Sunday 29 March 2015

5 Simple Steps to Analyse Operating Performance of Companies


Analyzing operating performance of any company is a critical step before taking any investment related decision about any company. It tells an investor whether any company is improving its activities year on year and should be a potential investment candidate or on the contrary, its performance is deteriorating with time and any investment in its stock should be avoided.

Topics :
  1. Companies need to grow
    1. Sales Growth
  2. Maintain or improve profitability
    1. Operating Profit
    2. Net Profit
  3. Operate Efficiently
    1. Inventory turnover ratio
    2. Days of receivable outstanding
    3. Fixed Asset turnover ratio
  4. Converts Profits into Free Cash
    1. Cumulative CFO higher than Cumulative PAT
  5. Using Free Cash to fund Future Growth

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