Performance Measures

Performance Measures

Finverso has made financial governance more effective by turning data into insights and streamlining the complexities of financial reports.

We have long recognised that financial statements can be complex and difficult to interpret meaningfully. Finverso automatically interprets financial reports into easy-to-understand information that business owners, directors, CFOs, and advisors to boards can utilise to create actionable conversations. That means less time struggling to present financial information and more time developing strategies leading to better financial conversations and business outcomes.

Improving financial performance today will lead to improving the valuation of your business tomorrow. The more a business is worth, the more stakeholders will experience financial freedom.

FINVERSO INDEX

Finverso measures the key financial results that really matter – “Killer Financial Indicators” –  and converting these into performance scores that accurately measure the financial health of any business. These combine into a single score out of 100 (Finverso Index) which accurately represents the overall financial performance of the business; not just profit.

Key financial results are:

  • Free Cash Flow
  • Cash Gain & Drain
  • Sustainable Cash Flow
  • Margin of Safety
  • Return on Operating Assets

A multi-dimensional view of financial performance rather than a singular (profit) view.

FREE CASH FLOW

Many a business has failed by spending in excess of its free cash flow. Now you can use Finverso to tell you the cash availability for discretionary expenditure such as dividends or CAPEX.

Having this knowledge allows you to consider:

  • The likelihood of the business continuing its core activities without needing to change its current mix of funding,
  • Its ability to self-fund growth, and
  • Provide returns to shareholders in the future

It is the lack of free cash flow that keeps business owners awake at night. By monitoring and raising awareness of the importance of free cash flow, Finverso assists you in responsible financial governance.

MARGIN OF SAFETY

How safe is your business to the loss of a key customer?

Will discounting prices push your business to not breaking even?

Margin of safety measures the extent to which the business is exceeding break-even and tells you the level of safety of current profitability.

Our experience at Finverso is that a company’s business model is more secure the higher is its margin of safety. This risk measure is included in our valuation methodology because the higher the margin of safety, the better is the business model and the higher should be its earnings multiple.

RETURN ON NET OPERATING ASSETS

The accountants at Finverso have long wondered why retail investors pay close attention to their annual investment returns whilst investors in privately held businesses pay little or no attention. Shareholders looking to grow wealth cannot ignore returns.

Finverso calculates the annual return or net operating assets of capital employed in the business.

Finverso automatically converts a conventional balance sheet or statement of financial position to quickly reveal the return on core operating assets.

Helping Business Owners Today,
Sell Tomorrow

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