Nividh Reporting

1. “F i n a n c i a l p e r f o rma n c e a n d c o s t
ma n a g eme n t—O n e d o m a i n o f b u s i n e s s
value for analy tics can revolve around
per formance management. Monitoring
and decision making on financial infor
Rudra Narayan Pandey mation is not often thought of as acompetitive str
Nividh Consulting a t e g y, b u t i t c a n b e”
Nividh Business Intelligence
Key - T h e m o s t i m p o r t a n t f a c t o r i n b e i n g p r e p a r e d f
919448119930 o r s o p h i s t i c a t e da n a l y t i c s i s t h e a v a i l a b i l i t y o f s u f
• http://www.nividh.com/bi/ondemand/fi ficient volumes of high-quality data.
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2. What is Nividh BI Why Nividh BI -Make more
IT-enabled business decision making informed business decisions:
based on simple to complex data • Competitive and location analysis
analysis processes • Customer behavior analysis
• Database development and • Targeted marketing and sales
administration strategies
• Data mining • Business scenarios and
• Data queries and report writing forecasting
• Data analytics and simulations • Business service management
• Benchmarking of business • Business planning and operation
performance optimization
• Dashboards • Financial management and
• Decision support systems compliance
Nividh Financial Reporting is a powerful tool for designing and presenting analytic data graphically. You can design traditional
financial report formats such as cash management reports, profit and loss statements, and balance sheets. You can also design non
traditional formats for financial or analytic data that include text and graphics

3. The importance of Business Analytics It is a defined process
• Analytics driven organisations are Business Analytics has a defined
shaping their own business outcomes order:
and delivering exceptional economic
performance as a result – Data has been cleansed
• For finance executives the benefit is – Clean data is converted to valid
clear: good data brings discipline to information
business unit planning and – Underlying logic of the model is
performance management and gives correct
finance teams the insight to make
fact-based decisions – Appropriate forecasting techniques
• • By understanding the strategic
have been Applied
implications of the data, finance
teams and decision makers gain the
ability to change course in volatile
circumstances and achieve
competitive advantage
 Financial data quality management is a business issue, and is defined as the practice by which
companies can effectively and consistently combine the following four factors:
Financial data collection and transformation
Repeatable financial processes
Internal controls
Audit trails

4. Challenges Analysis and reporting on Financial Analytics
• BI deployments across apps and
departments
• Fragmented view of information
• No consistent definition of business
metrics
– Are metrics such as product
profitability, customer lifetime value,
and marketing campaign ROI calculated
consistently?
– Each analyst with a BI tool may have
their own answer
• Report-centric model with backlog of
new requests in IT
– Top management requests get first
priority, while needs of other Business
users go unmet
• Few users have timely and actionable
information needed to optimize actions
and decisions
– Particularly middle management and
“front line” users

5. Analytical review Illustrative examples
• High level overview: an overall sense check on • Is the company insolvent?
the data, model • Do Non-Current Assets over depreciate?
structure and outputs • What happens to the outputs if all inputs are
– Hence, need to be clear what the key outputs deleted?
are – Tests for hard code in formulae
• Do the results appear reasonable under the – Tests for ‘plugs’
base case? – Tests for #DIV/0! errors
• Flex inputs to ensure that the outputs change • Chart key items such as EBITDA, debt waterfalls,
as expected ratios
– e.g. if Sales Volume is increased by 20%, what • Create control accounts
happens to Costs Of
Goods Sold (and Sales)? • Is interest being treated correctly: rolled up vs.
capitalised, etc.
• Attempt to break the model (this will not • Ratios:
always be an error)
• Chart key items to examine the patterns: – Ensure they relate to key outputs
– Increasing / decreasing trend – Confirm definitions
– “Blips” – Enter some extreme numbers and review
corresponding outputs
– Time lags or leading indicators
• Precedents / dependents analysis

6. • BI Trends

7. The Analysis of Financial Statements
• Ratio Analysis involves methods of calculating and
The Use Of Financial Ratios interpreting financial ratios in order to assess a firm's
performance and status
Analyzing Liquidity • Liquidity refers to the solvency of the firm's overall
financial position, i.e. a "liquid firm" is one that can
Analyzing Activity easily meet its short-term obligations as they come due.
Analyzing Debt • Activity is a more sophisticated analysis of a firm's
liquidity, evaluating the speed with which certain
accounts are converted into sales or cash; also measures
Analyzing Profitability a firm's efficiency
• Debt is a true "double-edged" sword as it allows for the
A Complete Ratio Analysis generation of profits with the use of other people's
(creditors) money, but creates claims on earnings with a
higher priority than those of the firm's owners.
• Profitability Measures assess the firm's ability to operate
efficiently and are of concern to owners, creditors, and
management

8. Profitability
• Gross Margin = Gross Profit / Revenue
– High level, “quick and dirty analysis”
– Provides contribution analysis at product and / or
segment level
• Net Margin = EBIT / Revenue
Ratio analysis
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– Not always defined consistently ardID=158&oq=window.open+ma&fp=1320138907855
– Takes into account overheads
– Easier to manipulate, but basis for some valuations,
e.g. EVA®
• Compound Annual Growth Rates (CAGR)
– Looks at growth in profit (or other metrics) over
multiple periods and provides an
average annual growth rate (on a compounding
basis)
– Assists with identifying performance against CPI,
etc.

