Gartner Research

Analyze Vendor Balance Sheets to Reduce Risk of Vendor Obsolescence

Published: 24 March 2014

ID: G00262389

Analyst(s): Gary Spivak

Summary

Balance sheets offer critical information to mitigate risk of vendor insolvency or obsolescence. IT vendor management leaders and other technology buyers should examine vendor balance sheets to decide when to divest and seek alternative providers.

Table Of Contents
  • Key Challenges

Introduction

Analysis

  • Evaluate Your Vendors' and Service Providers' Financial Health
    • What Is the Balance Sheet?
  • Analyze the Company's Assets to Gauge How Readily They Can Be Converted Into Cash
    • Assets
    • Cash
    • Accounts Receivable
    • Inventory
    • Current Assets
    • Noncurrent Assets
  • Identify the Company's Liabilities to Gauge Its Obligations and Its Ability to Meet Them
    • Liabilities
    • Accounts Payable
    • Debt
    • Deferred Revenue
    • Current Liabilities
  • Dissect the Company's Equity to Gauge Its Historic Profitability and Solvency
  • Analyze Key Balance Sheet Ratios and Other Derived Metrics
    • Examine Balance Sheet Ratios and Other Metrics
    • Measure Receivables as They Relate to Revenue and Prior Periods to Reveal Critical Trends
    • Measure Inventory by Looking at Inventory Turns
    • Monitor the Changes in Deferred Revenue
    • Tangible Book Value

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