Benchmarking Treasury for Shareholder Value

2 Treasury and Trade Solutions Positive correlation exists for both revenue and earnings before interest, tax, depreciation and amortization (EBITDA) with the treasury effectiveness scoring from the CTD survey. The compound annual growth rate (CAGR) of both revenue and EBITDA trending upwards as the relative performance of corporates participating in the survey increased (Figure 2a) . The top 25% of performers as measured by the diagnostics show an EBITDA CAGR and revenue CAGR of 7.98% and 5.72% respectively. Perhaps more importantly, irrespective of industry, the revenue to EBITDA ratio also increases significantly (1.07 to 1.40) between the bottom 25% and the top 25% of treasuries measured (Figure 2b) . We can conclude from this observation that the benchmark performance of treasuries as executed through the CTD is an effective indicator of the treasury’s ability to add value to the firm’s bottom line. Figure 2a: Corporates’ Efficiency Gains: Compound Annual Growth Rate/Earnings to Revenue Ratio Source: Citi Treasury Diagnostics Survey (368 participants from 2014-2018), Bloomberg. 8.00 5 Year CAGR (%) Top 25% Earnings/Revenue Ratio : 1.40 Earnings/Revenue Ratio : 1.18 Middle 50% Bottom 25% 6.00 4.00 7.00 5.00 3.00 7.98 5.72 5.38 4.56 Earnings/Revenue Ratio : 1.07 4.09 3.82 EBITDA (2018) Revenue (2018) EBITDA to Revenue Ratio Figure 2b: Corporate Rankings: Industries and sectors surveyed INDUSTRY SPLIT TOP 25% MIDDLE 50% BOTTOM 25% Consumer and Healthcare 28% 31% 21% Industrials 38% 32% 33% Technology, Media and Telecommunication 16% 22% 24% Energy, Power and Chemicals 16% 12% 17% Bank, Insurance and Non-Insurance NBFI 2% 2% 1% Metals and Mining 0% 1% 4%