“How we use the power of the model to reveal exactly where the company’s strengths and weaknesses lie”

The H-Score model is a composite model made up of a series of subsidiary models, catering for different kinds of companies. Each model consists of 7 factors which are ratios, weighted and treated mathematically.

The 7 factors are shown separately but are also

summarised into three groups and displayed in the Key Factor profile:-

    • One that evaluates the strength of Profit Management,
    • Three that evaluate the strength of the Asset Management and
    • Three that evaluate the strength of the Funding Management.

Together they cover all the financial strengths and weaknesses of any company which, when combined mathematically, produce the H-Score. Their relative importance varies with the financial structure of each company that is being evaluated, thereby ensuring that it is measured in accordance with its circumstances. For example it would not be appropriate to measure (say) a major hotel group on the same criteria as a small manufacturing company. Variations in the relative weighting and mathematical treatment of each ratio will ensure that each company is appropriately measured.

The purpose of revealing the strength of each of the seven factors is to help you understand where a company is strong and where it is weak. When performing “what-if?” experiments it helps you to understand what has caused a company to strengthen or to weaken and the degree to which changes reflected in that factor would have a material effect upon the company’s financial health.

The factor values are displayed graphically. Beneath each graph are the principal financial values which have contributed to the factor under review. Its purpose is to provide a means of explaining the underlying financial reasons for the company’s evaluation in each case.

Overview

Building Blocks