In sports, knowing the score is vital to deciding on the best game plan. In business, knowing the score is equally vital. What’s the score for a business? You find it by doing financial analysis. Financial analysis helps answer these questions: How is your business doing? Are there areas that need improvement? Are there things you’re doing better than the competition? Are your revenues keeping up with increases in your costs? Do you have costs that are higher than they should be? Our staff can help you with answers to these questions.
A trend analysis looks at your business’ performance over time. Are revenues trending upward or staying level? Are some lines of your business doing better while others are declining? And what about profits? Are they following the same trend as sales, or are they decreasing while sales are increasing?
Ratio analysis looks at the relations between different items in your financial statements. Bankers are keenly interested in the current ratio, which is the ratio of current assets to current liabilities. Ideally this should be a 1:1 ratio or better. If current liabilities are greater than current assets, this is a sign that the business might be having a tough time paying its bills.
Benchmarking compares the performance of your company to those in the same industry. This can help you determine if your staffing levels are too high, if your inventory is higher than normal or if your net profit is in line with other businesses like yours.
Call our office today and we’ll help you with an analysis of your financials. We’ll find ways to make this year your best year ever!