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(What they are and how to measure)
Decisions Communication Comparison Priorities
Personnel Performance Management Public Company Stock Market Departments
Usage Predictive Forecasting
Management Other Companies IT Staff
Who should determine the appropriate KPI’s for a company?
Where to get KPIs Developed Given Participation Discovery Commitment Belief Full Adoption Longevity Quick Pre-defined IT can manage Save time and effort Some Adoption Short lived
Cash Flow Indicators Debt Asset Management Market Value
Asset Coverage Ratio Capitalization Ratio Debt Service Coverage Ratio DEBT Debt Ratio Debt-to- Equity Ratio
Debt-to- Income Ratio Debt/EBITDA Ratio Financial Leverage DEBT Equity Multiplier Fixed Assets to Net Worth
Fixed Charge Coverage Ratio Interest Coverage Ratio (ICR) DEBT Long Term Debt to Capitalization Ratio
Acid-Test Ratio Cash Ratio Net Working Capital LIQUIDITY Current Ratio Quick Ratio
Working Capital Working Capital Ratio LIQUIDITY
Cash Return on Capital Invested (CROCI) DuPont Formula EBIT (Earnings Before Interest and Taxes) FINANCIAL Earnings Before Interest After Taxes (EBIAT) EBITDA
EBITDARM EBT (Earnings Before Tax) Gross Profit Margin FINANCIAL Effective Rate of Return Net Profit Margin
NOPLAT (Net Operating Profit Less Adjusted Taxes) OIBDA Operating Margin FINANCIAL Operating Expense Ratio Overhead Ratio
Profit Analysis Profitability Index Return On Assets (ROA) FINANCIAL Relative Return Return on Average Assets (ROAA)
Return on Average Capital Employed (ROACE) Return on Average Equity (ROAE) Return on Debt (ROD) FINANCIAL Return On Capital Employed (ROCE) Return On Equity (ROE)
Return On Invested Capital (ROIC) Return on Investment (ROI) Return on Research Capital (RORC) FINANCIAL Return on Net Assets (RONA) Return on Retained Earnings (RORE)
Return on Revenue (ROR) Return On Sales (ROS) FINANCIAL Revenue per Employee
Accounts Payable Turnover Ratio Asset Turnover Days Payable Outstanding (DPO) ASSET MANAGEMENT Cash Conversion Cycle (Operating Cycle) Days Sales Outstanding (DSO)
Defensive Interval Ratio (DIR) Fixed Asset Turnover Receivable Turnover Ratio ASSET MANAGEMENT Inventory Turnover
Cash Flow Coverage Ratio Cash Flow Management Free Cash Flows / Operating Cash Flows Ratio CASH FLOW INDICATOR Cash Flow Return on Investment (CFROI) Price / Cash Flow Ratio
Business Valuation Dividend Payout Ratio Dividend Yield MARKET VALUE Dividend Policy Ratios Enterprise Value (EV)
Enterprise Value Multiple EV/EBITDA ratio Loan-to-Value Ratio (LTV) MARKET VALUE Gordon Growth Model Net Asset Value per Share (NAVPS)
PEG ratio Price to Earnings Ratio (P/E Ratio) Price/Book Value Ratio MARKET VALUE Price-to- Research Ratio
Pick the right ones for your business
Gartner /EBRC KPI Initiative AICPA KPMG, Deloitte, PWC
All are valid… Narrow the focus… 3 are important From Sales to Professional Services Approximately 30 Measures Found
Top 3 Take-Aways
questions? final thoughts?
Business Performance Analysis (Part 2)
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Fin 4201/ Ratios Measure strength of various firm aspects Informational needs of creditors and investors Facilitate time-series or cross-sectional.
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Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999 Financial Statement Analysis © The McGraw-Hill Companies, Inc., Part One: Financial Accounting.
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FINANCIAL STATEMENT ANALYSIS. Important Questions Managers, shareholders, creditors and other interested groups seek answers to the following important.
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1 Copyright ©2012 Pearson Education Inc. Publishing as Prentice Hall.
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Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 1 Chapter 14.
Module Accounting & Finance Topic Ratio Analysis.
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