Key Financial Indicator for Operation Analysis

Operational Analysis is a method to examine the current and historical performance of operation. It is very creative in nature and should trigger consideration of how the objectives could be better met, how cost should be saved, and even the organization be performing a PARTICULAR Function.

      Operation Analysis must answer the some question from specific areas of
·         Strategic and business results
·         Financial Performance
·         Market and industry trends
·         Customer Results
·         Innovation

There are some Financial Indicator which helps like a boon in Operation Analysis viz;

Working Capital	Is the difference of Current assets and Current liabilities
Accounts Receivables Days	The time period within which the Receivables converts into cash
Accounts Payable Days	The time period within which the payables are setoff
Inventory Days	The average no. of days a firm hold its inventory.
Operating Cash Flow	Net cash flow from Operation
Operating Cycle	The average no. of days a firm need to collect the cash it used to purchase inventory.
Operating Cash Flow Margin	Is the difference between the revenue of the firm and the Operating cash  flow.
Return On Equity	Net profit per Equity
Labor cost ratio ( employee to sale ratio)	Cost incurred per employee
Sales per employee	Sales generated per employee
Fixed Asset turnover ratio	Fixed assets to sales
Debt to equity ratio	Long term Debt to Equity (shareholder’s fund)
Cash Flow leverage	Debt to EBITDA.
Cash Flow Coverage	The operating cash flow used to generate business funded.
Return On assets	Ratio of Net Income to Total Avg. Assets
Asset Composition	Percentage of each class of assets to Total assets