Each and every business is built on figures, and these figures need timely analysis to understand how to make them grow. A thorough financial analysis not only helps in creating a solid business plan but also portrays in clear light the financial strengths and weaknesses of the company. The three most essential parts that a financial analysis should cover are the income, the projection of cash flow, and in the end the balance sheet. Here is how one can highlight these three sectors in a financial analysis:
- Income
This section needs to show the details of two of the company’s financial sectors, the revenue, and the expenses, and thereby also show whether the current state is one of profit or loss. In case of a new business, it is good to have an income statement every month, otherwise once in every fiscal quarter is good enough. Be sure to calculate every last bit of the expenses such as the bank charges, interests, utilities, etc., and the revenue calculation is usually easy since there is always a record of all the various payments received.
- Cash Flow
Out of the three categories mentioned here, the projection of the cash flow of a business is probably the most important. It not only shows how the figures in a business are about to shift but also enables the ability to foresee the necessity of a loan or short-term investments. Remember, that this is the analysis of how the cash is flowing and therefore what its trajectory will be in the foreseeable future, and not a record of how the cash has simply moved in and out of the business. In the case of a new business, it is better to not be too optimistic while analyzing the trajectory of the cash flow, otherwise, it might lead to a weak or flawed financial analysis.
- Balance Sheet
This is basically the end of a financial analysis where a sheet is presented which can depict the net worth of the business at any given point in time. A typical balance sheet has two different parts, liabilities and equity, which when put together are the assets of a business. This balance sheet necessarily sums up the analysis made from the cash flow and the income statements and presents it in a figure format. It is safe enough to create a business balance sheet once a year regardless of the size of the business.
Choose Flatworld Solutions for Accurate Financial Analysis Services
If these three sectors are well covered, a sound financial analysis can be created and thus a strong business plan as well. However, it is rather safe to hand over the job of creating a financial analysis to professionals, and Flatworld Solutions provides the perfect platform to do so. FWS provides secure and easy financial analysis outsourcing solutions for any business, big or small. Our team comprises of talented and skilled financial experts who have the expertise to provide services within a quick turnaround time without compromising on the quality. Get in touch with us today!
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Editor
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