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Financial Analytics
1.
2.
3. Crowd funding is the new way forward
Grants and Loans the Traditional Way
Alternate Forms of Financing
The Bank of Family and Friends
The power of Angel Investors
6. Introduction
Every company wishes to have a strong financial
foundation, which eventually becomes the
company’s core strength. Financial teams work
hard to keep their data safe and structured so
that they can make educated and accurate
business choices using analytics. These financial
analytics not only aid in the creation of a clear
image of their firm now, but also pave the way
for future forecasts, budgets, and roadmaps.
7. Definition
Financial analytics is a field that gives
different views of a company’s financial data.
It helps to gain in-depth knowledge and take
action against it to improve the performance
of your business. Financial analytics has an
effect on all parts of your business.
8. Why Financial Analytics is important?
Timely information - Decisions in business
Sound financial planning & forecasting
New business model, Traditional financial department - financial analytics.
Shaping up tomorrow’s__________.
To improve the __________strategies of your business.
Focuses - tangible assets
deeper insight - financial status
9. Need for Financial Analytics
1.Improvise financial performance
2.In-depth insights into the financial health
3.Know your problems to find the right solutions
4.Assist in risk management
5.Financial communication to make informed decisions
6.Full analytical transparency
10. Documents used in Financial Analysis
• There are three main financial statements on which the
analysis is done
• Balance Sheet
• Income Statement
• Cash Flow Statement
• Annual Reports
11. Q 1
• The most commonly used tools for financial analysis
are:
(a) Comparative Statements
(b) Common-size Statement
(c) Accounting Ratios
(d) All the above
12. Q 2
• Financial Analysis is significant because it
a. Ignores qualitative aspect
b. Suffers from the weaknesses of financial statements
c. Judges operational efficiency
d. Facilitates intra firm comparison
13. Q 3
• Risk associated with a particular firm’s operating conditions is which
of the following risk?
a) Business Risk
b) Financial Risk
c) Interest Risk
d) Liquidity Risk
14. Q 4
What is the full form of "ATM"?
a) Automatic Teller Machine
b) Auto Teller Machine
c) Automated Teller Machine
d) Authorized Teller Machine
16. A financial KPI or metric is a
measurable value that indicates
a company’s financial results
and performance,
provides information about
expenses, sales, profit, and
cash flow,
in order to optimize and
achieve business’ financial
goals and objectives.
17. Here is the complete list of
the top finance KPIs and
metrics, that every financial
professional needs to know:
18. 1. Gross Profit Margin
• Gross Profit Margin = (Revenue - Cost of
Sales) / Revenue * 100
•How much revenue you have
left after COGS?
19. 2. Net Profit Margin
•Net Profit Margin = Net Profit /
Revenue * 100
• It measures your profit after subtracting
all operating expenses, depreciation,
interest and taxes divided by the total
revenue
• How well your company increases its
net profit?
20.
21. 3. Working Capital
•Working capital is a
measure of the business’s
available operating
liquidity, which can be
used to fund day-to-day
operations.
•Working Capital = Current
Assets - Current Liabilities
Is your company in stable financial health?
22. 4. Current Ratio
•liquidity ratio
•This ratio is a key indicator of
a company’s short-term
financial health and shows
whether you are able to
collect accounts due in a
reasonable amount of time.
•Current Ratio = Current
Assets / Current Liabilities
Can you pay your short-term obligations?
The higher your current ratio, the more capable you are of
paying your bills in the short-term.
Banks often recommend a current ratio higher than 2.
23. 5.Quick Ratio
• measures a business’s ability to
handle short-term obligations.
• This metric takes into account
just the short-term liquidity
positions (the so-called near-
cash assets) that you can
convert into cash quickly.
• Ratio = (Current Assets -
Inventory) / Current Liabilities
Is your company’s liquidity healthy?
24.
25. 6. BERRY RATIO
• This metric compares the gross profit
of a company with its operating
expenses,
• you can use it to indicate the profit in
a specific time period.
