Visual Finance Quotes

“ROA: is the company taking the best advantage of assets?   ROA is calculated by dividing the net profit by total assets. For”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“An income statement measures how a business is doing: what value it generates (sales), what value it consumes (expenses), and the value left at the end (profit).”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“Another impressive ratio is Altman Z-Score. Discovered in 1968 by Edward Altman, this quotient measures the probability of a company going into bankruptcy within two years. Over the last few decades, the formula has proven to be highly accurate. It was originally developed for public manufacturing companies, with other versions for private and non-manufacturing organizations becoming available later. The original Z-Score formula was as follows: Z = 1.2X1 + 1.4X2 + 3.3X3 + 0.6X4 + 0.99X5 Where: X1 = Working Capital / Total Assets X2 = Retained Earnings / Total Assets X3 = Earnings Before Interest and Taxes / Total Assets. X4 = Market Value of Equity / Book Value of Total Liabilities. X5 = Sales / Total Assets. If Z > 2.99, the company is in the Safe Zone.”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“Waste levels Logistics: Schedule accuracy On time delivery percentage Average time to deliver Inventory accuracy Human resources: Employee turnover Average time to fill a position Cost per hire Employee satisfaction/engagement index Absenteeism Salary competitiveness factor Training return on investment Corporate social responsibility: Carbon and water footprints Energy consumption Product recycling rate Waste recycling rate”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“growing sales Help save expenses Increase profitability Use assets efficiently Help improve cash flow Charge customers more quickly Provide innovative ideas Reduce delivery times Improve customer service (The more times you said yes, the more valuable are you to the company.)”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“Profitability can be fixed over time if the business has firm roots, but cash problems are usually a sign that the end is coming. Cash is harder to manipulate. While the income statement uses many estimates and can be subject to deliberate manipulation, cash is easily measured because it is backed by what's in bank accounts.”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“Another reason for the success of this group of companies might be that they base their price on what the customer is willing to pay rather than on the real cost.”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“growing, and sustainable. We’ve also explored how a company”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“In the same way that learning a foreign language opens your mind to new ways of thinking, learning the financial language teaches you new ways of looking at business.”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“ROCE: are you getting the best return on your investment?   As mentioned above, the ROE’s weakness is that it only takes into consideration the equity of a company, not accounting for the proportion of debt.   The return of capital employed (ROCE) fixes this problem because it takes into consideration the fixed assets (i.e., the investment that is employed to produce value).”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“ROE: how efficiently is the company using owner’s equity?   The return on equity (ROE) measures what amount of profit is returned as a percentage of the owner’s equity. In other words, this ratio tells us what the investors earned for their venture.”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“Few industries have enough cash to cover their debt without having to count on selling inventory or converting receivables to cash.   A healthy cash ratio is considered to be between 0.5 and 1.   Liquidity ratios are helpful way to measure if a company is at risk of not being able to pay its debt. However, some critics point out that those ratios are past-oriented and cannot predict future cash problems.   Also, such ratios can be misleading because of creative accounting practices (a topic we will cover later on), especially because accounts receivable might be inflated or inventory could be wrongly estimated.”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions

“To grow, a company may acquire other businesses and pay more than the market cost. The excess payment is called goodwill. Goodwill is an intangible asset and usually cannot be sold separately; it does not exist on its own outside the business. Examples include the brand, experience on the market, and reputation. Goodwill exists as long as the company exists, and it has an unlimited lifespan.”
― Georgi Tsvetanov, Visual Finance: The One Page Visual Model to Understand Financial Statements and Make Better Business Decisions