diagnosing financial health of business 1 new 19 slides
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Diagnosing Financial Health of Business
By Dr. Rajeev Jain
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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 Jain1
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DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT LIQUIDITY
Liquidity
Current Ratio
Liquidity Ratio
Current Assets
-------------------
Current Liabilities
Liquid Assets
-------------------
Current Liabilities
By Dr. Rajeev Jain1 A
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DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT ACTIVITY
Activity Activity or Asset or Asset ManageManage
mentment
OperatiOperating ng
CycleCycle
OperatiOperating ng
CycleCycle
ReceivaReceivable ble
TurnoveTurnoverr
ReceivaReceivable ble
TurnoveTurnoverr
Payable Payable TurnoveTurnove
rr
Payable Payable TurnoveTurnove
rr
Cash Cash ConversConvers
ion ion CycleCycle
Cash Cash ConversConvers
ion ion CycleCycle
Fixed Fixed Assets Assets
TurnoveTurnoverr
Fixed Fixed Assets Assets
TurnoveTurnoverr
ReceivablReceivable in Days e in Days
+ + Inventory Inventory in Daysin Days
ReceivablReceivable in Days e in Days
+ + Inventory Inventory in Daysin Days
PurchasePurchase--------------------------
--Average Average PayablePayable
PurchasePurchase--------------------------
--Average Average PayablePayable
SalesSales--------------------------
--------Average Average
ReceivablReceivablee
SalesSales--------------------------
--------Average Average
ReceivablReceivablee
Cost of Cost of SalesSales
--------------------------------------
Average Average StockStock
Cost of Cost of SalesSales
--------------------------------------
Average Average StockStock
ReceivablReceivable in Days e in Days
+ + Inventory Inventory in Days -in Days -payable payable in Daysin Days
ReceivablReceivable in Days e in Days
+ + Inventory Inventory in Days -in Days -payable payable in Daysin Days
SalesSales--------------------------
------Average Average
Fixed Fixed AssetsAssets
SalesSales--------------------------
------Average Average
Fixed Fixed AssetsAssets
InventoInventory ry
TurnoveTurnoverr
InventoInventory ry
TurnoveTurnoverr
By Dr. Rajeev Jain1 B
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DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT PROFITABILITY
Gross Profit ROI
Gross Profit------------ x 100Sales
EBIT----------- x 100Capital Employed
Profitability
Net Profit
Net Profit------------ x 100Sales
By Dr. Rajeev Jain1 C
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DIAGNOSING FINANCIAL HEALTH BY TAKING INTO ACCOUNT LEVERAGE
By Dr. Rajeev Jain1 D
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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 Earning
s Per Share
Market Valu
e
Net Earning from Continue Operation +
Other Earnings
-------------------Diluted
Potential Common
StockBy Dr. Rajeev Jain
1 E
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Z-THEORY
By Dr. Rajeev Jain1 F
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Z-SCORE A TOOL OF ASSESSING FINANCIAL HEALTH
By Dr. Rajeev Jain1 G
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Z-SCORE METHOD FOR ASSESSING FINANCIAL HEALTH
By Dr. Rajeev Jain1 H
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Z-SCORE -COMBINATION OF RATIOS
By Dr. Rajeev Jain1 I
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Z-SCORE -FINAL OUTCOME
By Dr. Rajeev Jain1 J
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PERFORMING TREND ANALYSIS TO DETERMINE FIRM'S ABILITY TO MEET FUTURE OBLIGATIONS
By Dr. Rajeev Jain2 A
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Final Outcome of Trend Analysis
Risk Scoring
Risk Mapping
Competitive Pressure
Target ROE
Future Potential
Cross Subsidizat
ion
Performing Trend Analysis
Final Final DecisDecisionion
By Dr. Rajeev Jain2 B
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Uncovering Alternative ways to measure Financial Health other than Ratio Analysis
Product Market ChoicesProduct Market
Strategies
Product Market ChoicesProduct Market
Strategies
Measurement Tools
1.Operational Risk Analysis2.SWOT Analysis3.Porter's 5 Score Analysis4.Sensitivity Analysis5.Case Study6.Six Sigma7.ABM8.TQM9.Economic Value Added10.Valuation of Business11.Productivity Measures
Management Goals
Management Goals
Outlook of Sales
Outlook of Sales
Future Access to target
sources of external finance
Future Access to target
sources of external finance
Future need for external
finance
Future need for external
finance
Future Financial and Competitive Performance
Future Financial and Competitive Performance
Investments in Assets to
support Product-Market
strategies
Investments in Assets to
support Product-Market
strategies
Stress test for viability under
various scenarios
Stress test for viability under
various scenarios
Operating, Investing and Financial Plan for Next Year
Operating, Investing and Financial Plan for Next Year
3-5 years Financial Plan
3-5 years Financial Plan
By Dr. Rajeev Jain3
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Benchmarking past and current performance to identify the causes That have offset the well being of the company
PAST V/S PAST V/S CURRENTCURRENTPAST V/S PAST V/S CURRENTCURRENT
RESPONSIBILIRESPONSIBILITY TY
ACCOUNTINGACCOUNTING
RESPONSIBILIRESPONSIBILITY TY
ACCOUNTINGACCOUNTING
BASE BASE PARAMETERSPARAMETERS
TARGETSTARGETS
By Dr. Rajeev Jain4
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How to Deal with Recession
By Dr. Rajeev Jain5
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RECESSION - AFTERMATH
By Dr. Rajeev Jain5 A
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By Dr. Rajeev Jain5 B
Remarks