Financial analysis - what is it? The purpose of the financial analysis
Financial and economic analysis - a necessary measure to identify the position of the organization in the market. The emergence of such analytics is due to the peculiarity of the development of a market economy, including the financial market and the priority of monetary resources. To represent the prospects for development and go in the right direction, you must be able to assess the financial condition. Work on financial analysis - the area of responsibility of specialists who have received special education and are fluent in thoughtful techniques. However, many note that the theoretical basis of such a study has not been worked out correctly enough to this day, although its important role for enterprises has been widely recognized. Accounting financial analysis, diagnostics are both methods of formal cognition, and an applied field of economics.
Analysis: the beginning and the end
In fact, it is analysis that is the most accessible to man method of knowing the world.It is equally applicable for different areas, scientific fields, as it helps to solve problems even if there is a shortage of a base for critical assessment and making an informed decision. Financial analysis is not just a thought process, but the dismemberment of an economic phenomenon into several parts, followed by a detailed study of each.
There are several different forms of research, methods of its implementation. Much depends on the complexity of the object: a financial analysis of an enterprise and a country's position in the global economy require completely different approaches. Something is determined by the level of abstraction, the structural features of the phenomenon. Focusing on them, the specialist can choose the best methods, procedures for knowledge, which will give the maximum amount of information on the object.
The analysis of financial and economic activities in the most general understanding of this phenomenon is financial diagnostics, although the essence of this concept (according to some experts) is somewhat different from a simple understanding of the idea of analysis. Within the framework of diagnostics, a certain comparative field is necessarily revealed.determine the quantitative standards of indicators characteristic of the object under study, calculate the development trends of the subject of research, the industry to which he belongs. A comprehensive collection of information provides enough data to assess the state of the object at the time of the event.
According to a number of researchers, financial analysis is a rather deep undertaking, which is a serious scientific work, within the framework of which monetary relationships and the movement of resources are explored. We consider the production, trading processes.
Many modern economists are of the opinion that financial analysis is a research process that considers the financial condition of an object, and the main objective of the event is to calculate the results of economic activity for a given period of time. Based on the obtained indicators, it is possible to determine by which methods it is permissible to achieve an increase in the value of assets in the market. Such a financial analysis of the organization provides information that is applicable for the effective development of the company and success in the market.
Some scientists are of the opinion that under financialism a process based on the mastering of statistical information about the state of the company should be permeated. At the same time, the results of the activity for the selected period are examined. There is also such an approach: financial analysis is a process of research, which the goal is to formulate a proposal, forecasts that allow changing the current financial conditions characteristic of the subject being studied.
Definitions: they have no number!
Economics as a science attracts the attention of a huge number of specialists, in different countries a rather different approach to formulating both definitions and the essence of the studied phenomena is practiced. Thus, a certain group of Russian scientists proposes to understand by financial analysis of an enterprise such a measure, which gives access to numerous informative parameters, on the basis of which it is possible to formulate an idea of the economic condition of an object. Such indicators in the sequential processing of statements are applied when making management decisions. The main goal of the work is to increase the economic efficiency of the organization.
What is being said in the West?
Some European economists are of the opinion that the purpose of conducting a financial analysis is to assess the organization’s current and current financial position. At the same time, it is necessary to analyze the results of the company's activities, and the first task is to assess the conditions of the present. Based on the information received, it is possible to build forecasts for the near future and make certain adjustments to the development of the enterprise in order to strengthen its position.
General and private
As can be seen from the above definitions, many economists, when formulating the essence and methods of conducting financial analysis, operate with rather similar concepts, differing quite insignificantly. It cannot be said that one option is more correct and more correct than the other - all opinions have their strengths, correspond to reality. As some theorists in the field of economics say, the analysis involves both working and research processes. The main idea of such an event is to find the answer to a number of questions related to management tasks.
How to understand?
Financial diagnostics and analysis of the current situation - the theoretical area of the modern economy is relatively unexplored, and there is no such abundance of definitions and approaches for diagnosing, which somewhat complicates the understanding of this sphere. The main ideas are based on the fact that diagnosis is the study of the financial situation in order to determine the signs that impede the active development of the company. As part of the diagnosis of financial analysis of the balance, attention is directed to the study of factors and reasons that prevent the legal entity from reaching a new level of success. It is important to identify risk factors that could trigger a worsening of the situation in the future. Based on the information received, you can adjust the development program, revise the goals to avoid risks.
