Financial indicators are a set of values that relate to a company’s income and expenses, final result, and economic position. These figures reveal the true state of the company, allowing strategic decisions to be made.
In this article, you will learn about the main financial indicators of a company and their significance.

1. Working Capital

It refers to the amount of money that can be invested in a company without jeopardizing its liquidity. It is computed by dividing current assets by liabilities.

Working capital is an important indicator for determining whether a company has the capacity to expand or not, as it serves as a forecast of growth and development.

2. Cash Flow

It is the substraction between income and expenses. Revenues are defined as sales, payments for the sale of resources, and asset use; expenses are defined as purchases, payments for the purchase of resources, and asset use.

It is a very useful indicator for measuring the direction that a business is taking because it determines whether or not it is functioning properly. In this regard, it is critical to determine whether or not the income exceeds the expenses.

3. Price and benefit ratio

You can use this variable to calculate the profitability of your products or services. The percentage of profit you make on each sale is usually a good indicator of whether an offer has a good price-earnings ratio.
If this is not the case, the company can consider improving quality or increasing or decreasing prices to achieve a satisfactory outcome.

4. Accounts receivable

It is the money that a company has yet to collect from its various customers. The amount includes any interest that has accrued since the previous billing.
The analysis of this indicator helps to improve working capital management and better plan its use.

5. Credit risk

It denotes the likelihood that a company will be unable to meet its credit obligations. Because it is a significant factor in the credit report, banks and lending institutions use historical data to qualify it.
In general, the outcome of this analysis aids in determining the trustworthiness of both the company and the borrower.

Why is it important to consider these company indicators?

Financial indicators quantify a company’s economic situation and the market in which it operates. Examining these metrics provides more insight into the evolution of profitability, liquidity, and solvency.

These factors are critical as part of financial institutions’ credit reports; therefore, being aware of them provides a foundation for improving the risk profile and having more opportunities to access financing.

How does a API improve financial analysis?

Every company can benefit from effective risk management solutions that help them better understand their current financial performance and plan for the future. The API from CRiskCo provides a credit risk assessment in minutes as well as real-time access to any accounting system or government repository (such as the SAT in Mexico).

If you’re looking for a new way to evaluate credit risk, CRiskCo is the place to be. Learn more about the features available through our system and begin making data-driven decisions.