is important to know the absolute numbers of your business
Слайд 2WHY
RATIOS HELP YOU COMPARE
as a start-up founder, it is important to
know the absolute numbers of your business
Слайд 5WHY
RATIOS HELP YOU COMPARE
you know, like…
how much money do I
have in the bank today?
what are my operating expenses each month?
what are my operating expenses each month?
Слайд 6WHY
RATIOS HELP YOU COMPARE
you know, like…
how much money do I
have in the bank today?
what are my operating expenses each month?
how much cash can I expect to come in next week?
what are my operating expenses each month?
how much cash can I expect to come in next week?
Слайд 7WHY
RATIOS HELP YOU COMPARE
but, while critical to the day-to-day operations of
a business, absolute numbers are not as useful when it comes to strategy, where we are concerned with trends over time & operating efficiency
Слайд 8WHY
RATIOS HELP YOU COMPARE
let’s look at revenue by month as an
example
what does that absolute number tell you?
what does that absolute number tell you?
Слайд 14WHY
RATIOS HELP YOU COMPARE
you happy with that as a founder? do
you understand your business?
Слайд 16WHY
RATIOS HELP YOU COMPARE
what if I add this bit of detail?
wow!
what an amazing business right? look at that steadily increasing profit!
Слайд 19WHY
RATIOS HELP YOU COMPARE
you can see this clear as day if
you consider the most basic Ratio:
Profit Margin
Profit Margin
Слайд 20WHY
RATIOS HELP YOU COMPARE
profit margin is calculated as:
net profit /
sales
it tells you how much money you make for every $1 in sales
it tells you how much money you make for every $1 in sales
Слайд 22WHY
RATIOS HELP YOU COMPARE
where you were making 70 cents per dollar
of revenue in Q1, by Q5 you’re only making .37 cents
so you’re selling more, but making less!
so you’re selling more, but making less!
Слайд 25WHY
RATIOS HELP YOU COMPARE
we can check out the Sales Growth Ratio
which is calculated as:
(current period sales – previous period sales) / previous period sales
(current period sales – previous period sales) / previous period sales
Слайд 26WHY
RATIOS HELP YOU COMPARE
hmmmm, despite a margin crisis, sales growth is
actually improving over time
kudos to your sales team
kudos to your sales team
Слайд 27WHY
RATIOS HELP YOU COMPARE
so if it is not revenue that is
pulling down your profitability, it must be cost
Слайд 28WHY
RATIOS HELP YOU COMPARE
let’s look at the Operating Expense Ratio which
is calculated as:
operating expenses / revenue
operating expenses / revenue
Слайд 30WHY
RATIOS HELP YOU COMPARE
do we need to fire the plant manager?
are we somehow exposed to some raw materials cost fluctuations?
Слайд 31WHY
RATIOS HELP YOU COMPARE
let’s break our cost down into 3 categories
(supply, manufacturing, distribution) & compare each against total cost
(i.e.: supply cost / total cost)
(i.e.: supply cost / total cost)
Слайд 33WHY
RATIOS HELP YOU COMPARE
so while absolute numbers are important for day-to-day
operations, ratios are critical for strategy because they allow you to look inwards & monitor / investigate the efficiency of your business over time
it allows you to identify & solve problems
it allows you to identify & solve problems
Слайд 35WHY
RATIOS HELP YOU COMPARE
because ratios remove the absolute numbers, they can
be used to compare your business against other businesses in your industry (even if those business are much larger or smaller) so that you know how well you fare relative to the competition or can spot interesting outliers
Слайд 36WHY
RATIOS HELP YOU COMPARE
why are we so good relatively? what is
so unique about our business model and what does that mean for the future?
Слайд 37WHY
RATIOS HELP YOU COMPARE
you can actually make ratios out of any
combination of absolute numbers depending on what aspect of your business model you want to investigate
however, certain classic ratios have shown great value, and your management team should be monitoring these monthly
however, certain classic ratios have shown great value, and your management team should be monitoring these monthly
Слайд 38WHY
RATIOS HELP YOU COMPARE
please ensure that your CFO is producing these
for your monthly management meetings and that you are reviewing them and asking questions
i’ve dumped a bunch of classic ones in the appendix, but feel free to create your own depending on the nature of your business model and its unique problems
i’ve dumped a bunch of classic ones in the appendix, but feel free to create your own depending on the nature of your business model and its unique problems
Слайд 39liquidity ratios tell you how much of your current assets can
be used to meet short-term creditor claims
APPENDIX
LIQUIDITY RATIOS!
Слайд 41what % of a firm’s assets are financed with creditor dollars
(how much is owned by bank vs shareholders)
APPENDIX
LEVERAGE RATIOS!
Слайд 44SHARE THIS DECK & FOLLOW ME
(please-oh-please-oh-please-oh-please)
stay up to date with my
future slideshare posts
http://www.slideshare.net/selenasol/presentations
https://twitter.com/eric_tachibana
http://www.linkedin.com/pub/eric-tachibana/0/33/b53
Please note that all content & opinions expressed in this deck are my own and don’t necessarily represent the position of my current, or any previous, employers
