Business Financial Planning

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 		Investment Evaluation Ratios for Stock Investors
Stock market investment is different from acquiring a business. Investors are interested more in the reasonableness of the stock market valuation of their shares.
Performance Ratios Look at Operational Issues
Operating performance ratios are concerned with the utilization of physical facilities, productivity of employees and management of working capital.
Debt Ratios Look at Financial Viability/Leverage
While a high proportion of debt funds can boost the returns to equity shareholders, it can also reduce a company's financial options during lean business periods.
Cash Conversion Cycle Measures Cash Flow Speed
Cash conversion cycle reflects the effectiveness of activities that go into working capital management, such as optimum inventory maintenance and good credit management.
Liquidity Ratios Help Good Financial Management
Even if a business has high profitability, it can face short-term financial problems if its funds are locked up in inventories and receivables not realizable for months.
Financial Ratio Analysis for Performance Check
Used externally, financial ratio analysis can spot better investment options for investors, and internally, business managers can spot business areas requiring attention.
Profitability Ratios Measure Margins and Returns
While profit margin ratios look at the margins that a company was able to generate, return ratios examine how well the company utilized available resources.
Working Capital Management Manages Flow of Funds
Working capital is the cash needed to carry on operations during the cash conversion cycle, i.e. the days from paying for raw materials to collecting cash from customers.
Venture Capital Fills a Critical Financing Gap
Innovative businesses with quick and high growth potential are the ideal candidates for venture capital funding. A detailed business plan would be essential, however.
Business Financial Management Fundamentals
Business finances are managed through techniques like capital budgeting, financial planning, budgetary control, cost variance reports and financial analysis.