20 Management Analysis Tools you Need to Know

 

1// DuPont Analysis
🎯 A profitability analysis method that breaks down your company's return on equity (ROE) into three components: net profit margin, asset turnover, and financial leverage.

2// Economic Value Added (EVA)
🎯 A financial performance measure that calculates the difference between your company's returns and its cost of capital.

EVA = Net Operating Profit After Taxes (NOPAT) - (Cost of Capital x Total Invested Capital)

3// Return on Investment (ROI)
🎯 A measure of an investment's profitability that calculates your return as a percentage of your initial investment.

ROI = (Net After Tax Cash Flow from Investment - Cost of Investment) / Cost of Investment

7// Operating Profit Margin

8// Net Profit Margin

9// Price-to-Earnings (P/E) Ratio

10// Cash Flow Analysis

11// Net Present Value (NPV)
🎯 A financial metric used to assess the profitability of an investment or project.

NPV = present value of cash inflows - present value of cash outflows

12// Cost Volume Profit Analysis (CVP)
🎯 A financial management tool used to analyze the relationship between your company's sales volume, costs, and profits.

13// Payback Period

14// Internal Rate of Return (IRR)
🎯 This is the discount rate that makes your NPV for a particular investment equal to zero.

15// Cash Conversion Cycle (CCC)
🎯 A financial metric that measures the time it takes for your company to convert its investments in inventory and AR into cash.

CCC = Days Sales Outstanding (DSO) + Days Inventory Outstanding (DIO) - Days Payable Outstanding (DPO)

16// Return on Assets
🎯 An financial metric measuring the total earnings as a proportion of your total assets

ROA = (Net Income / Average Total Assets) x 100

17// Debt Service Coverage Ratio
🎯 An indicator of your company’s ability to meet its fixed debt payment obligations of principal and interest.

18// Return on Invested Capital
🎯 A financial metric that measures your company's ability to generate returns on the capital invested in the business.

ROIC = (Net Operating Profit After Taxes (NOPAT)) / (Total Debt + Total Equity - Cash and Cash Equivalents) x 100

19// Weighted Average Cost of Capital (WACC)

20// Dividend Payout Ratio

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Oana Labes, MBA, CPAOana Labes, MBA, CPA