AssessingCompanyfuturefinancialhealth 1
European Master in System Dynamics
Financial Analysis: tools for business profitability & solvency analysis
Enzo Bivona
Assistant Professor in Business Management
University of Palermo - Faculty of Political Sciences
PhD in Business Management - University of Catania (Italy)
Master Phil in System Dynamics - University of Bergen (Norway) enzo.bivona@unipa.it Financial Analysis
• LEARNING OBJECTIVES
– How to review the performance of a business
– Indentify the limitation of the performance review process
– Understanding profitability, efficiency, liquidity, investment, financial structure ratios in assessing business financial performance
The performance review process
• Different stakeholders, both internal and external, are interested in the performance of the organization. • For instance, shareholders, lenders, suppliers, customers and banks are interested in analyzing a company financial performance and position from the perspective of safeguarding their interests (e.g., capital invested, recognizing lending risk, etc.).
The performance review process
• In the perspective of the company, a performance review process can be undertaken form different reasons: – To support the planning and budgeting process;
– To assist in investments decisions;
– To identify areas where there is room for improvement;
–…
– And, at a strategic level, to compare company financial performance with the performance of other competitors. The performance review process
Sales
growth
Profitability
Financial
Leverage
Performance review Liquidity
Asset
Management
Assessing a Company’s
Future Financial Health
Questions
• What is your assessment of the performance of
SciTronics in 2008 versus 2005?
• We can identify 4 main areas of analysis to asses a performance of a company
– Sales Growth – How does the company grow over time?
– Profitability – How profitable is the company?
– Asset Management – How well does the company employ its assets?
– Liquidity and Financial Leverage
Financial Analysis: tools for business profitability & solvency analysis
Enzo Bivona
Assistant Professor in Business Management
University of Palermo - Faculty of Political Sciences
PhD in Business Management - University of Catania (Italy)
Master Phil in System Dynamics - University of Bergen (Norway) enzo.bivona@unipa.it Financial Analysis
• LEARNING OBJECTIVES
– How to review the performance of a business
– Indentify the limitation of the performance review process
– Understanding profitability, efficiency, liquidity, investment, financial structure ratios in assessing business financial performance
The performance review process
• Different stakeholders, both internal and external, are interested in the performance of the organization. • For instance, shareholders, lenders, suppliers, customers and banks are interested in analyzing a company financial performance and position from the perspective of safeguarding their interests (e.g., capital invested, recognizing lending risk, etc.).
The performance review process
• In the perspective of the company, a performance review process can be undertaken form different reasons: – To support the planning and budgeting process;
– To assist in investments decisions;
– To identify areas where there is room for improvement;
–…
– And, at a strategic level, to compare company financial performance with the performance of other competitors. The performance review process
Sales
growth
Profitability
Financial
Leverage
Performance review Liquidity
Asset
Management
Assessing a Company’s
Future Financial Health
Questions
• What is your assessment of the performance of
SciTronics in 2008 versus 2005?
• We can identify 4 main areas of analysis to asses a performance of a company
– Sales Growth – How does the company grow over time?
– Profitability – How profitable is the company?
– Asset Management – How well does the company employ its assets?
– Liquidity and Financial Leverage