Methods of financial analysis of the enterprise - the main way to success

The word "analysis" entered our life a long time ago, since the days of Ancient Greece. It means the research method of cognition of a particular process and phenomenon, based on a careful study of the constituent parts that make up this process.

Methods of financial analysis is a program of actions aimed at studying the financial health of an enterprise, its domestic and foreign policies. They are aimed at monitoring the current state, determining its credit and investment ability. And they also help answer the question of how stable and cost-effective the company is at a particular moment in time.

Methods and methods of financial analysis in a timely manner identify weaknesses and strengths of the enterprise. This eliminates the potential sources of economic problems and reveals new goals that the company can make a bet in the future.

All methods of analyzing the financial condition of an enterprise are subject to the same goal: obtaining in a short time reliable, expanded information about the financial condition of the enterprise. As you know, the production life of the enterprise is saturated with complex problems and various rapidly changing situations. To organize a reliable and reliable financial management, you need to be aware of all the cases occurring at the enterprise. This means owning operational data: on sales markets, on suppliers and competitors, on the quality of products, on further, promising goals. The central point in coordinating the actions of such work is financial analysis. It gives an opportunity to answer all the exciting questions about the flow of funds, the quality of management and the position of the enterprise in the market.

In addition, methods of financial analysis with accurate and timely results are very necessary:

- both financial and other managers for a correct and effective evaluation of the actions and decisions taken;

-to shareholders, founders and other owners of the enterprise. To answer their questions related to the return of the invested funds or the possibility of their loss, with the level of risk probability for the capital;

-investors and lenders, closely cooperating with this business entity. To confirm the implementation of the investment program and the possibility of repayment of loan funds;

-contracting providers who are interested in timely payment of invoices for services rendered or delivered materials.

Methods of financial analysis include several stages:

Stage 1. It is aimed at a general preliminary assessment of the state of finances for a certain period.

2 stage. It includes a study of financial sustainability and solvency.

Stage 3. Investigates the creditworthiness and liquidity of the balance sheet.

4 stage. Analyzes the time of asset turnover.

5 stage. It is aimed at studying the possible state of potential bankruptcy.

In their practice, the methods of financial analysis are based on:

-First, to compare the financial data of the reporting period with the basic or planned period.

Secondly, the use of grouping tables that quickly, clearly give a picture of the state of individual indicators of financial activity and show their relationship with other values.

Thirdly, the method of mathematical substitutions. This approach of replacing the reporting indicator by a basic indicator makes it possible to determine the influence of one indicator on the total outcome of the financial condition as a whole.

-Fourth, to calculate financial ratios. They allow us to show both the quantitative picture of the current financial situation and the chain dynamics of the indicators separately.