5 Effective Steps In Analyzing Financial Statements

financial statement

For all professionals engaged in finance, it is actually very important to know how to analyze effectively the financial statements on the company. In this case, you need to know and understand the 3 key areas:

  1. The structure of the financial statements
  2. The economic characteristics of the industry in which the company operates, and
  3. The strategies that companies use to differentiate them from competitors

For those of you who want to know how to make an effective financial analysis, here are 5 steps you can use:

#1. Identify the characteristics of the industrial economy

First determine the value chain of a company’s industry as a chain of activities involved in the creating, manufacturing, and distributing of a company’s products or services.

#2. Identify the strategies the company uses

Next is look at the nature of the products or services offered by the company including the uniqueness of the product, the level of profit margins and cost control.

# 3. Assess the quality of the company’s financial statements

Assess key financial reports in the context of accounting standards. When you check the balance sheet within a company, things like valuation and classification are the key to proper evaluation.

# 4. Analyze the benefits and risks

This step is a step where you can actually add value in evaluating the company’s financial statements. The most common analysis is the ratio of financial statements relating to liquidity, asset management, profitability, management and risk assessment.

# 5. Preparing forecast of financial statements

Although not easy, as a professional financial manager you should also be able to make a clear assumption about the future of the company and determine.
When the financial analysis is complete, there are still many questions you should be able to answer such as “Is the data generated really reliable?” With the above question, you need a solution that can answer the question

Some companies answer this question by using the help of a tool such as accounting software that is able to present accurate and real time financial data such as Acumatica Cloud ERP.

Acumatica Cloud ERP can significantly improve the ability to generate fast and accurate financial statements that can shorten your time in managing reports and give you more time in analyzing and making business decisions.

Key Features Acumatica Cloud ERP

  • Can access reports anytime and anywhere
  • Present quality reports
  • Audit ability to improve data accuracy
  • General ledger
  • Making reports easy and fast
  • And so forth

The use of software such as Acumatica Cloud ERP not only gives you convenience but also benefits that will greatly value your business development. With Acumatica, you can unlock new potential in business for increased profit. Want to know more? Immediately contact us at (021) 53675015 or email us at sales@8thinktank.com.