Financial Statement Analysis Matrix

The Financial Statement Analysis Matrix is a 2x2 matrix used to analyze financial statements of a company. It helps to identify areas of strength and weakness in the company's financials.

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

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

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

  1. Profitability: Gross Profit Margin, Operating Profit Margin, Net Profit Margin
  2. Liquidity: Current Ratio, Quick Ratio, Cash Ratio
  3. Solvency: Debt-to-Equity Ratio, Debt-to-Assets Ratio, Interest Coverage Ratio
  4. Efficiency: Inventory Turnover Ratio, Accounts Receivable Turnover Ratio, Asset Turnover Ratio

What is the purpose of the Financial Statement Analysis Matrix?

The Financial Statement Analysis Matrix is a 2x2 matrix used to analyze financial statements of a company. It helps to identify areas of strength and weakness in the company's financials. It is used to compare the performance of the company to industry standards and to identify areas of improvement. The matrix is divided into four quadrants, each representing a different aspect of the financials.

The top-left quadrant is the 'Profitability' quadrant. This quadrant looks at the company's ability to generate profits. It includes metrics such as gross profit margin, operating profit margin, and net profit margin. These metrics give an indication of how well the company is able to generate profits from its operations.

The top-right quadrant is the 'Liquidity' quadrant. This quadrant looks at the company's ability to pay its short-term liabilities. It includes metrics such as current ratio, quick ratio, and cash ratio. These metrics give an indication of how well the company is able to pay its short-term liabilities.

The bottom-left quadrant is the 'Solvency' quadrant. This quadrant looks at the company's ability to pay its long-term liabilities. It includes metrics such as debt-to-equity ratio, debt-to-assets ratio, and interest coverage ratio. These metrics give an indication of how well the company is able to pay its long-term liabilities.

The bottom-right quadrant is the 'Efficiency' quadrant. This quadrant looks at the company's ability to efficiently use its assets. It includes metrics such as inventory turnover ratio, accounts receivable turnover ratio, and asset turnover ratio. These metrics give an indication of how well the company is able to efficiently use its assets.


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What templates are related to Financial Statement Analysis Matrix?

The following templates can also be categorized as business, finance and are therefore related to Financial Statement 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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