How does Enisa evaluate your company?
Over the past few years, Enisa has been developing and refining an algorithm through which it performs a series of analyses of startups that result in a credit rating, classified from A (low risk) to D (high risk). The approval of a loan in your startup will depend to a large extent on this rating.
In startups less than 2 years old, the rating will depend on an eminently qualitative evaluation, but in the case of companies with more than 2 years of life, the algorithm gives 90% weight to the analysis of a series of economic-financial ratios, while the remaining 10% depends on a qualitative analysis.
ENISA's quantitative evaluation focuses on analyzing 7 historical but also projected economic and 5 financial ratios of the company.
First, the economic ratios are analyzed:
- Sales Growth: Sustained growth in annual sales will be positively evaluated.
- EBITDA/Sales Ratio: A ratio tending to 20% indicates highly efficient management.
- Net Margin: A positive and growing net margin is seen as positive, and it is desirable to be above 8%.
- Asset Turnover: A turnover ratio of 5% suggests high efficiency in the use of assets to generate income.
- ROA (Return on Assets): An ROA greater than 24% indicates a highly effective use of assets to generate profits.
- Difference in Average Payment and Collection Periods: A positive difference between payments and collections suggests good cash flow management.
- Stock Rotation: A value greater than 22 is valued as a very efficient inventory management.
Second, a series of Financial Ratios are analyzed:
- Liquidity: A liquidity ratio of between 1.5 and 3 indicates that the company has a solid capacity to pay its short-term debts while maintaining an adequate level of liquid assets to take advantage of investment opportunities or manage financial emergencies.
- Solvency: A Net Worth to Total Assets ratio of less than 10% is valued as high solvency and reflects the ability to meet long-term obligations.
- Indebtedness: A moderate level (10 to 30%) of Gross Financial Debt over Total Funds is desirable, showing balance between debt and equity.
- Debt Coverage: A Net Financial Debt to EBITDA ratio of less than 5 is considered positively.
- Interest Coverage: In the same way, an EBITDA to Net Financial Expenses ratio of less than 5 indicates a greater capacity to cover financial expenses with operating profits.
On the other hand, qualitative evaluation includes the analysis of several key factors that may influence the success of the project:
Market and Product:
- Market Attractiveness: A market with high growth and significant entry barriers is positively valued.
- Competitive Advantages: Own technologies, differentiated products and innovative strategies are considered favorable.
- Company Life Phase: Companies that have achieved important milestones and have clear and viable expansion plans are well regarded.
- Suppliers and Customers: Diversification and strong relationships with important suppliers and customers are positively evaluated.
- Competence: Knowing and differentiating yourself properly from competitors is crucial.
Management Team and Shareholders:
- Partner Experience: Previous experience in entrepreneurship or successful management is valued.
- Management Team Involvement: High dedication and experience in the sector are key factors.
- Company Management: Efficient management structures and clear objective monitoring systems are valued as positive aspects.
