Business Health Check
The aim of the business health check is to provide business owners and stake holders an overview of the current financial situation and SWOT analysis of your business to help identify areas of strength and weakness in your business.
It is designed to give a snapshot of the current business position from the last three years financials. This will help identify trends and areas of both strength and weakness in the business.
Key ratios and benchmarks provided include
LVR – Loan valuation ratio, a key ratio banks use to determine your risk factor
Return on Equity
Return on assets
Asset turnover ratio
Overhead cost ratio
Operating profit ratio
TPML – total plant and machinery
Yield kg grain/100mm rainfall
Revenue per labour unit
Depreciation per hectare
Cost of Production
An understanding of these key ratios can help business owners and stake holders have more informed conversation around the following areas:
1. Overall financial performance
What are the key factors driving your financial performance, are there areas of weakness that need to be improved upon, are there areas of strength that should be further capitalised?
2. Risk in the business
What are the key risks to the business, are these risks healthy or harmful? Are the risks in the business helping it to achieve the overall goals of the business?
3. Debt structures
Analysis of current debt structures, are there other ways to structure debt that would benefit your business?
4. Capacity to grow
What is the capacity of the business to grow? Are there opportunities that could help the business to achieve key goals? Does the business have capacity to grow, what are the opportunities for growth?
5. Strategy for interest rate negotiation
Is the business getting a fair deal from your financier? How does the bank view your business and the risk associated with the business? How can you mitigate those risks and negotiate a better deal?
To understand how a business health check can help you make better decisions contact Hudson Facilitation today.