Banking Advisors Page 5

Dear friends, today we’re delving into a crucial metric that can give business owners peace of mind—the Debt Repayment Ratio. This ratio serves as a “financial health check-up” for companies, revealing whether they’re thriving or on the verge of collapse. Let’s uncover the secrets behind this formula. The Core Formula The Debt Repayment Ratio is calculated as follows: Debt Repayment Ratio = Net Cash Flow from Operating Activities / (Current Maturities of Debt + Cash Interest Expenses). The numerator, net cash flow from operating activities, represents the actual cash a business earns from its day – to – day operations. The denominator, the sum of current maturities of debt and cash interest expenses, represents the total debt principal and interest...

Like(0)SinoLoanExpert2025-03-25Business StrategyCash Flow AnalysisCorporate SolvencyDebt CrisisDebt ManagementDebt Repayment RatioFinancial Health CheckFinancial RiskNet Cash FlowOperational Cash FlowViews()

Why the Balance Sheet is the “Master” Financial Statement While the income statement and cash flow statement are critical, the balance sheet is the only true “master” financial statement. Here’s why: The income and cash flow statements merely detail the dynamics already embedded in the balance sheet. The Hidden Links Between Balance Sheet and Income Statement The foundational equation linking these statements is:Assets = Liabilities + Owner’s Equity + Revenue – ExpensesThis reveals a critical truth: Inflated profits (Revenue – Expenses) require either: Case Study: Earnings Manipulation Tactics Red Flags: The Trio: Balance Sheet, Income Statement, and Cash Flow Statement 1. Expenses vs. Assets 2. Critical Cross-Statement Relationships Dissecting Earnings Quality: Five Types of “Profit” Not all profits are equal....

Like(0)SinoLoanExpert2025-03-25Asset ValuationAsset ValuationsBalance SheetCash Flow StatementEarnings ManipulationEarnings QualityEquity ScrutinyFinancial Red FlagsFinancial Statement AnalysisIncome StatementLiability AnalysisOperating Cash FlowViews()