A well-conducted analysis of the financial and economic aspects of the functioning of an enterprise helps to assess the work done and correctly predict the changes to get the most profit. To carry out such a procedure as analysis of the financial condition of the enterprise, a financial manager of the enterprise is involved or, more objectively, a qualified specialist is hired in the relevant company. In order for the analysis of the financial condition of the enterprise to be carried out fully, the financial manager must use all the accounting and statistical reporting of the enterprise at the current time and for previous periods.
In the analysis it is important to take into account absolute indicators of profit, relative indicators of profit, financial stability and liquidity of the balance sheet, the efficiency of use of attracted capital (if any). An in-depth analysis of the financial and economic activities of the enterprise takes place in several stages. First, the existing reports are read, then deeper professional types of analytical activities are carried out, they include the vertical analysis method, the trend analysis method and, finally, the calculation of the so-called financial-coefficient analytics. While reading the statements, indicators of the enterprise’s performance are studied, an analysis of the financial condition of the enterprise, property status, use of long-term and short-term investments, sources of capital formation of the enterprise, relations with customers and suppliers, financial and credit enterprises is made, the income from the activities and profits of the current year is estimated. A horizontal analysis of the financial condition of the enterprise reflects the trend of changes in the article part of the reporting compared to the previous quarter, half year, month. Vertical analysis includes the assessment of the specific gravity of individual article indicators, for example, accounts receivable, in general activities. Conducting a trend analysis allows you to identify the main ways of enterprise development by reporting indicators. A more accurate analysis of the financial condition is obtained by comparing indicators for several years of activity.
Of particular importance to the financial manager are financial ratios, which are the basis for the analysis of the enterprise. The ratios show financial proportions and are based on data from a specific base: generally accepted standards, average performance in a particular industry, performance of the enterprise of previous years, data on the activities of other enterprises, other performance indicators of the company. Calculations by coefficients are not particularly difficult, but they make it possible to draw more accurate conclusions and make more feasible and optimally probable forecasts, to identify the weakest places in the enterprise. An analysis of the financial and economic activities of the enterprise carried out by qualified managers is not only a document for the manager, who, based on the results, will be able to evaluate the work of the company and outline measures to improve it. Such a document can be compiled for external users - banks, which on the basis of its indicators make a decision on the issuance of loans, stock market participants, determining the value of the shares of the enterprise or investors making decisions on the feasibility of investments.
The manager conducting the analysis should have the skills and experience in this type of activity, since he is responsible to the head of the company for the proposed recommendations for improving the work, the accuracy of the data that make up the "financial image" of the enterprise.