Look as a whole, the financial administration is apparently vast and complex, but look, measured and evaluated on their basis is wide and easy. The following financial commandments cover a macro aspects of high finance to take into account in structuring a strategic financial direction.
1 – PROFITABILITY. DuPont analysis shows the profitability generated by the company, if it the leverage to affect the final result will show the return to shareholders, in reality it is the most economically viable financial return. A higher rate, the better.
2 – INSOLVENCY. The model includes 9 indicators Fulmer due interelacionados will show you a rate which indicates the possibility of bankruptcy. The higher the outcome, the better. Below 0 the liquidity problem will be great if conditions do not change immediately.
3 – GROWTH. One of the most important aspects to evaluate growth for growth’s sake has no meaning, it must be profitable growth which requires favorable link 2 indicators, the index EBITDA and productivity net operating working capital. If the result shows less than 1, the company will not be able to finance the increased turnover. Currently, this index becomes critical tool for making financial decisions by senior management.
4 – COSTS AND EFFECT ON SELLING PRICE The purchase price is not fixed by the company,but is set by the market. But the cost structure of the company is allowing competitive pricing. There are 6 structures prices, based on the cost structure of the company: the first should cover fixed costs, variable, interest, taxes, utility and investment. The second covers only the initial 5, only the third 4.
The company must analyze the infamous “hidden costs” and that any system to work more cost default. It is important to make an important clarification, “is completely different costs, to implement a system of cost”
5 – THE LEVERS. There are two kinds of levers: a) operating lever. Measured by the fixed costs, shows the capacity of the lever to use these expenses to increase (or decrease) the effect that an increase in sales volume has on operating b) Lever financiera.Medida by the impact of interests in net income due to a change in operating. Gives an idea of the financial risk and the effect of debt levels on the utility. This leverage is always there debt, or fixed financial costs.
Leverages both values are not good because they are low or high risk levels shown by the structure of costs and fixed costs or the level of indebtedness. A main result a higher risk
6-FINANCIAL CASH FLOW (FCF). It is the reconciliation by which it identifies from where the cash that makes up the free cash flow available for investors. Is obtained from the combination of changes in the financial accounts, such as bonds and interest. Is calculated as:
- Increase (or decrease) of financial debt
- Unless the financial interests generated by the debt
- Less the dividends paid in cash
- Like FCF
This result should coincide with the result that shows the box “free cash flow available to shareholders” in the scheme of free cash flow.
Financial cash flow is important because it allows you to view if the company is able to distribute profits.
7 – PORTFOLIO. value based on the final sale price, then it becomes necessary to make an adjustment truly showing the amount the company has invested in these accounts. A simple way to calculate this cost is to determine what percentage of the sale price represents cost to the company and multiply this figure by the average accounts cobrar.
8 – ADDITIONAL FUNDS. Most companies calculate their capital requirements in different ways.
When sales increase, operating assets increase. Liabilities increase spontaneously with sales as a percentage of the funding or spontaneously generated by every $ 1 in sales.
Consider the calculation formula:
Additional funds required = required increase in assets less liabilities less increase in spontaneous increase in retained earnings.
Example: ventas1 = $ 3000, ventas2 = 3300, Asset 1 = 1800, 2000 Active 2 = Estimated, 200 Increased assets =
Accounts payable = 60, = 140 Other liabilities, net dividends = 114 = 58 cap = 56
- For every $ 1 increase in asset sales increase 67 cents (2000 / 3000)
- For every $ 1 increase in sales of the liabilities are increased by 7 cents a spontaneous funding (60 +140) / 3000
- Index diviendos surcharge 50.8% (58/114)
- Fee (outside) of utilidad.3.8% 114/3000)
- Capitalization rate 49.2% (56/114)
FAN = 0.67×300 – 0.07×300 – (0.038×3300) x 0,492 = 118 (201-21-62)
To increase sales in the $ 300 increase in assets is 201 spontaneous liabilities 21, retained earnings 62.
The company needed to seek outside $ 118, representing a 39% increase of $ 300.
9 – DIVIDENDS. FCL is part of that is reinvested or distributed, are the resources generated by the company to shareholders. The ability of self is through free cash flow and dividend distribution policy. The higher self, higher self-financing versus debt. Many organizations have policies with respect to the wrong distribution of dividends, and firms with net positive earnings, year after year, can over time, showing impressive liquidity problems. Many companies claim the payment of dividends by using debt. This is because they do not know the correct mechanism to determine to which amount a company is able to cover such dividend without affecting the structure and financial liquidity.
10 – ASSETS. The assets of the firm can be summarized as follows: current, fixed assets. Keeping active has a cost, a higher asset value and return less the return on these assets will be lower and vice versa. Management should consider which assets are actually profitable, which are vacant, which are not operational. There is a belief that the higher asset value, the higher company value, false, there are other parameters. We suggest you make a thorough analysis on this, because the asset is equal to the investment.
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