Analysis: how to conduct?
The first stage of economic research involves the determination of factors that deserve the attention of specialists. To assess the state of the company, resorting to a complex system of interrelated parameters, the number of which is quite large. It is usually necessary to choose the main ones, taking into account the sphere of specialization of the organization.
The most important thing comes first
The key parameters are parameters that allow to evaluate profitability, activity of the enterprise, financial stability, property, as well as the ability to pay bills. In the general case, within the framework of a financial analysis, it is necessary to operate with at least three indicators, but you should not use more than seven for each of these aspects. A set of indicators is determined by belonging to the industry, the goal pursued by the company. When the choice of indicators is completed, one can proceed to the formation of baseline values — most often, the average for the industry are in their quality, taking into account the regional coefficient.
The main idea of such analytics is a simple assessment of the current situation, the well-being of the organization. As a result, you can get visual information that reflects the development process dynamically. The analysis is accompanied by the calculation of a number of indicators. It is possible to supplement the basic methodology with additional approaches - this depends on the qualifications of the calculating specialist, his experience.
Usually, express analysis is done in three stages.First, preparatory work is carried out, reports are selected in the accounting department, then indicators are calculated and data is analyzed. It is important to understand how appropriate it is to analyze the financial documents of an organization under current conditions, and also to check whether they are prepared for a specific reading.
Features of express analysis
As a preparatory event, audit findings are usually collected and the data contained in the papers are evaluated. Identification of the readiness of reporting for verification is a crucial stage, in many respects technical. In this case, not only is a counting, visual check, within the framework of which it is monitored, whether all applications, forms are present. It is also important to check the availability of requisites, signatures, check how well the documents are filled in, in what currency the balance sheets are made. Experts monitor the subtotals, check how well they fit together, and also calculate the control ratios. On the basis of the data obtained, it is possible to understand how the accounting documentation is ready for analytical testing for the formation of the further course of the enterprise.
The next step is the analysis of the explanatory note accompanying the balance sheet of the company. This measure allows you to understand the conditions under which the work was conducted during the time for which the report was generated. On the basis of the obtained data, it is possible to calculate the performance indicators, qualitative changes in the position: property, financial indicators inherent to the legal entity. Formulating the primary conclusions regarding the dynamics of parameters from the explanatory note and reports, special attention should be paid to the algorithms used to calculate the parameters.
The described measures are usually attributed to preparatory work, after which you can proceed to the actual analysis.
Within the framework of this event, it is necessary to evaluate the effectiveness of the economic activity of the object under study. The assessment is formed by a generalized, taking into account the parameters reflecting the financial condition of the company. Analysis can be done with a high level of detail, if managers are interested in this, wishing to make the most effective management decision, but this approach is not necessary. In some situations, the analysis will be optimal with a low level of detail, not giving unnecessary confusing information.
Information: why a lot?
The main purpose of the detailed analysis is to describe the property and financial situation of the company, which is being studied by analysts, with the highest degree of detail. This takes into account how effective the company's activity over the past time period is, what are the prospects for development. Detailed analysis provides enough information for specific conclusions, and with regard to express analysis, it can be an additional measure that expands the scope of results. The degree of detail is directly determined by the instructions received by the analyst from the managers.
What's wrong with me, doctor?
When the data is collected, you can begin to draw conclusions. In economics, this is called a diagnosis. The information obtained allows a fairly accurate assessment of the position of the organization and its activity over the selected time period, on the basis of which experts report which places are the weakest and most vulnerable, which deserves a special approach and attention. Correct diagnosis is the most important stage for the recovery of the company, the adoption of measures allowing to take a stronger position in the market.
The summarized steps are used to formulate management decisions. Initially, drafts of such projects are prepared, and comprehensive assessments, including those considering trends of change, help to formulate conclusions on the current state of affairs and future ones, if the invented improvement options are introduced. All this in sum is a financial planning procedure that is necessary for any modern enterprise interested in long-term successful work.