Business and Economy Info

The combination of liquidity, profitability and debt determine Free Cash Flow FCF firms. The concept is very important if we consider that this is the cash flow available to meet the beneficiaries of the company and its creditors and partners.

Creditors are to assist with debt service and partners to distribute dividends to be determined.

Let’s define each of the signs and their relationship:

Liquidity is defined as the ability of companies to generate resources to meet current short-term commitments.The relationship between liquidity and profitability allows us to know the turnover index

In rotation is an implicit indicator of liquidity, such as accounts receivable turnover, inventory turnover and current ratio.Profitability is a measure of the productivity of funds committed to the company. The relationship of this liquidity to provide information about the financial structure.

Financial structure is the following indicators: Return on Assets and Return on Equity, which is nothing but the relative ratio of assets and capital with earnings, both operational and pre-tax and net profit.

Through the statement, you can analyze the structure in a different profit margin compared with sales from their point of view gross margin or operating margin before tax and net margin.Represented by the value of debt service interest on the shares for debt capital, liquidity and business-related loans, where we found the indicator shows the ratio of total liabilities to total assets.

This is an indication of total assets over total liabilities is used to evaluate the credit worthiness of the company. This indicator gives an idea of the risks assumed by taking debt and back on it.

The ability to take the obligation is determined to only pay interest, but also the capital of fertilizer. Herein lays the importance of the concept of Free Cash Flow FCF.Financial planning is very important to make a decision, which should have updated information on potential external events that could affect future ability to generate cash. Capacity can be determined from analysis of FCL.

Finally, to search for business information needed to prepare the Balance Sheet, Profit and Loss and Cash Flow, but more important is to analyze how they meet the projected business through the financial plan.Thank you for visiting this website. We want to develop products to help you start a business based on your needs.

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