ビジネス＆財務ジャーナル

Financial Competency Assessment Model

Abstract

Ercan Oztemel and Semih Ozel

Financial analysis is one of the evaluative criteria that have drawn the most attention and importance when measuring the performance of organizations or analyzing the corporate strength of the businesses. Particularly believed that the fiscal power will extend the business lifecycle. This opens the path to the intensive use of financial analysis in assessments and the easy collection of relevant data resting on measurable parameters.

The method most widely used in the financial evaluation of organizations is the ratio analysis. By performing a ratio analysis, important information can be gained about the financial status of the enterprises. That information may include liquidity, indebtedness and profitability. For example, Banks perform ratio analysis and evaluate the business’s structural condition to assess the risk and decide whether to give loans to a requesting organization. Although these analyses provide useful information it may not provide concrete evidence of financial competency. There is a need for further analysis to identify these.

In this study, Financial competency is considered to be the part of an enterprise competency assessment model. It is a nested architecture identifying the financial competency in 6 layers from the least up to the most concrete competency. Each layer has several criteria including financial ratios mentioned above. This paper describes the model and concentrates on financial competency procedures. The model proposed also highlights some remedies for the enterprises to increase their competency to upper levels. Note that, as the financial competency has a more numerical foundation than the other component of the competency model, an evaluation structure using the ratios most commonly used in the literature has been adopted in this part of the model.