経常収支比率を知ってる社長は銀行員から一目置かれます

Summary

This video script by Mori from Little Accounting addresses the importance of the 'operating income to expense ratio' in financial management. Often overlooked by company presidents and consultants, this indicator is highly regarded by banks for assessing a company's financial health and cash flow. The speaker emphasizes that a high operating income to expense ratio can impress banks and potentially improve loan conditions. The script explains how to calculate this ratio using profit and loss statements and balance sheets, and highlights the difference between operating income to expense ratio and operating profit ratio. It also discusses how banks use these ratios to detect potential financial discrepancies, advising viewers to understand and manage these ratios to avoid misunderstandings with financial institutions.

Takeaways

• 📊 The script discusses the importance of the 'Operating Expense Ratio' (経常収支比率) in financial management and its significance to banks.
• 🏦 Banks highly value the Operating Expense Ratio as it indicates the financial health and cash flow status of a business, but many company presidents and consultants are unaware of it.
• 🤔 The Operating Expense Ratio is a critical indicator for banks to assess the risk of lending, and a lack of awareness among company presidents can lead to misunderstandings or difficulties in securing loans.
• 🔢 The ratio is calculated by dividing operating income by operating expenses and expressing it as a percentage. It should ideally be over 100%, indicating more income than expenses.
• 💡 The script suggests that understanding and managing this ratio can positively influence a bank's perception of a company's financial stability.
• 📈 The Operating Expense Ratio, along with the Operating Profit Ratio (経常損益比率), can be used to detect any discrepancies in a company's financial reporting, which might indicate 'window dressing' or manipulation of figures.
• 🕵️‍♂️ Banks use automated systems like 'caster' to calculate and analyze financial ratios, reducing the need for manual calculations by bank staff.
• 🚫 A significant discrepancy between the Operating Expense Ratio and the Operating Profit Ratio can raise red flags for banks, potentially indicating fraudulent financial practices.
• 📋 Companies are advised to prepare and understand their financial statements, especially focusing on the Operating Expense Ratio, to be able to address any concerns raised by banks during loan negotiations.
• 🛑 If a company's Operating Expense Ratio is below 100% and significantly different from the Operating Profit Ratio, banks may request further explanations or documentation to clarify the situation.
• 🗣️ The script emphasizes the importance of clear communication and transparency in financial reporting to maintain a good relationship with banks and secure financing.

Q & A

What is the main topic discussed in the video script?

The main topic discussed in the video script is the importance of understanding and monitoring the 'operating income to expense ratio' for business owners, as it can significantly impact their relationship with banks.

Why is the operating income to expense ratio often overlooked by business owners?

The operating income to expense ratio is often overlooked by business owners because it is a financial indicator that is not widely known or understood among them, whereas bankers and financial institutions pay close attention to it.

What is the significance of the operating income to expense ratio in banking?

In banking, the operating income to expense ratio is significant because it helps to assess the financial health and cash flow situation of a business. It is a crucial indicator for banks to determine the creditworthiness of a business.

How does the operating income to expense ratio differ from other financial indicators like operating profit?

The operating income to expense ratio differs from other financial indicators like operating profit in that it focuses on the cash inflow and outflow related to the core business operations, rather than just the profitability as shown in the income statement.

What are the potential consequences if a business owner ignores the operating income to expense ratio?

If a business owner ignores the operating income to expense ratio, they may face difficulties in securing loans or getting favorable terms from banks. It could also lead to misunderstandings or suspicions from the bank about the business's financial stability.

How can a business owner calculate their operating income to expense ratio?

A business owner can calculate their operating income to expense ratio by dividing their operating income by their operating expenses and then multiplying the result by 100 to get a percentage. Operating income includes sales revenue, operating income, and any increases in receivables or payables, while operating expenses include cost of goods sold, selling expenses, and general administrative expenses.

What is the expected range for the operating income to expense ratio?

The expected range for the operating income to expense ratio is typically above 100%, indicating that the business is generating more income than it is spending on operations. A ratio below 100% suggests that the business is spending more than it is earning, which could indicate financial stress.

How does the operating income to expense ratio relate to the concept of 'window dressing' in financial statements?

The operating income to expense ratio can be used to identify potential 'window dressing' in financial statements. If there is a significant discrepancy between the ratio and the reported profits, it may suggest that the financial statements have been manipulated to present a more favorable picture of the company's financial health.

What steps can a business owner take to ensure that their operating income to expense ratio is favorable?

Business owners can ensure a favorable operating income to expense ratio by closely managing their cash flows, optimizing their operational efficiency, and controlling their expenses. They should also regularly review and adjust their financial strategies to maintain a healthy cash flow.

How can a business owner prepare for discussions with bankers regarding the operating income to expense ratio?

Business owners can prepare for discussions with bankers by understanding their own operating income to expense ratio, being able to explain any fluctuations or discrepancies, and demonstrating how they are actively managing their cash flow and financial health.

What is the role of financial analysis systems like 'Caster' in evaluating a company's financial health?

Financial analysis systems like 'Caster' automate the process of calculating key financial ratios, such as the operating income to expense ratio, and analyzing trends over multiple periods. They help bankers quickly identify potential red flags or concerns in a company's financial statements without manually performing the calculations.