Financial Analysis

The Financial Analysis System aims to identify and assess the performance level of establishments. the Financial Analysis System is embedded into the Market Control to make the most complex equations and comparisons among different equations and to explain and clarify the results reached and search for the reasons of these results, with an intelligent view to discover the weaknesses and strengths in the financial plans and policies. Furthermore, the Financial Analysis System helps assess control systems and develop necessary solutions and recommendations in a timely manner. The Financial Analysis System is used to identify and assess the performance level of establishments and make proper decisions for the following purposes:

Credit Analysis | Advice-based Analysis | Mergers and Acquisitions Analysis | Financial Planning | Financial Control | Performance Assessment Analysis

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Leverage Analysis

Ratios that measure the extent enterprise to financing on external sources

• Total Liabilities to total Assets
  It shows the extent to which the total liabilities can be covered using the total assets
• Total Liabilities to equity
  It show the extent to which the total liabilities can be covered using the owner’s equity
• Interest Coverage Rate
  It shows the ability to cover the interest of loans and bonds using the net operating profit
• Long-term commitments to capital
  It show the extent to which the long-term commitments can be covered using the capital
• Long-term assets to equity
  It show the extent of the contributions of equity to the long-term assets financing

Activities Analysis

Ratios that measure the efficiency of the facility in using its resources

• Inventory turnover
  It shows the analysis of the stock and how much time it takes to be sold out
• Debtor’s turnover
  It shows the efficiency of the collection process and the follow-up of customer debts in the facility
• Creditor’s turnover
  It helps in calculating the payment period for loans, for instance
• Storage cycle
  This average shows the period of stock from purchasing till discharged
• Collection cycle
  It shows the time elapsed to collect money from debtors
• Payment cycle
  It shows the time elapsed to repay for creditors
• Duty cycle
  It shows the timeline starting from obtaining inventory till the time of collection from debtors
• Cash cycle
  It shows the time elapsed when the company depend on its own cash (Operating cycle minus payment cycle)
• Long-term assets turnover
  It shows the ability of the company to take the best advantages of its own assets in achieving profit
• Total assets turnover
  It shows the extent of the activity of assets and their ability to generate profit. While when this percentage increase it indicates that the efficiency of the facility in using its assets is performing well
• Capital turnover
  It shows the ability of the capital as amount spent to generate sales. An increase in this percentage refers to the efficiency of the exploitation of working capital

Profit Analysis

Ratios that measure the efficiency of the management to exploit its resources optimally for best sales performance

• Gross profit margin
  It shows the relationship between net sales revenue and cost of goods sold
• Net profit margin
  It measure the net profit achieved on sales
• Return on equity
  It expresses the return that the stockholders achieve on investing resources for the company
• Return of investment
  It expresses the company’s efficiency in managing available credit in order to achieve profits
• Rate of return on capital
  It expresses the companies’ ability to use all its capital to generate profits
• Rate of return on assets
  It expresses the companies’ ability to use all its assets to generate profits
• Earnings per share
  It shows the profit per share

Liquidity Analysis

Ratios that measure the extent of the organization’s ability to face short term obligations (Which are required to be paid within a year or less)

• Trading rate
  It expresses the number of times the current assets can cover the current liabilities. Whenever this ratio increases it indicates to the company’s ability to paying current obligations without the need to liquidate fixed assets
• Payment rate
  This ratio shows the possibility of paying short-term debts within few days
• Cash ratio
  It shows the extent to which the short term debts can be paid as quickly as possible
• Liquidity ratio
  A measure of the liquidity of the assets trading during a short period of time

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