Financial analysis is the analysis of the result of your company's activities by examining the balance sheet items in the financial statements, the financial status of the company, how to improve the missing aspects, how to improve the missing aspects, where action plans are created for these missing aspects, and to plan the future of your company in line with the current situation.
Even though financial analysis is a serious guide especially for SMEs, many SMEs today unfortunately prefer financial burden rather than financial analysis. First of all, every visionary business should analyze its current situation well and manage its finances correctly while planning for the future.
The purpose of financial analysis varies according to who performs the analysis.
If the person doing the financial analysis is a bank; The purpose of the analysis is to measure the repayment power of the company with which it will enter into a credit relationship. In bank credit analysis, the balance between current assets and short-term debts, the structure of assets, capital structure, borrowing rates, debt / equity balance are important analysis items. This analysis is done with the information transfer of the bank staff and your finance manager. You should master the questions asked by the bank in the financial analysis and give clear answers.
If the person conducting the financial analysis is the management, the purpose of this analysis is to determine whether the desired point has been reached in line with the decisions taken by the management team. As a result of this analysis, the management team measures the success or failure of its activities. It sees whether the decisions taken and the targets given are realized or not. It makes and implements decisions according to the result of the analysis. It determines new strategies or makes updates to existing strategies.
If the person conducting the financial analysis is an investor, the purpose of this analysis is to measure the profit per share of the investment to be made by the person or institution that will be a partner in a company and to measure the efficiency of the investment.
Companies that regularly perform financial analysis identify financial threats in advance, clearly see whether they can make a profit from their activities and determine an action plan, have the opportunity to examine expense items in detail, draw a road plan to correct deficiencies in their financial data, know what financial analysis ratios mean and have the opportunity to compare them with sector values.
The purpose of financial analysis varies depending on who is doing the analysis.