Diagnosing Financial Health of Business 1- New 19 Slides

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Diagnosing Financial health by taking into account Profitability, Debt and Equity, Management should be proactive and continuously assess a firm’s future financial health before it is reflected in the firm’s financial statements.

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Presentation Transcript

Slide 1:

Diagnosing Financial Health of Business By Dr. Rajeev Jain

Slide 2:

Liquidity Debt / Equity Management Activity or Assets Management Diagnosing Financial Health Profitability Market Value DIGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT LIQUIDITY, ACTIVITY, LEVERAGE, PROFITABILITY AND MARKET VALUE By Dr. Rajeev Jain 1

Slide 3:

DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT LIQUIDITY Liquidity Current Ratio Liquidity Ratio Current Assets ------------------- Current Liabilities Liquid Assets ------------------- Current Liabilities By Dr. Rajeev Jain 1 A

Slide 4:

DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT ACTIVITY Activity or Asset Management Operating Cycle Receivable Turnover Payable Turnover Cash Conversion Cycle Fixed Assets Turnover Receivable in Days + Inventory in Days Purchase -------------- Average Payable Sales ----------------- Average Receivable Cost of Sales ------------------- Average Stock Receivable in Days + Inventory in Days -payable in Days Sales ---------------- Average Fixed Assets Inventory Turnover By Dr. Rajeev Jain 1 B

Slide 5:

DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT PROFITABILITY Gross Profit ROI Gross Profit ------------ x 100 Sales EBIT ----------- x 100 Capital Employed Profitability Net Profit Net Profit ------------ x 100 Sales By Dr. Rajeev Jain 1 C

Slide 6:

DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT LEVERAGE By Dr. Rajeev Jain 1 D

Slide 7:

DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT MARKET VALUE Price Earning Ratio Market Price ------------------- EPS Earnings Per Share Net Earning ------------------- Number of Shares Basic Earnings Per Share Net Earning from Continue Operation + Other Earnings ------------------- Number of Shares Dilute Earnings Per Share Market Value Net Earning from Continue Operation + Other Earnings ------------------- Diluted Potential Common Stock By Dr. Rajeev Jain 1 E

Slide 8:

Z-THEORY By Dr. Rajeev Jain 1 F

Slide 9:

Z-SCORE A TOOL OF ASSESSING FINANCIAL HEALTH By Dr. Rajeev Jain 1 G

Slide 10:

Z-SCORE METHOD FOR ASSESSING FINANCIAL HEALTH By Dr. Rajeev Jain 1 H

Slide 11:

Z-SCORE -COMBINATION OF RATIOS By Dr. Rajeev Jain 1 I

Slide 12:

Z-SCORE -FINAL OUTCOME By Dr. Rajeev Jain 1 J

Slide 13:

PERFORMING TREND ANALYSIS TO DETERMINE FIRM'S ABILITY TO MEET FUTURE OBLIGATIONS By Dr. Rajeev Jain 2 A

Slide 14:

Final Outcome of Trend Analysis Risk Scoring Risk Mapping Competitive Pressure Target ROE Future Potential Cross Subsidization Performing Trend Analysis Final Decision By Dr. Rajeev Jain 2 B

Slide 15:

Uncovering Alternative ways to measure Financial Health other than Ratio Analysis Product Market Choices Product Market Strategies Measurement Tools 1.Operational Risk Analysis 2.SWOT Analysis 3.Porter's 5 Score Analysis 4.Sensitivity Analysis 5.Case Study 6.Six Sigma 7.ABM 8.TQM 9.Economic Value Added 10.Valuation of Business 11.Productivity Measures Management Goals Outlook of Sales Future Access to target sources of external finance Future need for external finance Future Financial and Competitive Performance Investments in Assets to support Product-Market strategies Stress test for viability under various scenarios Operating, Investing and Financial Plan for Next Year 3-5 years Financial Plan Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 By Dr. Rajeev Jain 3

Slide 16:

Benchmarking past and current performance to identify the causes That have offset the well being of the company PAST V/S CURRENT RESPONSIBILITY ACCOUNTING BASE PARAMETERS TARGETS By Dr. Rajeev Jain 4

Slide 17:

How to Deal with Recession By Dr. Rajeev Jain 5

Slide 18:

RECESSION - AFTERMATH By Dr. Rajeev Jain 5 A

Slide 19:

By Dr. Rajeev Jain 5 B Remarks

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