Evaluating financial performance

8 important questions on Evaluating financial performance

What are the financial ratios and measures of the survival stage?

cash burn, liquidity, and conversion ratios

What are the financial ratios and measures of the rapid-growth stage?

leverage ratios, profitability and efficiency ratios.

What do financial ratios show?

financial ratios show the relationships between two or more financial variables or between financial variables and time.
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What are the three basic ratio analysis techniques?

1) trend analysis
2) cross-sectional analysis
3) industry comparable analysis

Cash burn formula is?

cash burn= income statement-based operating, interest, and tax expenses + increase in inventories- (change in payables and accrued liabilities) + capital expenditures

Cash build formule

cash build= net sales - increase in receivables

Fixed charges coverage?

fixed-chargers coverage= (EBITDA + lease payments) / interest + lease payment + (debt repayments/(1-tax rate))

What do profitability and efficiency ratios indicate?

profitability and efficiency ratios indicate how efficiently a venture controls its expenses and uses its assets.

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