In this post, I will explain how to create an App to calculate financial ratios using Power Apps.
As a part of the Power Platform tools we have Power Apps, in case you are not already aware of this Power Apps tool, I will tell you that it is part of the set of programs of Microsoft‘s Power Platform and it helps us to create applications with very little code, (low code) that is, without having to apply programming language (at least not at an initial to intermediate level).
You can access an official Microsoft free trial at this link: https://powerapps.microsoft.com/es-es/downloads/
Balance sheet analysis with Power Apps introduction
I created a Power Apps app, specifically in Canvas App format, where we introduce some figures obtained from a Balance Sheet and a Profit and Loss account of a company, the calculation of a series of ratios is automatically obtained and at the same time the app tells you if the value obtained is optimal or not.
In addition, at a more technical level, the analysis is included through the figures of the assets of the balance sheet, representing the area they occupy according to the value entered.
Above, is an image of the Home screen for the Balance Sheet Analysis app with Power Apps:
Usage screens in the Balance Sheet Analysis app with Power Apps
- Instruction Screen
- Key Figures Explanation Screen
- Key Figures Calculation Usage Screen
- Asset Mass Analysis Screen
The main usage screen is where the key figures are entered and the calculations are made, we can call it: Key Figures Calculation Usage Screen.
Also, we have a support screen to know how the application works, and the instructions, and another screen where we summarize what ratios are used, as well as their optimal value.
Instruction Screen
As the app is designed for people who do not belong to the field of finance, the actions for its use are detailed.
«On the Key Figures screen, enter the data from the Balance Sheet and the profit and loss figure from the Profit and Loss account (profit or loss, in this case with a negative sign).
Then, if the data is correctly entered and the balance is squared, the calculations of the key figures are displayed, otherwise, that area remains hidden.
As an additional resource, there is a functionality to analyze the balance sheet through the assets masses.»
Key Figures Explanation Screen
I have created the app with the following ratios, but others could have been taken, and always keep in mind that the conclusions obtained with the analysis with ratios must be considered with other analyses such as sector, environment, economic situation,…
Current Ratio: Although it depends a lot on the sector and activity, it is considered an optimal value between 1.5 and 2. A value of 1 or less, i.e. a negative working capital, is very worrying. (AC/PC). Current Assets/Current Liabilities,
Debt Ratio: A value greater than 0.60 implies that the company is excessively indebted. If it is less than 0.40, it means that the entity has insufficiently used its own resources. If it is less than 1.50, it indicates that the solvency level is not sufficient, and the lower it is, the more distrust it can generate in creditors or potential creditors. (Total Liabilities/Equity + Total Liabilities).
Collateral Ratio: The ratio between a company’s assets and its total debts. Optimal between 1.5 to 2.5. It makes it possible to prove the guarantee that companies offer to their creditors to meet their payment obligations. Total Assets/Total Liabilities.
Financial Profitability Ratio: Greater than zero. The higher this ratio, the better for the company’s owners. (Net Profit After Tax/Equity).
Key Figures Calculation Usage Screen
On this screen, we will write the following figures that we will obtain from the following balance sheet items: Non-current assets, Current assets, Net equity, Non-current liabilities, and Current Liabilities.
From the Profit and Loss account, we will take the result, either Profit or Loss writing a positive or negative sign respectively.
It automatically checks that the balance sheet is square and the results of the calculation of the key figures and whether each amount obtained is correct according to the standards defined for each of the ratios appear in this Balance Sheet analysis app with Power Apps.
Asset Mass Analysis Screen
After entering the figures on the key figure calculation screen, the size of the balance sheet items is automatically displayed by mass so that you can make visual comparisons.
Conclusion
As a result I hope you find this app for Balance Sheet Analysis with Power Apps useful.
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