Entries by Eric de Diesbach

Financial Ratios – Solvency Ratios

I spoke in previous blogs about the importance of Profitability Ratios, then Efficiency Ratios, then Liquidity Ratios. Finally, in this blog, I highlight the importance of Solvency Ratios. It’s important to not confuse Solvency with Liquidity. While both set of ratios measure the financial health of a company, they have notable differences. As previously explained, […]

Financial Ratios – Liquidity Ratios

In earlier blogs, I spoke about the importance of Profitability Ratios, then Efficiency Ratios. In this blog, I highlight the importance of Liquidity Ratios. Liquidity ratios are used to determine a company’s ability to pay off its short-terms debts. Short term means 12 months and less. Liquidity ratios can be of enormous benefit to business […]

Financial Ratios – Efficiency Ratios

In an earlier blog (Financial Ratios – Profitability Ratios), I spoke about the importance of Profitability Ratios. In this blog, I highlight the importance of Efficiency Ratios. In simple terms, Efficiency Ratios measure how well companies utilise their short term assets and short term liabilities to generate income. Efficiency ratios, for example, might include the […]

Financial Ratios – Profitability Ratios

A recent article in the Australian Financial Review explained that the three main reasons for business failures were: Poor Financial Management (28% of failures), poor Accounting (16%) and lack of Management experience (15%). So Poor Financial Management is the main culprit in business failures. The Directors and the owners of a company need to monitor […]

Lean Finance – Continuous Improvement

After having in previous blogs highlighted the first two principles of Lean as they relate to the Finance function, Adding Value and Reducing Waste, let’s talk about the third and final principle of Lean: Continuous Improvement. Broadly speaking, Lean projects need to commence with a Lean Analysis to assess the existing situation and determine the […]

Waste in the Finance Function? Surely Not!?

In a previous blog, we discussed applying the first principle of Lean (‘adding value’) to the Finance function. Today, let’s consider the second Lean principle: ‘Reducing waste’. Yes, there can indeed be waste and missed opportunities in any Finance Department. Here are a few common examples: inefficient collection processes the same data being manually entered […]

Can Finance be LEAN?

Most of our readers will be familiar with ‘Lean’ methodology and principles, which have been around for a number of years. But, like most people, some readers might primarily associate ‘Lean’ with manufacturing and everything that is linked with production. In actual fact however, ‘Lean’ can be applied to every function in a business, including […]

Financial Assistance for Exporters

Are you an exporter or aspiring exporter? Is your turnover below $50 million? If the answer is yes to both questions, you may be eligible to benefit from the Export Market Development Grants (EMDG). The EMDG scheme is a key Australian Government financial assistance program for aspiring and current exporters. Administered by Austrade, the scheme […]

Money Has A Time Value

In these times of low inflation, it’s easy to forget or at least underestimate the impact of time on the value of money. $1 today is worth $1. That is easy to understand. However, $1 last year was worth more than $1 today, and $1 next year will be worth less than $1 today. One […]

It’s Payback Time! …or is it?

Everyone facing a business investment decision, such as launching a new product, purchasing equipment, installing a new production line, building a factory or acquiring a business needs to ask themselves the following questions: How long before I get my money back? Which of these investments is better? The Payback Analysis provides us with a means […]