• If the coefficient is above 1, it means
that your company is making profit
above all variable expenses,
• while a coefficient below 1 will
indicate that your company is losing
money
Are you losing money or generating profit?
26. 7. CASH CONVERSION CYCLE
• The mathematical formula for
calculating CCC
= DIO (days of inventory outstanding) +
DSO (days sales outstanding) – DPO (days
payable outstanding).
A steady or decreasing CCC is a fairly
good sign, but if it starts to rise, an
additional analysis should be made.
Performance Indicators
If a company is efficiently managing the
requirements of the market and its
customers, the cash conversion cycle will
have a lower value.
How fast can you convert resources into cash?
27. 8. ACCOUNTS PAYABLE TURNOVER
Accounts payable turnover is a short-term
liquidity financial metric and shows how
quickly you pay off suppliers and other
bills.
28. 9. ACCOUNTS RECEIVABLE TURNOVER
How quickly do you collect payments?
The higher the accounts receivable turnover ratio, the
better and the more liquidity you have available to finance
your short-term liabilities.
measures how quickly you collect your
payments owed and displays a
company’s effectiveness in extending
credits.
29. 10. RETURN ON ASSETS (ROA)
The higher the return on assets (ROA) the better, especially
compared to other companies in the same industry.
how effectively they are converting investments into
net income.
insight into how efficiently management is using
their assets to generate earnings
30. 1. Gross Profit Margin: How much revenue you have left after COGS?
2. Net Profit Margin: How well your company increases its net profit?
3. Working Capital: Is your company in stable financial health?
4. Current Ratio: Can you pay your short-term obligations?
5. Quick Ratio / Acid Test: Is your company’s liquidity healthy?
6. Berry Ratio: Are you losing money or generating profit?
7. Cash Conversion Cycle: How fast can you convert resources into cash?
8. Accounts Payable Turnover: Are you paying expenses at a reasonable
speed?
9. Accounts Receivable Turnover: How quickly do you collect payments?
10. Return on Assets: Do you utilize your company’s assets efficiently?
31. Return on Equity: How much profit do you generate for shareholders?
Economic Value Added: How much profit do you generate for shareholders?
Employee Satisfaction: Will your team recommend you as a workplace?
Payroll Headcount Ratio: How do you utilize your labor force?
32. Operating Profit Margin: How is your EBIT developing over time?
Operating Expense Ratio: How do you optimize your operating expenses?
Vendor Payment Error Rate: Are you processing your invoices productively?
Budget Variance: Is your budgeting accurate and realistic?
38. Meaning
• A debt instrument is a fixed income asset that allows the
lender (or giver) to earn a fixed interest on it besides getting
the principal back while the issuer (or taker) can use it to
raise funds at a cost.
• Debt acts as a legal obligation on the issuer (or taker) part to
repay the borrowed sum along with interest to the lender on
a timely basis.
• A debt instrument can be in paper or electronic form
39. Dirty price =
Clean price
+ Accrued
interest
Dirty price is quoted in
most markets, but
there are exceptions,
and consequently
either clean price is the
starting point or
accrued interest is
deducted from gross
price.
40. • Clean price of publicly issued
government bond is calculated
in order of the following priority:
• MP is derived from OTC =
• Dirty Price is quoted
• Deduct the AI = Clean Price
• BSE
• If no OTC & BSE – Bid
• Clean price = Dirty price – Accrued
interest.
41. Privately placed government bonds
• In the case of privately placed
government bonds we use
different methods to calculate
the prices of fixed or floating
(variable) interest bearing
bonds.
• Fixed bonds
Floating bonds
Future cash flows of floating bonds are unknown, because coupon payments are
determined only for the next period of duration, so we cannot use the formula
above. In this case we simply regard these prices as 100% of nominal value.
