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

中小企業の財務チャンネル

16 Jan 202419:38

Summary

TLDRThis 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.

Outlines

00:00

📊 Understanding the Current Profit and Loss Ratio

The speaker, Morio from Ko-Kai, thanks the audience for watching and introduces the topic of the current profit and loss (P&L) ratio. This financial indicator is often overlooked by company presidents but is highly valued by banks. The P&L ratio is a fundamental financial metric, crucial for assessing a company's cash flow and profitability. Despite being a basic concept, many company leaders are unaware of it. The speaker emphasizes the importance of this ratio for managing a business and suggests that understanding and promoting it can positively impress bank officials. The P&L ratio is calculated by dividing the current income by the current expenses and expressing it as a percentage. It is used to check the financial health of a company, and banks use it to evaluate the solvency and cash flow of businesses. The speaker advises the audience to calculate their company's P&L ratio for the past few years to understand its financial standing and to avoid any misunderstandings with banks that could affect loans or credit terms.

05:02

💼 The Significance of Current Profit and Loss Ratio in Banking

The video script explains that the current profit and loss ratio is a key indicator for banks to assess a company's financial stability. It is generally expected to be over 100%, indicating that the company's income exceeds its expenses. If the ratio is below 100%, it suggests that the company is operating at a loss. Banks tend to prioritize the operating profit and ordinary profit only when the current profit and loss ratio is above 100%. If the ratio is below 100% and yet the company reports profits, it raises suspicions of potential financial manipulation. The script also introduces the concept of 'current profit ratio', which is calculated using only the current profit from the income statement, and is compared with the current profit and loss ratio to check for any discrepancies that might indicate 'window dressing' in the financial statements. Financial institutions often use automated systems to calculate these ratios and analyze the financial health of a company.

10:02

🚨 Analyzing Discrepancies in Financial Ratios

The speaker discusses how banks use the difference between the current profit and loss ratio and the current profit ratio to detect potential 'window dressing' in a company's financial statements. If the current profit and loss ratio is below 100% but the profit ratio is above 100%, it raises a red flag for bankers. The automated system, referred to as 'caster', compares these ratios over several periods to identify any significant discrepancies. A difference of up to 5% might be tolerable, but anything beyond that indicates potential financial manipulation. The script suggests that banks may request further explanations or documentation if the ratios suggest suspicious activities. It also lists several areas that banks might investigate, such as inventory levels, accounts receivable, and expenses, to ensure that the company's financial statements are accurate and not artificially inflated or deflated.

15:04

📚 Preparing for Bank Inquiries and Financial Explanations

The final paragraph of the script advises company presidents and financial officers on how to prepare for inquiries from banks regarding their financial statements. It suggests that companies should proactively calculate and understand their current profit and loss ratio and current profit ratio to be ready to explain any discrepancies. The speaker warns that banks may have suspicions if the financial statements do not add up, and it is crucial to be able to provide clear explanations for any unusual increases in inventory, receivables, or other financial items. The script also advises companies to be prepared to show their financial statements and to be ready to explain their financial situation in detail to maintain a good relationship with banks and secure future financing.

Mindmap

Keywords

💡Operating Profit Margin

Operating Profit Margin, also known as the operating ratio, is a financial metric that indicates the profitability of a company's core operations. It is calculated by dividing operating income by net sales. In the video, the speaker emphasizes that banks highly value this ratio, using it to assess the financial health of a company. It's a key indicator that can influence a bank's decision to lend or not, as it reflects whether a company's main business is generating enough income to cover its expenses.

💡Financial Indicator

A financial indicator is a measurable metric that provides insights into a company's financial performance. The video discusses how the operating profit margin is a significant financial indicator that is often overlooked by company presidents but closely monitored by banks. It is used to gauge the efficiency and profitability of a company's operations, which is crucial for making informed business decisions and securing financial support.

