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How to do a financial health check.

This involves preparing or reconstructing your year to date financial statements.

Financial statements allow you to undertake a detailed analysis to help you determine how you want your business to operate after you reopen and whether it is financially viable for you to reopen. Your accountant will be able to assist with such analysis.

Such analysis will also enable you to spot any trends in your business prior to the disaster and compare how your business performed against similar businesses in your industry (more on benchmarking in our DRT download). Such information will be useful in identifying areas of the business that were operating well and those areas that should be improved or closed.

We have included a template of the ratios commonly used to assess the financial health of your business and how to calculate such ratios. We recommend that you compare your results to other businesses in your industry. Benchmark data is provided by several commercial providers. Basic benchmarking data for many New Zealand industries can be found on the Inland Revenue Department (IRD) website 


By looking at your financial statements and your ratio analysis, you should be able to complete much of the below checklist:

  • Do you have adequte cash (such as cash, stock and money owed by customers) to cover bills due in the next couple of months?
  • Is your stock easily converted to cash, if need to pay debt?
  • Does your business have adequate assets to all committments including long term debts?
  • Do you know what your gross margin is?
  • Do you know what your net margin is?
  • Do you know how your margins benchmarks in your industry?
  • Do you know what your break even point is?

We offer 2 choices, download all ratio templates via excel or complete the profitablity ratio and have a copy emailed directly to you.



 

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