42. Calculation of debt securities’ accrued
interests
• Fixed bonds
• The accrued interests of fixed
government bonds are
calculated on the basis of
Actual/Actual method
43. Floating bonds
• In case of floating rate bonds we use different formulae to calculate the
accrued interest depending on the reference product on which the
interest calculation is based.
44. Market Technical Analysis
• Technical analysis is a process used to examine and predict the future prices
of securities by looking at things like
• P___ m____
• C_____,
• T____,
• Trading V___ and other factors.
• focuses on trading signals to describe good investments and trading
opportunities by examining an investment's trends through its trading data
and other statistical elements.
45. As a general rule,
technical analysis
leads the
current or past price
of a security
as the best indicator
of the future price
of that security
46.
47.
48. Meaning
Technical analysis is a method used by
traders to forecast future price movements
of stocks by analysing past trading activity.
Chart patterns and statistical numbers are
used extensively by technical analysts.
49. Technical Analysis three assumptions
1.History
repeats itself
2.Market
Discounts
everything
3.Prices are
trend driven
50.
51. Top 5 Technical Analysis Tools For the Stock Market
• In present times, have started
investing in the .
• Investing in the stock market = to get----------.
• But keeping a close eye on the stock market trends is
not everyone’s cup of tea, especially for a person who
doesn’t have much experience in the field.
52. • So, for understanding the latest stock market trends- tools for
technical analysis.
• These tools help investors - highs and lows of the stock market
trends and make things easier for them
• But, considering its 21st century, there are a large number of
tools available for solving the purpose and it is very tricky to
choose the right one too.
• The points to be kept in mind while choosing these tools are
professional scalability, cleanliness, and the tool must be easy
to understand and use.
53.
54.
55. List of 19 Best Technical Analysis Software for
Indian Stock Market in 2022
1. Masterswift 2.0 Trading Platform
2. RichLive Trade Technical Analysis
Software
3. MetaTrader 4 Software
4. MotiveWave Trading Software
5. ECG Trade Software for Stock
Market
6. Investar Stock Trading Software
7. eSignal
8. Spider Stock Trading Software
9. Sharekhan Trade Tiger
10. Trader Guide
11. NinjaTrader
12. AmiBroker India
13. VectorVest
14. Profit Source Platform
15. Algo Trader
16. WinTrader
17. Angel Broking
18. Trade V
19. KeyStock
67. How Technical Analysis Software for Indian
Stock Market Works?
• several key features - investment decisions.
• Scanning tools – Research on their ups and downs through this tool.
• Customizable Charts - forecast stock patterns - current as well as past
data.
• Up-to-Date News: To keep you updated, - the latest stock market news
from relevant news sources.
• Reports: go through research papers and reports developed by third
parties on general and stock market.
• Monitor Data: The constant availability of data such as a company’s
worth, stock prices, quarterly reports, etc., lets traders and investors
make informed decisions about their investment/trading choices.
68. Market risk
• Systematic risk, - uncertainty associated with any investment
decision.
• Price volatility
• Systematic risk is not specifically associated with the company or the
industry one is invested in; instead, it is dependent on the
performance of the entire market.
• Investor to - such as inflation, interest rates, the balance of payments
situation, fiscal deficits, geopolitical factors, etc.
70. Market Risk Analytics
• Market Risk Analytics is aimed at mitigating risk by
offering techniques such as
• Value at Risk (VaR) Assessment,
• Scenario Analysis,
• Stress Testing,
• Correlation Analysis,
• Volatility Correction etc.
71.
72.
73.
74. •To determine the potential benefits of releasing his
product into the market, the inventor can use scenario
•What if there’s another company working on a similar
technology,
•it manages to release its product into the market first?
• What if the material makes the phone bulky?
•Will it still be as attractive as the current mobile cases?
77. Meaning
Stress testing is a computer-simulated technique
to analyze how banks and investment portfolios
fare in drastic economic scenarios.
Stress testing helps to measure investment risk
and the adequacy of assets, as well as to help
evaluate internal processes and controls.
