Navigating the financial landscape as an MSME in Kosovo can be daunting, but understanding your company’s financial health is crucial for long-term success. Here, we introduce a simplified yet comprehensive Financial Health Check Template that can be manually used to assess your business’s financial status. Although not dynamic, this template uses specific scoring criteria to give you an idea of where you stand.
Scoring Criteria
| Metrics | Criteria | Points Awarded |
| Cash Flow Ratio | Positive Cash Flow | 2 points |
| Neutral Cash Flow | 1 point | |
| Negative Cash Flow | 0 points | |
| Current Ratio (Liquidity) | > 2 | 2 points |
| 1 – 2 | 1 point | |
| < 1 | 0 points | |
| Debt to Equity Ratio | < 1 | 2 points |
| 1 – 2 | 1 point | |
| > 2 | 0 points | |
| Net Profit Margin | > 15% | 2 points |
| 5% – 15% | 1 point | |
| < 5% | 0 points | |
| Inventory Turnover | > 6 times/year | 2 points |
| 3 – 6 times/year | 1 point | |
| < 3 times/year | 0 points | |
| Days Sales Outstanding (DSO) | < 30 days | 2 points |
| 30 – 45 days | 1 point | |
| > 45 days | 0 points |
How to Use the Template
- Calculate Metrics: First, calculate the above-mentioned ratios and figures for your business. Most of this information can be found in your financial statements.
- Score Each Metric: Based on where your numbers fall in the ranges provided, assign the corresponding points to each metric.
- Total Score: Sum up all the points to get a total score.
Interpretation of Scores
- 12-14 Points: Your business is in excellent financial health. You’re likely managing your assets efficiently and have a good liquidity and debt position. Keep up the good work!
- 8-11 Points: Your business is financially stable but there’s room for improvement. Consider revisiting your financial strategy and consult a financial advisor for targeted advice.
- 4-7 Points: Your business is facing financial challenges that require immediate attention. A review of your business model and financial strategy is urgently needed.
- 0-3 Points: Your business is in critical financial health. Consult financial and business advisors immediately for crisis management.
While this Financial Health Check Template is not a substitute for professional financial advice, it does offer a quick snapshot of your financial situation. If you find yourself scoring low, it might be the right time to consult experts in the field, be it for improving your cash flow management, debt handling, or overall business strategy.
Remember, understanding your financial health is the first step towards making informed, strategic decisions for your MSME.
