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Payback period (PP)

Payback period is the method used to evaluate investment projects. It comes out from relevant profit or cash-flows and calculates the number of years (months or other periods) during which will the invested amount be repaid from the relevant income or cash inflow. Generally, investments with shorter

Strategic planning and its process

As part of this series you will find basic information about strategic planning process. You will encounter here with terms such as analysis of internal and external environment of the company, vision, mission, goal/objective and strategy. If you are interested in budget and forecast preparation, r

Financial analysis indicators - liquidity

This series follows the series about Group of financial analysis indicators and describes in detail the indicators of liquidity.    

Working capital

Working capital is formed by current assets and includes inventories, receivables and financial assets. It is another indicator of liquidity.   Calculation formula inventories + receivables + financial assets   Another form of working capital is Net working capital.

Equity to debt ratio

Equity to debt ratio is one of the indicators of indebtedness and financial structure.  It is inversed indicator to Debt to equity ratio (D/E), which more widely used.   Calculation formula     Interpretation and recommended values ​​ can be derived from the text presente

Debt repayment period

Debt repayment period is one of the indicators of indebtedness and financial structure. It shows in years, how long it is expected that the company will repay its loans and borrowings from operating cash flow. This indicator is an inverted indicator of Solvency.   Calculation formula

Responsibility centers and their types

Financial analysis indicators - financial structure and indebtedness

This series follows the series about Group of financial analysis indicators and describes in detail the indicators of financial structure and indebtedness.    

Sources of finance

In general, sources of corporate finance can be summarized into the following groups: internal sources of finance – mainly retained earnings external sources of finance: debt – bank loans, issue of debentures, lease equity  - issue of shares Each source of finance be

Debt to equity ratio (D/E)

Debt to equity ratio (D/E) is one of the indicators of indebtedness and financial structure. It expresses the proportion of debt capital to equity. The inverted indicator is Equity to debt ratio.   Calculation formula   Instead of the debt capital can be used only payables, loans and

Debt-service coverage ratio (DSCR)

Debt-service coverage ratio (DSCR) is one of the indicators of indebtedness and financial structure. It shows the proportion of cash-flow (calculated simply from profit after tax) for the reporting period on all future installments of loans, including interest payments.   Calculation for

Cash conversion cycle

Cash conversion cycle is one of the indicators of activity and liquidity, which indicates the number of days beginning with the date of payment for purchased materials, labor and other costs up to collecting cash for the receivable.   Calculation formula Inventory turnover period + Rece

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