Often, the viability of a company depends on its financial condition, so it is very important to track its changes in time, as well as to analyze the financial condition to identify various problems and complexities in its balance sheet and reporting. Thanks to timely analysis, you will be able to compare the current financial data of the company with its past data and draw appropriate conclusions regarding the ongoing financial dynamics.
Instructions
Step 1
The main problematic articles usually relate to the unsatisfactory financial position of the company - uncovered losses, overdue loans, debts, and so on, as well as the shortcomings of the organization, which affect its financial well-being. Examples of such shortcomings are unpaid penalties, fines, forfeits, accounts receivable, and much more.
Step 2
Examine the balance sheet data to assess the company's solvency by subtracting the company's short-term liabilities from the cost of its working capital.
Step 3
Also, conduct a vertical and horizontal analysis of the profit and loss statement - in the process of analysis, trace the relationship between the dynamics of revenue and cost. Problems with business efficiency are evidenced by a decrease in revenue and an increase in expenses.
Step 4
In addition, it is important to analyze the liquidity of the company's balance sheet in order to find out if it has enough assets to cover its liabilities. The factors that determine the business activity of the company, both in interaction with suppliers and in interaction with customers, are important to you.
Step 5
Calculate the financial soundness ratio to characterize the share of equity in the balance sheet currency, and in addition, calculate the profitability indicators - it is important to determine the overall and net profitability of the company. Before analyzing, do not forget to set a goal for yourself - the results of the analysis should become specific answers to specific questions for you.
