1. Indicators about the overall size or value of the enterprise include
-Total assets
-Net assets
-Share price
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-Market value = stock price per share
- Cost rate = cost/sales
- Profit rate = net profit/sales*100
- Marketing expense rate/administrative expense rate/R&D expense rate = expenses/sales *100
Gross profit margin or cost rate is the indicator used by most manufacturing companies to judge production efficiency. According to the cost structure of the company, the ratio of "materials, labor, and expenses" in the cost can be further analyzed and analyzed accordingly. Control achieves the purpose of controlling costs and improving production efficiency.
For many sales-oriented companies, such as fast-selling, luxury goods, mobile phones, etc., special attention will be paid to the proportion of marketing expenses, such as the analysis of different marketing expenses for advertising and promotion and sales realization, etc.
Technology-based companies or technology companies are very concerned about the proportion of R&D expenses. This involves the future development potential of the company and can be further refined into specific indicators such as the number of patents.
3. Solvency index
- Asset-liability ratio = total liabilities/total assets
- Net asset-liability ratio = total liabilities/net assets
-Interest income ratio = net profit/interest expense
The ability of an enterprise to bear liabilities is also an indicator that banks and other financial institutions give priority to when financing enterprises.
For many banks or financial institutions, there are so-called "red lines" for customers' asset-liability ratios. Once the "red line" is exceeded, not only will no further loans be granted, but they will also have to try to get the original loan back. to reduce risk. Therefore, for enterprises, when there is no shortage of money, the bank will lend you money behind your back. When you are really short of money, you cannot borrow money from the bank. The world is hot and cold, with red tops and white heads, that's probably the case.
As a company, since these asset-liability ratios are "point-in-time" indicators (that is, the time point when statements are issued at the end of the quarter or the end of the year), in order to avoid the above-mentioned "red line", companies will always There are some small means to "temporarily" reduce the asset-liability ratio at the time of reporting. In fact, banks will do the same thing to temporarily increase their cash reserves in order to make their statements look good. This is why the original daily deposit yield from December 31st to January 1st at the end of the quarter or the year may be It is several times or even dozens of times more than usual. "Cook the book & play with the figure", the bank itself is also a listed company and must also be responsible to its shareholders.
4. Liquidity indicator
- Current Ratio = Current assets/Current Liability
- Quick Ratio= (Cash Bank A/R)/Current Liability
- Cash Ratio = (Cash Bank)/Current Liability
Reflect different levels of prudence principles based on the liquidity of different assets. After all, inventory may be "cleared out" and accounts receivable may become "bad debts," which may affect the liquidity of these assets.
5. Net Working Capital = Accounts Receivable, Inventory - Accounts Payable
The most important balance sheet item used by most companies to measure cash flow.
(These three items are directly related to the business and are the main changes and risks in the balance sheet)
6. Turnover rate/turnover days
Accounts receivable turnover rate
AR Turnover= Sales/Average AR
DSO = 365/AR Turnover
Inventory Turnover
Inventory Turnover= Cost/Average Inventory
DSI = 365/Inventory Turnover
Accounts Payable Turnover
AP Turnover= Cost/Average AP
DPP = 365/ AP Turnover
The accounts receivable turnover rate reflects the speed at which a company collects money after sales. In the final analysis, it reflects the gaming ability between the company and downstream sellers and agents.
The inventory turnover rate reflects the speed at which the products produced are sold. It mainly reflects the popularity of the company's products in the market, but it is also affected by many other non-market factors, such as the company's Management thinking - placing orders on demand (Pull) or stocking large quantities (Push) - has a great impact on inventory turnover.
The payables turnover rate is similar to the receivables turnover rate, which reflects the competitiveness between the enterprise and its upstream suppliers. If the supplier is strong, the turnover rate will be high and the turnover days will be short; vice versa.
7. Cash Cycle= Accounts Receivable DSO Inventory DSI-Accounts Payable DPP
This is calculated on the basis of 6 to estimate the company from production to final collection The shorter the process required, the less funds are used for business operations, or the funds are used more efficiently.
In extreme cases, the cash cycle can become negative. For example, Dell, which uses the concept of zero inventory management, has a very short receivable DSO and inventory DSI, but a very long payable DPP, so the Cash Cycle is a negative number; I estimate that Xiaomi and Apple are in a similar situation. It is always best to make money with other people's (suppliers') money.