9. Liquidity
Current ratio = Current Assets / Current
Liabilities
– Frequently used ratio
– Short-term creditors prefer high current ratio
– Shareholders prefer lower current ratio
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Quick ratio = (Current Assets – Inventory) / oard.dashboardID=158&oq=window.open+ma&fp=1320138907855
Current Liabilities Liquidity
– An alternative measure of liquidity that does • Debtor days = Closing Debtors x Days in Period / Credit Sales
not include inventory (because it may be – Very common ratio
– Frequently miscalculated
hard to liquidate inventory quickly) • Creditor days = Closing Creditors x Days in Period / Credit Payments
– It is often referred to as the acid test – Also, often miscalculated
Cash ratio = (Cash + Marketable Securities) / Ratio analysis
Current Liabilities • Inventory turnover = Cost of Inventory Sold / Inventory
– Identifies slow moving stock if broken down
– This is the most conservative liquidity ratio – Can be calculated in days also
– Excludes all current assets except the most Gearing
liquid: cash and cash equivalents • Gearing ratio = Debt / Equity
– Proxy for financial leverage
– Indicates ability to pay of current liabilities if
immediate payment demanded

10. Finance professionals need to learn Managers are required to make
efficient and effective data decisions under uncertainty about
forecasting methods in order to make the future
effective decisions • In order to make those decisions, it is
• Almost all managerial decisions are necessary to forecast key variables
based on forecasts of future • The choice of forecast models can have
conditions a significant impact on the accuracy
• Forecasts are needed throughout an of forecasts
organisation – and they should • It is necessary to understand
certainly not be produced by an isolated forecasting methods (and their
group of forecasters limitations) in order to make reliable
• Forecasting is never “finished” and timely business decisions
• Forecasts are needed continually, and
as time moves on, the impact of the
forecasts on actual performance is
measured, original
forecasts are updated, variance analysis
assessed and decisions modified, etc.

11. • Fixed Costs: These are expenses that
Break-even Analysis do not fluctuate in relation to the
For Month Ended June 30, 2010 Fixed amount of sales. They can be
Costs (Operating Expenses) $ considered operating expenses.
962 Examples of fixed costs are monthly
phone bill, insurance payments, rent,
Variable Costs (Cost of Goods Sold) etc.
3,680 • Variable Costs: These expenses vary.
Break-even in Sales = Fixed Costs + (If these expenses contribute directly
Variable Costs = $4,642 to the production of a business’s
service or product, then they can be
Formula to calculate the break-even considered Costs of Goods Sold as
point: well.) Some examples are supplies,
• Break-even = Fixed Costs (Operating wages, etc.
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Expenses) + Variable Costs (COGS) board.dashboardID=158&oq=window.open+ma&fp=132013890785
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• OR • (Break-even) Sales = Fixed Costs +
• Break-even = Operating Expenses ÷ (Variable Costs / Estimated Revenues)
Gross Margin per unit x Sales

12. The key relation for CVP analysis is the profi t Total revenue = Price *Units of output
equation. Every organization’s fi nancial produced and sold TR = PX
operations can be stated as a simple relation In our profi t equation, total costs ( TC )
among total revenues ( TR ), total costs ( TC ), may be divided into a fi xed component
that
and operating profi t:
does not vary with changes in output levels
Operating profi t = Total revenues - Total costs and a variable component that does
Profi t = TR - TC vary. The fixed component is made up
(For not-for-profi t and government of total fixed costs ( F ) per period; the
variable component is
organizations, the “profi t” may go by
different names such as “surplus” or the product of the average variable cost per
“contribution to fund,” but the analysis is the
unit ( V ) multiplied by the quantity of
output
same.) Both total revenues and total costs
are likely to be affected by changes in the ( X ). Therefore, the cost function is
amount of output. 1 We rewrite the profi t Total costs = (Variable costs per unit Units
equation to explicitly include volume, of output) + Fixed costs
allowing us to analyze the relations among TC = VX + F
Profi t = Contribution margin - Fixed costs
volume, costs, and profi t.
(P -V)X-F
Total revenue ( TR ) equals average selling price
per
unit ( P ) times the units of output ( X ):

14. Customer Choice - Move when ready
Dashboards &
Reports
Enhance Nividh BI
Ad-hoc Query
Analysis
Dashboards &
Nividh BI
Reports
Maintain
Ad-hoc Query
RDBMS
Analysis

15. • Nividh Provides Actionable Intelligence
– Configurable Best Practices
– Role based Analytics, Metrics and Reporting
– Designed for Finance, executives and line managers throughout the organization
• Adaptive Application Framework
– Flexibility to change as business needs change
– Reduces IT complexity
• Reduces need for highly scarce IT resources and lengthy development initiatives
– Immediate access to critical information, throughout the organization
Sales – Vipul Sharma +91-9483-265110
sales@bdisys.com,
hr.transformation@bdisys.com
vipul.sharma@bdisys.com