paralysed by numbrsThere’s a saying, or rather a comment, I picked up from a very smart Scottish accountant who had become an MBA teacher at a leading US Business School. He said that often, accountants and finance directors suffer from something called analysis paralysis. It’s the state of over-analysing (or over-thinking) a situation so that a decision or action is never taken, in effect paralysing the outcome.

Has that ever happened to you? Or worse still, have you been guilty of doing it yourself.

There’s nothing wrong in analysing numbers provided you measure the result.

With this in mind, I’ve taken look at some of the tools within the Bizezia Calculators and Evaluators product and thought it would be useful for my readers to review what these tools do. The results from these tools should be used as a guide only and clients should consult an experienced or qualified accountant or financial/business adviser before making any decisions.

Borrowing Risk Calculator            

Are you serious about reducing borrowing costs? Would you like to know the ‘secrets’ of how your banker assesses a lending proposal and the business in terms of risk?

The Borrowing Risk Assessment Tool, which is intended for use as a guide only, has been developed as a guide to:

1. Show you what you can do to get a lower rate of interest on borrowings by reducing the risk.
2. Help you to identify your ‘escape routes’ if you hit a financial hole.
3. Help you improve your relationship with your bank.

Business Growth Calculator

Based on the well-known “Four ways to grow a business” popularised by Michael Gerber, Jay Abraham and many others, the Business Growth Calculator is designed to calculate the change to the gross profit of a business arising from altering any or all of:

  • the number of customers
  • the average number of times they purchase
  • the average amount they spend, and/or
  • the average gross profit percentage

Most business owners don’t know the number of customers they have, or the frequency of purchase or the average sale value. The good thing about this tool is that it allows you to try various combinations until you arrive at a total sales value that is correct.

Business Health Calculator

This is the smartest of all the tools. Basically, accountants or their clients, input numbers from the accounts of the business.  The calculator then produces a lengthy series of meaningful ratios, including:

  • Profitability Ratios
  • Liquidity Ratios
  • Operational Ratios
  • Solvency Ratios

Then, the calculator does something quite amazing. It works out something called the Z-Score, which indicates financial health (or sickness) of the business. It also indicates the short-term potential for financial problems at your company. The expert who devised the Z-Score is Professor Edward I. Altman, who is known as the founding father of using statistical techniques to predict company failure.

The Z-score was developed from an analysis of 33 bankrupt manufacturing companies in the US with average assets of $6.4 million. Altman’s system, basically a “bankruptcy indicator,” can be used by stockbrokers trying to determine if a company is a good investment, and also internally, by anyone who wants to take a close look at his or her own company’s financial health.

Accountants can even use it on their own firm’s results.

Altman’s Z-score calculates five ratios: return on total assets, sales to total assets, equity to debt, working capital to total assets, and retained earnings to total assets. These ratios are then multiplied by a predetermined weight factor, and the results are added together. The final number, the Z-score, yields a number between -4 and +8. Financially-sound companies show Z-scores above 2.99, while those scoring below 1.81 are in fiscal danger, maybe even heading toward bankruptcy. Scores that fall between these ends indicate potential trouble. In Altman’s initial study of 33 bankrupt companies, Z-scores for 95 % of these companies pointed to trouble or imminent bankruptcy.

In the hands of a smart accountant looking for new work from prospects, this tool could be dynamite in getting new business.

Customer Value Calculator
The Customer Value Calculator considers the effects on sales (over a 5 or 10 year period) of altering the rate of retention of customers and the referrals that customers give to other potential customers.

Business Parameters:
1.  % Retained customers that give referrals
2.  Number of referrals per customer
3.  % Referrals that become customers
4.  % Customer Retention Rate

Risk Exposure Calculator

Analysing data risk exposures enables you to estimate the degree of risk. Results fall into one of these categories:

· Very Little Risk: You either don’t have very much critical data on your computers, or your backup plan is probably adequate. Consider using a remote backup service to supplement your backups.

· Slight Risk:  If you experience a non-catastrophic loss of data, you will probably be able to recover it. Generally, you are doing a good job with your backup plan, but you should consider improving.

·Moderate Risk:  A loss of data from your hard disk drives may not be recoverable. Your backup plan is not adequate and you are at risk of losing data critical to the operation of your daily business.

·High Risk: Any major data loss would be catastrophic, and would probably not be recoverable. Your business is at risk of failure if you lose data.

·Extremely High Risk: Your backup plan isn’t protecting your data. You could experience an un-recoverable catastrophic data loss at any time which could cause the business to fail.

