How to analyse performance of a MSME business in India? Looking for some metrics used for analysis.
Answers
Answer:
Companies can employ financial and non'financial performance methods, depending on their management objectives. However, small and medium companies mainly focus on traditional financial methods, such as profitability (net or gross), return on asset, return on equity, sales growth and such. Some companies employ more or less methods in order to see the operation from different aspects.Different accounting ratios like liquidity ratios (current and quick ratio), leverage or debt ratios (Debt ratio, Debt-to-equity Ratio, Interest coverage ratio), turnover or activity ratios (Inventory turnover, Average Collection Period, Average Payment Period, Total Asset Turnover, Fixed assets turn over, Working capital ratio), profitability ratios (return on asset and return on equity), market ratios (P/E ratio, market to book ratio) are usually employed to measure the financial performance of small and medium enterprise (SME). However, non-financial measures may be used.
Explanation:
Chinhoyi University of Technology
You need to understand what SME means according to IFRS. A company can be big but not listed on the stock exchange. Thats also an SME. We are used to taking SMEs as those small and upcoming companies. Measuring performance is usually by looking at the bottom line (net profit). We can then use ratios e.g. profitability, liquidity, debt, market and activity.PROGRAMAS GERENCIALES S.A.
The existence of very large, large, half a small companies is a very evident fact, but, also we see than, in practice, all of them have to utilize the same countable accounts ( NIIF or the in use at each country ), that is than, referent to the results of his financial performance, only are different for the number of digits of the values of accounts ( in real numbers ), because in relative terms, that it is as calculate the ratios, they will have to utilize the same formulas for one and another companies.
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