Analysis of business activity
Business activity - a comprehensive description, which embodies different aspects of the company, so system defined criteria such as place on the market specific products, geography, business relationships, reputation of the company as a partner activity Innovation and investment competitiveness. Thus, business activity can be characterized by dynamic performance of industrial and economic activity in general. Positive dynamics of these indicators will strengthen the financial condition of the company.
"Golden Rule" Banking provides compliance conditions under which the rate of growth of company profits exceed the rate of growth in sales, and the latter should be higher than the growth rate of assets (property).
Regarding finance "golden rule" dictates the terms of efficient use of financial resources invested in tools, assets and working capital. Indicators of turnover of working capital as a whole and its individual elements, return on capital, advanced in production, you can evaluate the business activity of the company. The higher rates of turnover, the greater the sales and profits reached company and the higher its business activity.
Working capital turnover ratio reflects its rate of turnover. Intensity of use of working capital affect the liquidity of the company, profitability, financial stability as a whole.
Reducing the length of one revolution means saving working capital, they release sales or production of an additional output for the same amounts of working capital. If, by contrast, turnover ratio decreased compared to the previous period, the company will have to bring in additional turnover funds.
This parameter specifies the asset turnover ratio and focuses on the return of funds of shareholders. Performance analysis of the dynamics of the activity provides an estimate of the share capital. If K o.v.k much higher than K OA , we can conclude increase in turnover of borrowed resources, the need to secure justification of that amount to avoid financial difficulties and reduced profitability in the future.
The low value of K o.v.k, bringing it closer to K OA and there is evidence of falling efficiency of capital in general and in particular equity. The company needs to analyze investment trends and determine the sources of income in the future.
During the year, reserves make 9.3 turnover. The duration of a turnover - 39 days. Analysis of this indicator allows you to identify the reserves reduce operating cycle due to the intensification of the production process, streamline warehousing, accelerate payment transactions and more. As a result, the same level of reserves the company will increase production.
With the economic crisis and especially the crisis of defaults important analysis of turnover and accounts receivable.
The average maturity of accounts payable is 20 days (360: 15). The stability of financial position depends on the balance of receivables and payables. Given the stable economy if the receivables exceed payables, it might be viewed as a manifestation of a strong increase of sales. But in terms of inflation, high interest rates phenomenon leads to losses.
Return on assets is an important indicator for investors in deciding about investing in the company. This parameter adjusts the reallocation of capital between industries, types of products, based on their profitability.
Return is calculated as the ratio of net profit to equity plays an important role in the evaluation of share prices as reflecting the possibility that the dividends.
Return on sales and profitability of products play an important role in planning product mix, choice of activities.
This formula reveals ways to increase profitability by increasing both the profitability of sales, and by speeding up capital turnover.
Seamless reduced scorecard will help assess the financial condition and develop proposals to strengthen its competitive position.