What Is The Purpose Of The Financial Analysis Of A Company

1
PROMINENCE CLIENTS TRUST MANAGEMENT
www.prominenceclienttrust.com/
2
What Is The Purpose Of The Financial Analysis Of
A Company
The financial analysis of companies is based on
the study of accounting documents produced by
companies. This includes analyzing in detail the
tax package of a company (the tax package
corresponds to the declaration of income of a
company).
3
What is the purpose of the financial analysis of
a company?
The analysis aims first and foremost to better
understand and interpret a company's figures in
order to visualize its financial situation and
help provide a better marketing plan. The
solvency, liquidity, and profitability of a
company are therefore analyzed. It is commonly
said that this is what makes the numbers speak
4
The analysis allows ? Organize or reorganize the
various accounting elements ? To reveal
problems ? To study the sector and the risks
incurred by the company ? To determine its
ability to generate profits ? Assess growth
prospects ? To study the formation of the
result ? Analyze the assets ? Help in making
the marketing plan ? To measure profitability ?
To issue a financial diagnosis (i.e. an opinion
on the financial health of the company).
5
For whom is the financial analysis of a company
useful?
The analysis is widely used internally, within
companies themselves. This allows data to be
analyzed to improve a company's financial
performance. It is also widely used when
companies decide to open their share capital to
new investors.
6
Sometimes, financial analyzes can also be carried
out by third parties to a company, i.e.
externally. It is often other players in the same
sector who carry out these analyzes to get an
idea of the financial situation of a supplier, a
customer, or even a competing company. For
companies that work together, this makes it
possible to ensure the partner's ability to pay,
for example. We also note that an analysis is
almost systematically carried out during business
takeover projects. To carry out the analysis of a
company, it is necessary to restate its
accounting documents in order to bring out its
financial situation. This is the financial
diagnosis. Thus, the analysis is based on the
balance sheet, the income statement, and the
annexes of a company. These documents can be
found in the annual accounts or in the tax
return.
7
What is the benefit of outsourcing financial
management?
The use of an external financial director may be
the safest solution to avoid increasing the
workload of internal employees. Expert and
specialist in the function of CFO, he will save
you from hiring a high-level full-time employee,
which will save you on the payroll. In addition,
an outsourced financial analysis will be able to
focus more on the challenges of its function,
namely managing the cash flow, monitoring the
accounts, planning the budget, and monitoring the
company's financial forecasts.
8
(No Transcript)