Company's Financial Accounting
Company's overall rating
How to Estimate a Company's Financial Position
The interpretation of all indicators is intended to give a succinct overview of the company's financial situation. The overall estimate depends on the goals of the analysts. The financial analyst can make an emphasis on different aspects of a company's economy in his analysis such as: profitability, growth or funding.
Thus, let's review the financial situation of our hypothetical company X and give the overall rating to it with a scale from 4-10 points. (The calculation of each of the indicators is given in the previous sections of our website.)
| Company's X overall rating | Year 2019 | Rating |
| Profitability | ||
| EBIT margin | 16% | 9 |
| ROCE % | 33,9% | 9 |
| Capital structure | ||
| Equity ratio | 66,7% | 10 |
| Gearing ratio | 21,8% | 10 |
| Liquidity | ||
| Quick ratio | 1,6 | 9 |
| The turnover of the working capital items | ||
| Accounts payable turnover | 51,1 days | 7 |
| Inventory turnover | 243,3 days | 7 |
| Growth | ||
| Growth in turnover | 11,1% | 9 |
| Loan debt solvency | 2,8 | 10 |
We have estimated every coefficient equally according to previously mentioned recommended values and, thus, our total score is an average value of the sum of all rates. We have got company’s X overall rating equal to 8,9 and this is an excellent result!
(9+9+10+10+9+7+7+9+10)/9 = 8,9
To assess the EBITDA margin (käyttökate) indicator, it is necessary to compare our obtained result (20%) both in changing dynamics (from year to year) of the enterprise itself and for the industry as a whole. You can find different key figures at Statistic Finland website.
You can estimate other figures in the same manner, for example, equity ratio or growth in turnover.