Financial Analysis Matrix

The Financial Analysis Matrix is a 2x2 matrix used to evaluate the financial performance of a company. It is used to compare the company's financial performance to that of its competitors and to identify areas of improvement.

At a very high level, the Financial Analysis Matrix is used in the context of business, finance.

Financial Analysis Matrix quadrant descriptions, including examples
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What is the Financial Analysis Matrix?

A visual explanation is shown in the image above. The Financial Analysis Matrix can be described as a matrix with the following quadrants:

  1. Profitability: Measures the company's ability to generate profits from its operations, including metrics such as gross profit margin, return on assets, and return on equity.
  2. Liquidity: Measures the company's ability to pay its short-term obligations, including metrics such as current ratio, quick ratio, and cash ratio.
  3. Efficiency: Measures the company's ability to efficiently use its assets, including metrics such as asset turnover, inventory turnover, and days sales outstanding.
  4. Solvency: Measures the company's ability to pay its long-term obligations, including metrics such as debt to equity ratio, debt to assets ratio, and interest coverage ratio.

What is the purpose of the Financial Analysis Matrix?

The Financial Analysis Matrix is a 2x2 matrix used to evaluate the financial performance of a company. It is used to compare the company's financial performance to that of its competitors and to identify areas of improvement. The matrix is divided into four quadrants, each of which represents a different aspect of the company's financial performance.

The top left quadrant is labeled 'Profitability'. This quadrant measures the company's ability to generate profits from its operations. It includes metrics such as gross profit margin, return on assets, and return on equity. The top right quadrant is labeled 'Liquidity'. This quadrant measures the company's ability to pay its short-term obligations. It includes metrics such as current ratio, quick ratio, and cash ratio.

The bottom left quadrant is labeled 'Efficiency'. This quadrant measures the company's ability to efficiently use its assets. It includes metrics such as asset turnover, inventory turnover, and days sales outstanding. The bottom right quadrant is labeled 'Solvency'. This quadrant measures the company's ability to pay its long-term obligations. It includes metrics such as debt to equity ratio, debt to assets ratio, and interest coverage ratio.

The Financial Analysis Matrix is a useful tool for evaluating a company's financial performance. It can be used to compare the company's performance to that of its competitors and to identify areas of improvement.


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What templates are related to Financial Analysis Matrix?

The following templates can also be categorized as business, finance and are therefore related to Financial Analysis Matrix: AIDA Marketing Matrix, Affiliate Marketing Matrix, Agile Capability-Value Alignment Matrix, Agile Scaling Matrix, Ansoff Matrix, Asset Allocation Matrix, BCG Matrix, Brand Affinity Matrix. You can browse them using the menu above.

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