In the face of fierce competition, companies constantly have to fight for survival. To stay afloat, it is not enough to find and occupy a free market niche, you need to maintain and constantly improve your position. In order to solve these problems, companies should regularly conduct financial analysis of their activities. Conducting a qualitative study will not solve all the problems of the enterprise, but will provide specific information about the strengths and weaknesses that can be effectively used.
Financial analysis - what is it? This is an assessment method that allows you to determine the sustainability of the enterprise by calculating indicators, based on which conclusions are made about the results of the company in the present and forecasts regarding the future. During the study, coefficients are calculated, which are divided into several groups depending on the direction of assessment.
You need to know in order to independently analyze what the main financial indicators are and how to calculate them correctly.
The coefficients used to assess the activities of the enterprise are included in 4 main groups of indicators:
- Liquidity ratios. They determine the financial stability of the company in a short time by calculating the degree of mobility of assets and their relationship to each other.
- Solvency ratios. They determine the financial stability in the future and characterize the structure of own and borrowed capital.
- Profitability ratios. Determine the efficiency of capital use, investment and the activities of the company as a whole.
- Turnover ratios. Determine the cost recovery for the production cycle and the intensity of use of funds.
Each of the listed groups includes many indicators, but to study the results of the company, it is enough to apply the main ones, of which there are about three dozen.
They are determined according to data taken from the most important reporting documents: the balance sheet and its annex, and the report on financial performance.
In addition to the derivation of individual indicators and ratios, a factor analysis is used to study the state of affairs of the company, which consists in drawing up an economic model that takes into account the relationship of the coefficients with each other and its influence on the final result.
The use of factor analysis in the economy allows us to identify more accurate results and influence positively on the adoption of managerial decisions.
An effective study of the results of the operation of the enterprise involves not only the calculation of the most important indicators, but also the correct use of the data obtained.
Analysis of the company is carried out by the analytical department. However, in some cases, the participation of auditors is required. Experts will explain by calculating financial stability indicators and performing an analysis that such a study needs to be carried out regularly to see the dynamics. Thus, it is possible to identify such important factors as the growth rate of gross output, the value of working capital and others.
Experts will decipher, after analyzing, what is the profitability and solvency of the company, what are the investment risks, how to properly and efficiently use the assets.
Based on the data obtained, an analytical report is compiled containing information on the results of the analysis, as well as recommendations, following which will improve the state of affairs of the company.
