Financial ratios are used by lenders to make a decision on whether to provide finances to a business or not. These ratios can be used to evaluate the overall financial position of a business. To build up a strong credibility before its lenders, a business must strengthen its financial ratios.
The financial ratios are classified into four main categories, namely, liquidity ratios, activity ratios, solvency ratios and profitability ratios. Profitability ratios are a measure of the profitability and earnings of the business. One such important ratio which draws the attention of investors is the Return on Net Worth.
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A business may extend credit to its customers for the goods sold & services rendered to them and frame appropriate credit policy suitable to the business. Credit policy indicates the credit period that a company will offer to its customers. A credit policy should not be too liberal that it results in defaults, nor should it be too strict that it restricts sales. Ageing analysis of accounts receivables helps a business in framing an appropriate credit policy and also helps to analyze the category and quality of its debtors.
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Profitability ratios indicate the company’s ability to generate revenues over and above the operating expenses of the company during an accounting period. Of all the profitability ratios, Net profit margin is the most closely followed ratio by the shareholders.
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Loan Against Property is widely regarded as the most effective mortgage loan for funding a business and remains one of the most popular loan products in the small business loans category. Given this popularity, there are many sources for Loan Against Property that you can access. Here are 5 reasons why Loan Frame should be your first – and only – port of call for your Loan Against Property.
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The performance of the business can be evaluated by having an insight into its financials. To build up a strong credibility before its lenders, a business must strengthen its financial ratios. The financial ratios can be classified into four main categories, namely, liquidity ratios, profitability ratios, solvency ratios and activity ratios. Activity ratios are the financial tools that are used to evaluate the ability of the firm to convert its assets into cash or cash equivalents. One such important ratio is Receivables Turnover ratio.
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Your credit score is the mirror to your lenders in terms of your repayment habits and to some extent, your reliance on debts. Thus, it is important for you to have a good credit score. Reviewing your credit report indeed helps you understand your credit health but understanding what is impacting your credit score is also important.
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Gearing Ratio evaluates the financial structure of the company. It indicates the ratio of capital raised through debt to that raised through equity. In other words, it is the measure of financial leverage of a company. It is also known as Debt-Equity Ratio.
It can be computed by dividing the company’s total debt (both long-term as well as short term obligations) with the shareholders’ equity. Thus,
Gearing Ratio/Debt-Equity Ratio = Total Debt/ Total Equity
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Once you have decided to apply for a small business loan, it helps to have an understanding both of your circumstances as well as the business loan lender’s perspective. This will help to improve the odds of success, and apply for a loan type and amount that is suitable to both your needs and your capacity.
Here are 5 important questions you should ask and answer before you apply for an unsecured business loan:
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Fintech firms have been generating a lot of interest among investors and borrowers. One aspect that perhaps has not received due attention is that of career prospects, especially relative to banking.
Fintech, as the term suggests, is a combination of technology and finance. This combination serves three purposes: a) it reduces cost of providing a service; and b) it widens the reach of the said service and c) provides a better customer experience. The primary categories of professionals a Fintech firm would attract are Information Technology, Risk, Finance, and due to high growth rates and customer orientation, Sales. There are compelling reasons for candidates from these fields to choose Fintech over Banks or NBFCs. Let us look at a few of these.
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Every business has its own core activities which are referred to as the Operating Activities.
Operating Income or Operating Profit refers to the profit that a business has after paying for all its Operating Expenses that include raw material costs, employee costs and all other operating bills. It is the amount available to cover the Interest & Tax obligations of the business. The Operating Profit when divided by the Revenue from Operating Activities gives us Operating Margin or Operating Profit Margin. It is a type of Profitability Ratio which implies how much a company earns as profit for every rupee of its sales.
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