ReadyRatios Software Manual
- — Analysis Methods Description
- — Formulas Customization
- — Templates Customization
- — Input Tables Customization
Analysis Methods Description
In the section "Analysis methods description" you can get a ready in-company order which approves the methodology used for financial analysis. The order is generated automatically and describes the formulas used for calculating the financial indicators and their qualitative assessment contained in the program (see "Settings - Formulas customization ").
The Order is an internal administrative document, governing the process of financial analysis in a company. We recommend its approval, particularly for those organizations where appropriate decisions are based on analysis of the financial situations of customers (for banks, leasing companies, etc.).
Creation of the Order depends on the choice of option to ignore or not ignore the user changes in the preset formulas and qualitative assessments of indicators. If you check "Ignore user changes in the formulas", the order will identify those formulas and qualitative assessments initially incorporated in the software by the developers, even if they have been modified later by the user.Up
One of the main features of ReadyRatios is the ability of users to adjust the formulas for the calculation of indicators on request. To do this, go to "Settings - Formulas customization". You will see a table with a list of formulas used in the program:
In each line to the right of the formula there are three buttons: edit formula, delete formula, setting for qualitative assessment indicator.
To use this feature you must be a registered user.
Each formula has the following properties:
- Report GAAP;
- Indicator name;
- Code - name of variable which is used to display the values of the report indicator (should consist of Latin letters without spaces);
- The formula - the formula which is used to calculate the indicator.
To write formulas, the following syntax should be used:
|F1[ххх]||data in line ххх of form №1 "Statement of financial position"|
|data in line ххх of form №1 "Statement of financial position" at the beginning and end of the period, respectively|
|F2[ххх]||data in line ххх of form №2 "Statement of comprehensive income", recalculated for the given period *|
|F2c[ххх]||data in line ххх of form №2 "Statement of comprehensive income" in the column "for the same period from last year," recalculated for the given period *|
|F1_u[sss]||data in line with sss code from the table "Additional data - table 1"|
|data in the line with the sss code from the table "Additional data - table 1" at the beginning and end of the period, respectively|
|F2_u[sss]||data in the line with the sss code from the table "Additional data - table 2", recalculated for the given period *|
|F2c_u[ххх]||data in line ххх of form №2 "Statement of comprehensive income" in the column "for the same period from last year," recalculated for the given period *|
|summarized data for the entire analyzed period in the line with the number xxx of forms №1, form №2 and form №2 "for the same period from last year", respectively|
|summarized data for the entire analyzed period in the line with the code sss of tables "Additional data - table 1", "Additional data - table 2" and "Additional data - table 2" column "for the same period from last year", respectively|
|СF2[ххх]||data in line ххх of form №2 "Statement of comprehensive income", as entered by the user (i.e. as a progressive total)|
|СF2_u[sss]||data in the line with the sss code from the table "Additional data - table 2" as entered by the user (i.e. as a progressive total)|
|NUM_DAYS||number of days in the period for which we calculate the indicator|
|NUM_MONTH||number of months in the period for which we calculate the indicator|
|abs(х)||module of number x|
* In Form 2, data is presented as a progressive total, i.e. revenue for the 1st quarter, half-year, 9 months, per year. In this case for further calculations the figure F2 is recalculated in a way that makes it was possible to move from the progressive period to the data for each interval of the analysis (i.e. revenues for the 1st, 2nd, 3rd and 4th quarters).
In addition, the variables themselves can be used in the lower formulas. For example:
EBIT = F2[ProfitLossBeforeTax] + F2[FinanceCosts]
EBITDA = EBIT – F2_u [DepreciationAndAmortisationExpense].
Any formula whose value is used in another formula must stand higher in the list. For this reason, there is an option for easily changing the order of the formulas in the list - just left-click on the line and hold, while moving the line up or down. Formulas can be edited, new ones can be added, and you can move and delete them. But you cannot delete or change the code for any of the formulas which were originally present in the software.
After changing the formulas, their original values continue to be stored in the program database. This way, they can be restored at any time:
- To restore all formulas at the same time, use "Restore default formulas" (see top of the page "Settings" – "Formulas Settings").
- To restore exact formula use "Restore default" button in the formula editing window.
Quality assessment index Setting
In the program, qualitative assessments are given for some indicators - that is, ranges of "good" - "bad" values. Depending on the quality assessment the text of the report is generated, a rating of the financial status is detected, and all indicators in the report appear in red or green. The Button for adjusting the quality assessment - - is on the far right of the formula table row. If this button is pale yellow in color, it means that the qualitative assessment for this indicator has not been set. It is possible to customize qualitative assessment for all industries as a whole, or by individual sectors:
If a certain sector has no separate settings, then during analysis of companies in this industry the program will use the setting "Quality assessment common for all industries".
