The solvency reflects the bottom line of enterprise management. Without solvency, enterprises will not develop. This dimension begins with "current liabilities" and "non-current liabilities".
Operational ability reflects the management efficiency of enterprises. The main reference indicators of this dimension are "total assets turnover rate" and "turnover rate of different types of assets".
Profitability is an index that shareholders and creditors are very concerned about, which is reflected by "return on assets" and "return on assets".
The ability of value creation reflects the performance of enterprises in the capital market, and returns cash through "P/E ratio" and "P/B ratio".
By expanding the above dimensions, we can get more detailed analysis indicators, and we can complete the financial analysis of the company according to these indicators.
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The financial analysis of Harvard analytical framework analyzes the company in detail from four dimensions: solvency, operational ability, profitability and value creation, so as to achieve the purpose of quickly understanding a company.
References:
[1] Jia Ning Financial Lecture