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4 Tips to an Accurate Vendor Financial Performance Assessment

May 15, 2015 by Venminder Experts

As you review your vendors financial health, here are 4 tips to an accurate vendor financial performance assessment.

4 Tips

1. Is your vendor making money? 

This is the biggest driver of financial performance - if your vendor is not making any money then how will they have the resources to not only improve their particular product but also keep staff at the appropriate levels to deliver you that customer service? 

2. The Net Worth can mislead you. 

This is an important area, however, in some large publicly traded companies it could be declining as they’re buying back their treasury shares .... so it may not actually be a negative reflection on their performance!

3. Be sure to review cash and especially the current ratio 

Does your vendor show that it has sufficient cash so that it can sustain their operations at current levels?  

4. Third party reviews are critical

Look at how outside rating agencies rated your vendor's debt obligations. Be sure to note if the ratings have either been upgraded or downgraded in the past 12 months. Use third party reviews like Moody’sStandard and Poors together with the Altman Z-Score.

Venminder Financial Analysis Sample

Venminder Experts

Written by Venminder Experts

Venminder has a team of third party risk experts who provide advice, analysis and services to thousands of individuals in the financial services industry.

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