The button "Restore default settings" allows you to reset the qualitative assessments of the indicator to the condition originally preset by the author of the program.Up
The creation of reports in ReadyRatios is based on templates (see "Input tables" - "Report template"). The standard templates that come with the program can be edited and you can create your own custom templates based on these.
Templates are in HTML-format with some elements of their own markup, and they are adapted for editing in HTML editors (either those built into the program or external ones).
To change the template, go to "Settings" - "Templates customization".
You cannot change the standard templates that come with the program, you can, however, create custom templates based on them - after editing, the default template it will be saved as a user template.
A simple edit of the template is recommended. For example, you can add a corporate header to the top of the report, or delete data about the compiler at the end of the report. Apart from that, the editor in the program makes it easy to add user indicators to the report, and the formulas for calculating them, which were mentioned earlier in the "Formulas customization" section.
To make it easier for users to add indicators to the report, the editor has a wizard for creating new tables - see "Insert indicators table" at the top of the editor page. When you click this button the following dialog appears:
First, determine which table with indicators you want to add to the report. There are three options:
- a table with indicators that are calculated solely using Form #1 "Statement of financial position" data (and / or additional data from Form 1) - such as liquidity ratios, for example;
- a table with indicators that are calculated solely using Form #2 "Statement of comprehensive income" (and / or additional data from Form #2) - for example, gross margin;
- a table with indicators, which are calculated using both Form #1 and Form #2 data - such as asset efficiency indicators, turnover indicators.
This division of indicators into 3 groups is related to the fact that the use of indicators of different types in one table is not possible for the following reasons. Firstly, in the headers, time is specified differently (in the case of indicators in table #1, it is by date (e.g. as for 30/06/2010), and in table #2 by periods of time (March, 1st quarter, 2nd quarter)). Secondly, when calculating for several periods, the number of received indicator values (columns) of different groups differs (by one column).
Depending on this choice, the dialog will display a list of relevant indicators at the bottom of the dialog box.
In this dialog you can also configure the way the date used in the table header will be formatted, as well as which sign you wish to round the values of indicators up to. In addition, you can decide whether or not columns with the absolute and percentage differences between the first and last indicators in a row should be inserted in your table, and whether a comment column is needed or not (this is commonly taken from the field "Comment" for the corresponding indicator - see "Formulas customization" section).
The indicator valuescan be specified by color depending on the quality characteristics of a given indicator. And for the changes of indicator you can select the colors "green" - "red" depending on whether indicator has a positive or negative value (or vice versa).
Next, check the indicators you want to see in the table. Rows of indicators can be dragged up and down – this is the order in which they will appear in the final table.
After clicking the "Insert table" button, the ready to use table will appear in the report template.
To insert custom chart in your template press "Insert chart button":
Insert indicator description
You can insert software generated description of the indicator. The description (up to 3 sentences) is created by ReadyRatios software depending on value and changes of the indicator. Press "Insert indicator description" button.
Further to the value and change description of the indicator you can add qualitative assessment description (qualitative assessments are defined in the "Settings-Formulas customization" section) – just turn on corresponding checkbox.Up
Input Tables Customization
When entering the source accounting data, the program, beyond the two standard forms (#1 "Statement of financial position" and #2 "Statement of comprehensive income"), will use the tables "Additional data - table 1", "Additional data - table 2 and "Additional data – constants". Additional forms 1 and 2, according to information input principle, are similar to the two standard forms 1 and 2, but contain data for deeper analysis.
The "Additional data - constants" form is designed for entering additional information to be used in generating the report, but it does not change from period to period. For example, the name of the person who created the report.
Indicators from additional forms can be added and edited, and you can also change the order or remove them. This is done in "Settings" in the section "Templates customization".
Indicators from additional forms have the following properties:
- Input table - indicates the form to which the input field is applied: "Additional data - table 1" (similar to Balance sheet), "Additional data - table 2" (similar to "Profit and Loss statement") or "Additional data - constants ";
- Indicator name displayed in data entry table;
- Code - the variable name which is used in formulas for calculations and in the report template to display the indicator values (must contain only Latin letters without spaces);
- Comment - a brief explanation of the indicator (optional);
- Specification of data type: text or numeric, and whether indicators should be shown as negative, as a fraction, or as zero;
- Default value;
- A list of reports (templates) for which input of a particular indicator is set (i.e. in which reports they are used).
Indicators from additional tables 1 and 2 can be used in formulas in a similar way to using indicators in standard forms. For example, the indicator "Depreciation and amortisation expense", which is provided by additional table 2 under the code "DepreciationAndAmortisationExpense", is used to calculate EBITDA:
EBITDA = EBIT – F2_u [DepreciationAndAmortisationExpense]Up