(What do we give you with this index?)
We will tell you what this index means in more detail, although of course any doubt or question about it we will be happy to give you a personal answer for your specific case.
As we indicated in the introductory post we express each index using the concept “distance”: we indicate in what situation of departure it is (ratios from 1 to 5) and we say, based on the strategy that we want to implement, the level of the recommended ratio.
Therefore, we always express the results based on “distance maps” and recommendations for their achievement, which would be part of the global roadmap.
This index indicates what the effective results are. Whatever action we do, any strategy that we propose will be focused on achieving results. Of course. What happens is that, depending on the starting point, and depending on what we want to do, we can foresee and anticipate necessary actions and possible impacts, which we will have to manage.
We focus on visualizing operational risks and financial risks separately. We look at the evolution and behaviour to understand where the results come from at the moment, and to be able to anticipate the actions that facilitate and provide a path in the strategy that we want to implement.
We identify and observe the vulnerabilities and / or opportunities in the income statement and in the balance sheet. This allows us to measure the balance between the evolution of revenues and the associated management ratios, debt ratios, and therefore to measure the impact of the strategy and the action plans, as reflected in the income statement and balance sheet.
To work and show it, we apply a traffic light code, which, in a very summarized and simplified way, we would indicate if at the time of diagnosis we come from a deterioration of the operational / financial situation, a stagnation, or a time of growth, and from that position, towards where we believe that it can be reached with the implementation plan that has been proposed to us.
Each starting point will tell us in detail how the company is doing and will allow us to identify in which points they are going to impact, to strengthen with the proposed strategy.
Situations that happen in companies and that can be familiar can be of the following type:
- To be obtaining good results, from the point of view of income, but having very low EBITDA ratios, compared to companies in the sector
- Have a repetitive incidence in the operating ratios that limits a good cash flow, and therefore generate a greater financial tension than the sector’s own
- Discern adequately between debt problem and operational problem, in an initial stage, and focus the implementation plan so that it takes into account
- Faced with the activity and strategy that is to be implemented, review the operational financing needs well, and maximize the result
There are many situations in which financial reality, and the evolution that may have facilitates or limits the implementation and implementation of the strategy.
The achievement of results is the clear and concise measure that achieves what is intended with the implementation of the strategy.
Be aware of this, in a broad way in the organization, know what activity impact what, and based on the semaphores that are identified, guide the concrete action plan taking into account this evolution, is always a recommendation by In Movement.
Only from the knowledge and full awareness of the impact of our operational activity in finance, and the implications of investments and adjustment of operating costs, we recommend moving forward with the implementation of the strategy.
(Can I analyse only this part?)
We can look at this part of the diagnosis in greater depth, if that is your concern. We can help you. We put the FOCUS where you feel you have more need of solution.
In our experience, and from In Movement, we will always give you a holistic vision both in the analysis and in the proposed actions to walk the path of identified improvement. Although we look only a part, a brushstroke of the global that we detect, we will also share it.
We are at your disposal for any questions you may have and that you want us to discuss in greater depth