2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Analysis of the company's activities is to obtain a certain number of key parameters, with which you can see the most accurate picture of the financial condition, profit or loss, any changes in liabilities and assets, settlements with creditors and debtors. At the same time, specialists should be interested in both the current state of the organization and the expected results of economic activity.
Analysis of the activities of the enterprise pursues the achievement of certain goals, formed taking into account the information, organizational, methodological and technical capabilities of carrying out analytical work on the basis of accounting and financial statements.
The main principle of considering the relevant material is deductive. However, it must be applied repeatedly. The analysis of the enterprise's activity reproduces the historical and logical sequence of various events and economic factors with the direction and strength of their influence on the results obtained.
Based on practice, economists have developedsome rules for reading reports, among which the main ones can be distinguished:
- horizontal analysis of the company's activities, providing for the comparison of specific reporting positions with the previous period;
- vertical analysis, which consists in determining the structure of the resulting financial indicators with determining the degree of influence of each of them on the overall indicator;
- trend analysis, presented by comparing each individual reporting position with the corresponding results of previous periods and determining the trend, separating it from individual characteristics and random influences of individual periods;
- analysis of relative indicators - separate relations between some positions are calculated with the definition of their relationships;
- the comparison is carried out in comparison with similar results of the enterprise and its competitors, as well as with industry average data;
- factor analysis involves considering the influence of certain circumstances on the outcome using stochastic and deterministic research techniques.
Among the main indicators evaluating the effectiveness of an organization's activities is profitability (for example, investments), which is calculated by the ratio of net profit to investments invested in the company. Evaluation of efficiency based on these calculations is possible only if specialists have comparable data on similar firms.
The same can be said about the profitability of operationsenterprise, calculated as the ratio of net profit to costs. Cost analysis of the enterprise will be most effective if it is carried out in all areas of the enterprise's economic activity.
It should also be noted that an assessment of only the financial performance of an enterprise does not give a complete picture of its economic activity and does not allow diagnosing some problematic issues.
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