Financial analysis refers to an assessment of the viability, stability and profitability of a business, sub-business or project.

Financial analysis is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports.

Continue or discontinue its main operation or part of its business

Acquire or rent/lease certain machineries and equipments in the production of its goods

Make decisions regarding investing or lending capital

Profitability- its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations

Liquidity- its ability to maintain positive cash flow, while satisfying immediate obligations

Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators

Financial analysts often compare financial ratios (of solvency, profitability, growth...):

Past Performance: Across historical time periods for the same firm (the last 5 years for example),

Comparative Performance: Comparison between similar firms.

Net profit / equity = return on equity, Gross profit / balance sheet total = return on assets

Comparing financial ratios are merely one way of conducting financial analysis. Financial ratios face several theoretical challenges

SFAF - the French Society of Financial Analysts

EFFAS - European Federation of Financial Analysts Societies

Financial statement analysis is a judgmental process.

liquidity ratios measure a firm's ability to meet its current obligations.

leverage ratios measure the degree of protection of suppliers of long-term funds and can also aid in judging a firm's ability to raise additional debt and its capacity to pay its liabilities on time.

Working Capital

Acid Test or Quick Ratio

Current Ratio

Cash Ratio

Profitability Ratios, Net Profit Margin (Return on Sales)

Return on Assets

Operating Income Margin

Return on Investment

Ratios and Formulas in Customer Financial Analysis

Return on Equity

Du Pont Return on Assets

Gross Profit Margin

Financial Leverage Ratio, Total Debts to Assets

Capitalization Ratio, Indicates long-term debt usage.

Interest Coverage Ratio (Times Interest Earned)

Common Size Analysis

Rule of 72, A rule of thumb method used to calculate the number of years it takes to double an investment.

Days' Payables Outstanding, Indicates how the firm handles obligations of its suppliers.

Efficiency Ratios, Cash Turnover

Total Asset Turnover

Interest Coverage Ratio (Times Interest Earned)

Operating Cycle

The financial implications of different deal structures is greatly enhanced through rigorous analysis of forecasts and risks.  Risk and sensitivity analysis: What factors have most effect on the value of a deal? How can we reduce risk?  Investing in Biotechnology: Financial Perspectives and Evaluation Strategies.  Valuation continues to be one of the toughest challenges for investors and companies who are interested in forming strategic alliances or in pursuing mergers and acquisitions. Explaining market valuation by new methods and models including the DCF model and ROV (Real Options Valuation), this report covers the concepts and applications to help the biotechnology industry get to grips with the finance industry.  Business development, mergers and acquisitions.
 

 

 

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excel based financial modeling  and statistical modeling consultancy services aimed primarily at supporting corporate and project finance transactions around the world.

SG Systems


SG Systems is a financial modeling and analysis firm with a focus on the pharmaceutical and biotechnology industries.

 

SG Systems specializes in the quantitative and qualitative evaluation of:

  • Discovery, early-mid-late phase, and marketed products

  • Product portfolios

  • Firm equity

  • In-house sales force versus licensing agreements

  • Mergers and acquisitionsFinancial modelling or financial modeling is critical in determining the current valuation of projects, products, and firms.  Discounted cash flow, DCF models along with real options are utilized extensively.  Business development, Mergers & Acquisitions.

SG Systems' objective is to transparently value our clients' projects, portfolios, products, technologies and companies so the client can make very educated business decisions to maximize their firm's value.

 

SG Systems' clients include multinational pharmaceutical companies, companies developing pharmacological products, companies distributing pharmaceutical products, as well as manufacturing concerns.

 

SG Systems' typical projects include financial evaluation and risk analysis of R&D projects, valuation of marketed products, firm valuation in light of product values, trade-off and sensitivity analysis, determination of value-maximizing partnering and licensing conditions, and the valuation of research and technology investments.

 

 

 

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Financial Analysts and Personal Financial Advisors

Financial modeling

Financial modeling is the task of building an abstract representation (i.e., a model) of a financial decision making situation. The result of financial modeling is a tool - mathematical model, computer simulation - designed to represent, under some hypothesized condition, the performance of a financial asset or a portfolio, of a business, a project, or any other form of financial investment.

Financial modeling is a general term that means different things to different users. For others, it means the development of a mathematical model to predict a fair equilibrium price for an asset. For others, it means the development of a mathematical model and the associated computer implementation to simulate scenarios of financial events, such as asset prices, market movements, portfolio returns and the like. Yet for others, it is the development of optimization models for managing and controlling the risk of a financial investment.

Financial modeling the vast proportion of the market is spreadsheet-based, and within this market Microsoft Excel now has by far the dominant position, having usurped Lotus 1-2-3. From this it is easy to see how the uninformed can equate Financial modeling competency with 'learning Excel'. However, the fallacy in this contention is the one area on which professionals and experts in the financial modeling industry agree.

Financial Modeling and Analysis: A Spreadsheet Technique for Financial, Investment, and Risk Management

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