Financial appraisal of a company implies an analysis of its financial position. It includes: calculation of a number of basic indicators, reflecting the system of formation of working capital in a legal entity, the direction of their most competent use.
Instructions
Step 1
Calculate the data characterizing different aspects of the firm's activities related to the use and formation of all of its monetary funds. Determine the value of the liquidity indicator. It characterizes the ability of an enterprise to meet its short-term debt obligations. In turn, it is necessary to find the absolute liquidity ratio, which determines what amount of short-term debt obligations can be returned not in cash, but with the help of securities or deposits. This ratio is determined as the ratio of the amount of cash and financial short-term investments to the available amount of current liabilities.
Step 2
Calculate the quick liquidity indicator. It is calculated as the ratio of the most liquid share of working capital (financial short-term investments, accounts receivable and cash) and the sum of short-term liabilities.
Step 3
Determine the value of the current liquidity indicator. It is calculated as a quotient of the ratio of the amount of working capital and short-term debt. This ratio reflects whether the firm has enough funds that can be used to pay off short-term obligations.
Step 4
Calculate the profitability ratios. They will help you assess how profitable the business is. The return on sales indicator will be able to show a part of the net profit received from the volume of all sales of the organization. It can be determined from the ratio of net profit to net sales multiplied by 100%.
Step 5
Find the sum of the return on equity ratio. This indicator determines the efficiency of the use of equity capital, which was contributed by the owners of the enterprise. You can calculate it using the following formula: divide the net profit by the value of your own cash investments, and then multiply the resulting value by 100%.
Step 6
Compare the data obtained with the normative and planned indicators. Draw conclusions of the financial assessment of the company.
