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Financial Analyzer

Financial analysis refers to an assessment of the viability, stability and profitability of an enterprise. Financial analysts often compare financial ratios of solvency, profitability, growth, etc.

With Financial Analysis we can compare past performance across historical time periods for the same firm (the last 5 years for example) or future performance by using historical figures and certain mathematical and statistical techniques, including present and future values or comparative performance between similar firms. These ratios are calculated by dividing a group of account balances, taken from the balance sheet and / or the income statement, by another, for example:

  • Net income / equity = return on equity (ROE)
  • Net income / total assets = return on assets (ROA)
  • Stock price / earnings per share = P/E ratio

Financial Analysis is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions.

Business Challenges

The following challenges are commonly faced by any business:
  • Whether to continue or discontinue its main operation or part of its business;
  • Whether to make or purchase certain materials in the manufacture of its product;
  • Whether to acquire or rent/lease certain machineries and equipment in the production of its goods;
  • Issue stocks or negotiate for a bank loan to increase its working capital;
  • Make decisions regarding investing or lending capital;
  • Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.

Questions around the following topics arise from a lender during credit sanctioning process

  • Profitability –the entity's ability to earn income and sustain growth in both the short and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations;
  • Solvency - its ability to pay its obligation to creditors and other third parties in the long-term;
  • Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations;
  • Stability - the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of the income statement and the balance sheet, as well as other financial and non-financial indicators. etc.

What We Offer

Kumaran Systems have developed a tool for computing important ratios. By feeding the data input from Income statement and Balance sheet, a set of common ratios are automatically generated in the screen. These set of financial ratios are fundamental to any Banker as the credit decisions are made based on these set of ratios.

KFA provides powerful ratios and indicators that allow lenders to quickly view the financial status of a business entity. Here are just a few of the ratios KFA provides in its financial analysis software:

  • Current ratio
  • Debt-Equity Ratio
  • Debt Service Coverage ratio
Benefits Of Financial Analyzer

Benefits of Financial Analyzer May Include

Financial Analyzer is a useful tool for gaining a "snapshot" picture of a company. These ratios help to identify the company's strengths and weaknesses and useful insights can be gained through the process.

With financial ratios, we have no way to identify a "theoretically best" value for any of the ratios. In fact, financial ratios are nothing more than common sense measures that have been developed and evolved over time. Ratios tell us where to focus our attention and to ask relevant questions. We never want to depend of just one ratio to draw a conclusion, the ratios are complementary and one ratio can be used to confirm a suspicion raised by another ratio's value. It is only after looking at a variety of different ratios that a picture of the company's financial condition begins to form.

This Financial Analyzer computes Financial Rating which is a vital input in the Whole Risk Rating process. This Financial Analyzer can be used as it is or customized and more ratios can be added as per the need of the clients.

Past performance and future performance can be compared. The Financial Analyzer helps for speedy decision making process.



Nesbitt Burns Inc, Toronto, Canada

Providian Financials, US

Citibank, US

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