Step 1:Overview of management,operations and industry Background information on the firm's operations Organizational and business structure Products or services provided ■ Competitive position in the marketplace ■ Business and industry outlook report Management character and quality The nature of the borrower's loan request and the quality of the financial data provided. 爸封强的黄香+孝
Step 1: Step 1: Overview of Overview of management, operations and indu management, operations and industry Background information on the firm’s operations Organizational and business structure Products or services provided Competitive position in the marketplace Business and industry outlook report Management character and quality The nature of the borrower’s loan request and the quality of the financial data provided
Step 2:Common size and financial ratio analysis ▣Common size ratio: divide by total assets (balance sheet)or net sales (income statement). It is adjusted for size and thus enables comparisons across firms in the same industry or line of business. ■ The figures can be distorted,if a firm has one balance sheet or income statement item that differs sharply from industry standards. 爸封强的黄香+孝
Step 2: Step 2: Common size and financial Common size and financial ratio analysis ratio analysis Common size ratio: divide by total assets (balance sheet) or net sales (income statement). It is adjusted for size and thus enables comparisons across firms in the same industry or line of business. The figures can be distorted, if a firm has one balance sheet or income statement item that differs sharply from industry standards
Financial ratio analysis ▣Four categories Liquidity ratios:indicate its ability to meet its short-term obligations and continue operations. Activity ratios:signal how efficiently a firm uses assets to generate sales. Leverage ratios:indicate the mix of the firm's financing between debt and equity and potential earnings volatility. Profitability ratios:indicate the firm's sales and earnings performance (ROE,ROA). 麓的贫香小手
Financial ratio analysis Financial ratio analysis Four categories Liquidity ratios: indicate its ability to meet its short-term obligations and continue operations. Activity ratios: signal how efficiently a firm uses assets to generate sales. Leverage ratios: indicate the mix of the firm’s financing between debt and equity and potential earnings volatility. Profitability ratios: indicate the firm’s sales and earnings performance (ROE, ROA)
Step 3:Cash flow analysis Cash flow estimates are compared to principal and interest payments and discretionary cash expenditures to assess a firm's borrowing capacity and financial strength. 目Cash flows: Operating activities Investing activities ■ Financing activities 麓的贫香小手
Step 3: Cash flow analysis Step 3: Cash flow analysis Cash flow estimates are compared to principal and interest payments and discretionary cash expenditures to assess a firm’s borrowing capacity and financial strength. Cash flows: Operating activities Investing activities Financing activities
Step 4:Financial projections The previous 3 stages:historical performance The final step addresses the future conditions. In order to understand the range of potential outcomes,an analyst should make forecasts that incorporate different assumptions about the future. Sensitivity analysis:three alternative scenarios 麓封强的黄香+孝
Step 4: Financial projections Step 4: Financial projections The previous 3 stages: historical performance The final step addresses the future conditions. In order to understand the range of potential outcomes, an analyst should make forecasts that incorporate different assumptions about the future. Sensitivity analysis:three alternative scenarios