Financial analysis tables 
and financial diagnostic

Diagnosing a business financial strength:
profitability, solvency, prospects, valuation.


A financial analysis is needed for a business valuation or a solvency
diagnostic so as to make appropriate investing / financing decisions

This article shows the main steps: business description, its profitability,
its financial structure (solvency...), its prospects, its valuation.
It gives also the framework of a final presentation

Want to find out sous contagion how healthy is a business?

Purposes and steps

The analysis of an entity, a situation or an  issue - and financial analysis is
no exception - ends normally with a ...synthesis which
  • Sums up the key elements.
It can address to:
    • the management team so as to build its strategy,
    • or an investor to get a valuation of a firm so as to invest in it
    • or a lender (*) for a solvency / survival diagnostic.
(*) an existing or potential one, or to anybody whose fate is 
      linked tonthe firm: staff, suppliers, customers...

The tables below cites the main steps of a financial analysis
 (and the framework for a synthesis or presentation):
* Description of the business,
*
Its profitability,
*
Its financial structure (solvency...),
*
Its prospects,
*
Its valuation.
_____________________________________________________________________

presentation A. BUSINESS PRESENTATION

Key elements

Describe

Comment
situation

Possible
evolutions

 Origin, history
x
x


 Activity and positions (markets,
 production, equipments, premises)
x
x
x
x
x
x
 Markets (needs, segments,
competition, selling prices)
x
x
x
x
x
x
 Operational factors (availability
 of supplies, production cycle)
x
x
x
x
x
x

 Selling network and methods

x
x
x
x
x
x

 Management, human resources

x
x
x
x
x
x
_________________________________________________________

calcul luck B. FINANCIAL DATA

 Profitability:
 costs, margins

(for last 3 or 5 years)
 Sales / revenues, expenses / costs,
 margins
(table below)

 + C
omments on level
+ evolution 
     of costs
+ profitability.
Elements of P&L
account
(Income statement)
Year A
Year B
Amounts
% of
sales
Amounts
% of
sales
 Sales
xxxx
 Main costs (items or
 groups
of items above
 5 % of sales)
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
x
 Operating profit /
 loss 
xxxx
 Net profit / loss
xxxx
Break-even threshold

 Is it high / low ? What sales are needed
 
to reach it?  Is it an easy objective?
Financial structure
elements (Balance sheet)

for the last 3 or 5 years
 Main assets / liabilities (on the same
 
model as in the profitability table above)
 + Comments on solvency / liquidity
 Risk (and opportunity)
 factors
on revenues /
 costs /
  solvency

 Main financial risk / opportunity factors?
 Is the sensitivity of earnings low / high?
 What are the balance sheet fragilities /
 strengths?
________________________________________________________

dynamic loupe C. PROSPECTIVE ANALYSIS

This supposes also a
"SWOT" analysis: Strengths, Weaknesses, Opportunities, Threats.

The marketing plan
can also be added to the prospective analysis 

within for example a business plan.

Which evolutions =>
may have a crucial
effect on :
Techno-
logical
evol.
Socio-
logical
evol.
Economic
evol.
Geo-
political
evol.
Other
evol.

Sales

x
x
x
x
x
x
x
x
x
x

Production

x
x
x
x
x
x
x
x
x
x

Prices

x
x
x
x
x
x
x
x
x
x

Costs

x
x
x
x
x
x
x
x
x
x
List of new / existing factors that
will have the most impact on:

In a few months

In a few years

The geographical zones
of activity or sales
x
x
x
x

The industrial sectorx
x

x
x

The firmx
x

x
x


_________________________________________________________

computer sousD. STOCK VALUATION

Valuation sheet for a stock (in Euros: E)

EPS 5 (projected earnings per share in 5 years)

x "Primary" P/E coefficient

E 3,10

x 12


E 37

Present gross dividend

x number of years

E 1,20

x 5


E 6

Total = EEV / Estimated economic value

E 43


Minimum
potential

Structural

Maximum
potential

x Estimated Image coefficientx 0,8x 1,2x 1,7
= PMV / Potential market value E 34E 52E 73

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M.a.j. / updated
: 21 July 2015

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