The company's operating ability can be understood as turnover rate. The higher the turnover rate, the better the business and the stronger the management ability. The company exchanges assets for tables, and the asset turnover rate is high, which shows that the asset utilization rate is high and the management ability is strong.
The company's important assets include accounts receivable, inventory, fixed assets and total assets.
Therefore, the three indicators to measure the operating ability are: accounts receivable turnover rate, inventory turnover rate and total assets turnover rate (fixed assets turnover rate is the same as total assets turnover rate).
According to the importance, the total assets turnover rate is 50 points, the accounts receivable turnover rate and the inventory turnover rate are 25 points each.
Concept: It means that a company's total assets can do business several times a year and earn money for the company several times.
Location: Find among the five financial ratios → operational capacity.
Judgment standard:
1, and the total assets turnover rate is less than 1, which indicates that the company is weak in operating ability or is a capital-intensive/luxury industry, which can also be called "money-burning industry". For example, aircraft, automobiles/high-speed rail, ships, gold, silver, copper, iron, oil and other raw materials industries, technology panels or semiconductor industries.
2. A company with total assets turnover rate of 1~2 belongs to normal operation. It is generally a traditional industry.
3. The total assets turnover rate is greater than 2, and it belongs to a company with particularly strong operational efficiency or a circulation industry or a fast-moving industry. Products sell quickly, and funds naturally turn around quickly.
Concept: Accounts receivable turnover rate and average cash days are a set of concepts.
? Average cash days =? 360 (days)? receivable turnover ratio
The turnover rate of accounts receivable reflects how many times the assets "accounts receivable" can do business for the company in a year. The average cash withdrawal days refers to the number of days you can recover cash in a business.
Location: Find among the five financial ratios → operational capacity.
Judgment standard:
The shorter the average cash collection days, the better. The fewer days of cash withdrawal, the faster the funds will be withdrawn.
1, and the average cash collection days are less than 15 days, which can be considered as a cash collection industry.
2, the average cash withdrawal days are less than 60 days are good, because the "accounts receivable turnover rate" is more than 6 times are considered to be well-run companies. The average cash collection days within 90 days are also within the normal range. ?
Concept: Inventory turnover rate and average inventory days are a set of concepts.
Average inventory days = 360 (days)? stock turnover
Inventory turnover reflects how many times inventory can do business for the company in a year. Average inventory days refers to the average number of days that inventory can be sold.
Location: Find among the five financial ratios → operational capacity.
Judgment standard:
The fewer average days in warehouse, the better, and the fewer represent the best-selling products.
Less than 30 days, excellent management skills.
30 ~ 50 days, model student in circulation industry.
50 ~ 80 days, good management ability.
80 ~ 100 days, mostly b2b business.
100 ~ 150, industrial or raw material industries, such as oil, steel and other industries with weak demand.
/kloc-more than 0/50 days, poor management ability or belonging to special industries, such as shipbuilding, aircraft, real estate, luxury goods companies, etc.
Judgement standard is not the only reference, but also depends on the specific situation of the industry.
1. Look at the total asset turnover rate first. If it is greater than 1, continue to look at the average days of inventory and cash, and judge according to the standard.
2. If the turnover rate of total assets is less than 1, you should realize that this is a company that burns money, and immediately check whether the ratio of cash to total assets (as queried in the asset-liability ratio table) is greater than 25%, because the more cash on hand, the safer it is.
Next, check the average cash collection days, preferably less than 15 days. This is a company that receives cash every day.
Finally, check the average number of days in the warehouse to see if the product sells well.
If the total assets turnover rate is less than 1, the importance of other conditions is: the ratio of cash to total assets >; Average cash collection days > average inventory days
(A) the complete cycle of doing business
As shown in the figure, the complete cycle of doing business is from the company purchasing raw materials to production, completing product production, warehousing, paying suppliers, selling products, and finally receiving payment from customers.
Complete business cycle = average inventory days+average cash withdrawal days.
= Days of Payable Accounts+Days of Lack of Money
Teacher MJ thinks that a complete business cycle within 35 days can be used as a criterion to judge a company's excellent business ability. Of course, this is only a reference figure and should be compared in the industry.
Another point in the complete cycle of doing business can show how the company's operating ability is, and that is the number of days when it is short of money. Do you believe that some companies are short of money and can do business without spending money?
There really is. General suppliers will give the company a discount on the number of days of payment, and we can use this time to sell the goods and get the payment. For example, a complete business cycle of a company is 45 days, and the number of days for payment of accounts payable is 60 days, so the number of days for lack of money is-15 days, thus realizing the completion of business before the payment date, which is equivalent to doing business without spending money.
(2) Pay quickly and pay slowly.
After understanding the complete cycle of doing business, the company's best business strategy is obvious: try to lengthen the days of paying suppliers and shorten the days of collecting money from customers. This is to collect quickly and pay slowly, so that the company can do business with the least money or even no money.
(3) Identify false accounts from the average cash collection days.
The average cash collection days are not only an important index to analyze the operating ability, but also an entrance to identify false accounts.
Generally speaking, the company's average cash payment days are relatively stable within 5%. If we find that a company's average cash turnover days have greatly increased, then it is probably making false accounts.
One of the common methods of making false accounts is false trading. Judging from the income statement, the net profit will increase substantially, but there will be no real cashback of false transactions. Therefore, there will be no substantial cash growth on the left side of the balance sheet, and this part of the money can only be reflected in accounts receivable, so the average cash collection days corresponding to accounts receivable will show a trend of substantial growth. Therefore, the three financial reports should be read together, not just the income statement, otherwise it is likely to be blinded by illusions.