Grading High Book / Market Stocks

This tool is rather smart too. It’s based on the work of Joseph Piotroski, an Accounting Professor at the University of Chicago who reasoned that because value stocks are troubled companies by definition, many are financially distressed and won’t have the financial resources to recover. Pondering on whether he could improve the performance of a value portfolio by throwing out the financially weakest stocks, he devised a simple nine-criterion stock-scoring system for evaluating a stock’s financial strength that could be determined using data solely from financial statements. One point was awarded for each test that a stock passed. Piotroski classed any stocks that scored eight or nine points as being the strongest stocks. His findings were that these strong stocks as a group outperformed a portfolio of all value stocks by 7.5% annually over a 20-year test period. Piotroski also found that weak stocks, scoring two points or fewer, were five times more likely to either go bankrupt or delist due to financial problems.
The evaluator goes through these stages:

·  Net Income: Positive net income – Net income, the bottom line after-tax profits, is the simplest measure of profitability. Score 1 if the latest year’s net income is positive; otherwise, a zero.

·  Operating Cash Flow: Cash flow is arguably a better profitability measure than net income. Cash flow measures the money that actually moved into or out of a company’s bank account; Score 1 point if the latest year’s operating cash flow is positive, otherwise, a zero.

·  Return On Assets (ROA): Earnings quality – Many experts compare net income to operating cash flow to detect potential accounting manipulations. Cash flow normally exceeds net income because depreciation and other non-cash expenses reduce income, but not cash flow; Score 1 point if the latest year’s operating cash flow exceeds the current year’s net income, otherwise, a zero.

·  Quality of Earnings: Warns of Accounting Tricks. Score 1 if last year’s operating cash flow exceeds net income, otherwise, a zero.

·  Long-Term Debt (LTD) vs. Assets: Is Debt decreasing? Score 1 if the ratio of long-term debt to assets is down from the year-ago value, otherwise, a zero. (If LTD is zero but assets are increasing, score 1 anyway.)

·  Current Ratio (CR):  Measures increasing working capital. Score 1 if CR has increased from the prior year, otherwise, a zero.

·  Shares Outstanding: A Measure of potential dilution. Score 1 if the number of shares outstanding is no greater than the year-ago figure, otherwise, a zero.

·  Gross Margin (GM): A measure of improving competitive position. Score 1 if full-year GM exceeds the prior-year GM, otherwise, a zero.

·  Asset Turnover: Measures productivity. Score 1 if the percentage increase in sales exceeds the percentage increase in total assets, otherwise, a zero.

Overall, it’s a pretty impressive list, I think you’ll agree. All these tools and about 50 more can be available to accountants, clients and prospects. They sit on the accountants’ website and are available 24-hours a day, 365 days a year and are accessible from anywhere in the world with an internet connection, on a PC, Mac, iPhone, Smartphone, Android or whatever fancy equipment may be used.  There is no set-up fee for these tools, just an easy, affordable payment option with a minimum 12 month subscription. Details here.

Instead of the restricted functionality available with other online calculator packages, where users can only calculate results in a one-dimensional way, Calculators & Evaluators incorporates Bizezia’s interactive Lead-Generation Technology. This allows users to:

  • Print results
  • Share results with friends and colleagues by email
  • Export results to Excel
  • Export results to PDF
  • Ask for an e-mail alert when the selected Calculator/Evaluator is updated
  • The opportunity to request more information from an accounting firm hosting the tools on their website using the Contact Us feature.

Bizezia is so confident that you and your clients and customers will enjoy using the Calculators & Evaluators that it comes with a 30 Day Money-Back Guarantee. If, within 30 days of the start of a subscription, you think that Calculators & Evaluators is not for you, Bizezia will refund your full subscription, with no questions asked.

If you want more information, call me on 01444 884221 or contact me by email at

Martin Pollins

Martin Pollins

Managing Director at Bizezia
Martin Pollins is a Chartered Accountant with wide experience in corporate finance and business management. He holds a number of directorships and has served on the boards of several companies, including those listed on the London Stock Exchange, AIM and OFEX.

He was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996.

Martin Pollins ran his own firm based in Sussex and was the first Accountancy firm in the UK to advertise on television and Martin went on to create and launch the CharterGroup Partnership (the UK's first Accountancy network) and then LawGroup UK (one of the largest networks of lawyers in the country).

Martin started work on the Bizezia concept in 1996, developing the broad range of information resources and products over the past 18 years.
Martin Pollins

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