💡Bank Financing

Bank financing refers to the process of obtaining funds from a bank or financial institution, typically in the form of loans or credit facilities. The script mentions that companies with a higher operating profit margin are more likely to receive favorable financing terms from banks. This is because a higher margin indicates better financial stability and lower risk, making the company a more attractive candidate for lending.

💡Cash Flow

Cash flow represents the movement of cash into and out of a business. It is a critical aspect of a company's financial health. In the video, the speaker explains that even if a company shows a profit on its income statement, it might still face cash flow issues if the operating profit margin is low. Banks use this metric to understand if a company's core business activities are generating enough cash to sustain operations.

💡Profit and Loss Statement

A profit and loss statement, also known as an income statement, is a financial document that outlines a company's revenues, costs, and expenses during a specific period, ending with the net profit or loss. The video script uses the profit and loss statement as one of the primary documents to calculate the operating profit margin, highlighting its importance in financial analysis.

💡Balance Sheet

A balance sheet is a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and equity. The video mentions the balance sheet in the context of calculating the operating profit margin, as changes in accounts receivable and other balance sheet items are factored into the income calculation.

💡Financial Misrepresentation

Financial misrepresentation refers to the act of providing misleading or false financial information, often to manipulate financial results or hide financial issues. The script warns about the potential for financial misrepresentation when there is a significant discrepancy between the operating profit margin and the profit shown on the income statement, which could raise red flags for banks.

💡Inventory

Inventory refers to the goods and materials a company holds for sale or use in production. The video script discusses how inventory levels can be scrutinized by banks as a potential area for financial misrepresentation. Sudden increases in inventory might be seen as suspicious and could lead to questions about the company's financial practices.

💡Accounts Receivable

Accounts receivable represents the money owed to a company by its customers for goods or services provided on credit. In the video, the speaker mentions that an increase in accounts receivable should be considered when calculating the operating profit margin, as it affects the company's cash inflow.

💡Depreciation

Depreciation is the systematic allocation of the cost of a tangible asset over its useful life. The script explains that depreciation is an expense that reduces the value of assets over time and should be subtracted when calculating the operating profit margin. However, it does not affect cash flow, which is why it's important to differentiate between accounting profits and cash-based profits.

💡Financial Analysis

Financial analysis is the process of evaluating a company's financial performance and position by reviewing its financial statements and ratios. The video emphasizes the importance of financial analysis for banks, which use various metrics, including the operating profit margin, to assess a company's financial health and creditworthiness.

Highlights

The speaker introduces the topic of 'Operating Profit Margin' and its importance in banking and business management.

Operating Profit Margin is a crucial financial indicator often overlooked by CEOs but highly valued by banks.

Banks use the Operating Profit Margin to assess the financial health and cash flow status of a company.

The speaker emphasizes that CEOs should be aware of this indicator to avoid misunderstandings with banks regarding financing.

Calculating the Operating Profit Margin involves dividing operating income by operating expenses and expressing it as a percentage.

The Operating Profit Margin should be calculated for the past 3 to 5 years to understand a company's financial trend.

A high Operating Profit Margin indicates that a company's core business is generating more income than expenses.

The speaker explains how to calculate operating income and expenses using profit and loss statements and balance sheets.

The importance of distinguishing between cash inflows and outflows is highlighted for accurate financial analysis.

Banks may use automated systems to calculate financial ratios like the Operating Profit Margin to assess loan applications.

The speaker advises CEOs to consult with tax accountants to understand and calculate their company's Operating Profit Margin.

A discrepancy between the Operating Profit Margin and the profit shown in the income statement can raise suspicions of financial manipulation.

The Operating Profit Margin, when above 100%, indicates that the company is generating more cash from its core business than it spends.

The speaker introduces the concept of 'Operating Loss Ratio' and its use in checking for potential financial discrepancies.

A significant difference between the Operating Profit Margin and the Operating Loss Ratio over several periods can be a red flag for banks.

The speaker suggests that CEOs should be prepared to explain any significant increases in inventory or receivables to banks.

The session concludes with advice on how to approach bank negotiations with a clear understanding of financial ratios and their implications.