The analysis of the company’s financial condition has the main purpose of assessing the current state of the organization and determining potential development prospects. At the same time, a stable financial condition refers to the ability of the company to finance its current activities on an extended basis.
Analysis of the company’s financial and economic activities
The analysis of the company’s financial and economic activity is a comprehensive assessment of the financial situation of the company, its assets, liabilities and equity over a certain period of time.
The main indicators of financial reporting, as part of the management financial consulting of the company – profit, volume of production, the amount of costs – in themselves can not give an exhaustive answer to the question about the sustainability of the financial condition and the potential of the company. This requires a thorough analysis of the company’s financial activities. Depending on the specific objectives of the financial analysis, appropriate forms of reporting, time interval, financial coefficients and calculations are selected. The financial analysis of the company gives an opportunity to assess the adequacy of equity for the planned tasks and the need for additional sources of financing.
The results of a qualitative analysis of financial reporting allow the management of companies to make timely and prompt management decisions that contribute to further growth and business development. The need for financial analysis is especially high for enterprises undergoing different stages of reorganization, from the corporatized and privatized organizations, as well as from companies that are changing their organizational and legal form.
The purpose of financial analysis
The aim of the financial analysis carried out by AGTL specialists is to obtain the largest number of key parameters that give you an objective and accurate picture of the financial condition of the company:
- its profits and losses;
- Changes in assets and liabilities;
- Settlements with receivables and creditors;
- identify the most effective ways to achieve profitability.
The main task of the financial analysis is to identify and eliminate the negative factors of financial instability and redundancy, which can lead to the imminent depletion of financial reserves and, as a result, total insolvency, or, on the contrary , to a high rate of capital turnover, hindering the healthy development of the business.
In turn, the object of financial analysis is financial reporting, which must meet the requirements of reliability and openness, significance and completeness, consistency of some others.
The information basis for the analysis of the financial condition of the company is the company’s reporting, both official, accounting and internal, management. Assessment of the reliability of reporting is a prerequisite for financial analysis. Based on these reports, the calculation of indicators and financial coefficients is made. First of all, the most significant factors are determined, characterizing financial stability, solvency, liquidity, business activity, profitability. The analysis of financial reporting consists in comparing the received coefficients with the industry-wide indicators. The trend of changes in indicators for the reporting period and previous years is necessarily monitored. On the basis of the financial analysis, a conclusion is drawn up, giving a clear picture of the financial condition, highlighting trends, highlighting prospects and possible risks.
Analysis of the company’s financial condition
The analysis of the company’s financial activities implies not only a quantitative assessment of the indicators, but also consideration of all issues affecting the life of the company: changes in the level of prices, bank interest rates, inflation rate, changes in tax and civil legislation. In order to conduct a qualitative financial analysis of the company, it is also necessary to get an idea of the availability of raw materials, logistics problems, the level of competition. Once the main range of possibilities and challenges have been identified, you can move on to analysing numbers and indicators. In particular:
- Analysis of the composition and structure of the balance
- Analysis of the financial balance between assets and balance sheet liabilities
- Liquidity analysis
- Analysis of business activity and solvency
- Cost-effectiveness analysis
- Analysis of receivables and payables
- Determining the financial strength and profitability threshold
- Sensitivity analysis
- Cash flow analysis
- Determining (diagnosis) of the probability of bankruptcy
- Analysis of the company’s solvency
- Assessment of property and financial situation
- Finding opportunities for planned growth available for financing by the company itself
- Detection of factors that negatively affect the company’s financial position
- Finding and mobilizing reserves that can positively affect the efficiency of the company
- Assessing the reliability of counterparties
- Analysis of the feasibility of investment
- Improving the company’s financial performance
Any company is unique and has its own features of financial and economic activity, so on our part you can always c
ount on the attentive approach of our specialists to the details and specifics of the business.
Call! +38 (050) 676-34-45, +38 (098) 028-08-51.