Analysis of income and expenses allows you to get information about the amount of income and expenses, sources of profit, causes of losses, and also gives an idea of the financial activities of the company as a whole. Work on the analysis of income and expenses is carried out on the basis of primary documents and financial statements of the enterprise.
Instructions
Step 1
The economic analysis of income and expenses allows you to assess the financial condition of the enterprise, to draw a conclusion about its sustainability. The analysis contains accurate and complete data on the results of the company's activities for a certain period. Based on the analysis of income and expenses, it is possible to give not only a current assessment of the financial position of the enterprise, but also to make forecasts for the future period.
Step 2
The analysis allows you to plan the economic activities of an enterprise, set long-term goals, and develop a development strategy. Thus, the economic analysis of income and expenses is part of the company's strategic development plan. Analysis of income and expenses is necessary during changes in the organizational and legal form of an enterprise, for example, during its reorganization in the form of transformation.
Step 3
To analyze income and expenses, financial reporting documents come to the rescue: Profit and Loss Statement, Balance Sheet, Cash Flow Statement. Sources of information are also primary documents: invoices, invoices for the shipment of products, sales ledger and others. Useful data is also contained in the financial plan section of the company's business plan. The necessary information can be obtained by analyzing the dynamics of the main technical and economic indicators of the company's activities over the past 3 years.
Step 4
As a result of the analysis of the documents, the specialist concludes that the profit has increased, the rate of sales growth, the profitability of sales, proceeds from the sale of products and others. There is a break-even point - the volume of sales at which the company does not receive income, but also does not incur expenses. In this case, specific numbers give an idea of what the sales volume should be for the company to have a financial strength. The assessment of the factors influencing the profitability and efficiency of the company is given.
Step 5
Analysis of the income and expenses of the enterprise allows not only to assess the company's activities, but also helps the management to make the right management decision. Analysis of the results of financial activities makes it possible to create such working conditions for the enterprise, under which it will maintain financial stability. Thus, the analysis of income and expenses helps to choose the best way for the company to get out of the crisis, predict profitability, and assess potential risks. On the contrary, inaction of the management and underestimation of risks can lead to insolvency, lack of funds, and as a result, to bankruptcy of the company.
