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Financial Analysis Software

Financial analysis software is used for the analysis of a company or individual's financial statement, typically by financial analysts or grantors of credit like commercial, small business, agricultural and consumer lending institutions.

Financial analysis software chores are more easily undertaken using a centralized system like WebEquity to save time in the data gathering and financial analysis processes which eliminates the need for "re-keying" financial information for the purpose of performing a financial analysis on a potential borrower.

Financial analysis software scribes and academicians, and economics in general, love to hear themselves wax poetic on how financial analysis software works with dialogue like, "Financial analysis software deals with the cost and benefit flows from the point of view of a firm or individual and traces the investment's monetary effects. Financial analysis software is carried out to assess the financial effects of a project, determine the financial efficiency of resource use, assess financial incentives, provide a financial investment plan and debt repayment capacities, assess whether the investment resources are available at the required time, and assess any changes needed in an organization and their management."

Whew! What a mouthful on financial analysis software.

Financial analysis software like WebEquity encompasses the use of electronic balance sheets, cash flows, associated income and expense schedules, cash and accrual analysis, enterprise analysis and the use of financial ratios for commercial, small business and agricultural business entities. To this degree, WebEquity is used for the evaluation of financial statement data, economic & market information and forecasts to produce an assessment of a business entity's past or future operating performance & financial condition.

Financial analysis software is a multi-faceted, dynamic process that allows you to:

• Follow a systematic approach to analyze large credit requests.
• Determine the financial repayment ability of a business.
• Evaluate the financial sensitivity of the operation to fluctuation in interest rates, revenues and expenses.
• Determine the financial liquidity, solvency and collateral position of the business and compare results to industry averages.
• Determine whether the operation is profitable and efficient.
• Identify non-financial factors that affect the management of the operation.

Financial analysis software like WebEquity provides powerful ratios and indicators that allow lenders to quickly view the financial status of a business entity. Here are just a few of the ratios WebEquity provides in its financial analysis software:

• Current Ratio: Current Assets ÷ Current Liabilities = Current Ratio

Financial analysis software ratio that provides an indication of the liquidity of the business by comparing the amount of current assets to current liabilities. A business's current assets generally consist of cash, marketable securities, accounts receivable, and inventories.

• Quick Ratio (Acid Test): (Cash + Marketable Securities + Accounts Receivable) ÷ Current Liabilities = Quick Ratio

Financial analysis software ratio that is a measurement of the liquidity position of the business. The quick ratio compares the cash plus cash equivalents and accounts receivable to the current liabilities. The primary difference between the current ratio and the quick ratio is the quick ratio does not include inventory and prepaid expenses in the calculation.

• Cash Ratio: (Cash Equivalents + Marketable Securities) ÷ Current Liabilities = Cash Ratio

Financial analysis software ratio that indicates a conservative view of liquidity such as when a company has pledged its receivables and its inventory, or the analyst suspects severe liquidity problems with inventory and receivables.

• Working Capital: Current Assets - Current Liabilities = Working Capital

Financial analysis software ratio that compares current assets to current liabilities, and serves as the liquid reserve available to satisfy contingencies and uncertainties. A high working capital balance is mandated if the entity is unable to borrow on short notice.

WebEquity calculates a complete financial analysis on any loan type, from the simplest loan requests to the most complex agricultural and related small business credits utilizing the Farm Financial Standards Ratios and RMA Industry Comparisons. Credit bureau reports can be pulled from within the WebEquity system and lenders can include that information in their scoring and rating parameters. WebEquity also provides the Fair, Isaac LiquidCredit® analytic and decisioning service for small business lending, including the industry-leading Small Business Scoring Models^SM (SBSS^SM) functionality so lenders can quickly and confidently process loans up to $250,000 with little or no financial data.

Source: Financial Analysis Software