No comments - Business & Finance

Planning and control are the two most important ingredients for a successful business. A business plan takes most of the guess work out of Business Strategy and Control through solid financial analysis. Financial Data provides a way to evaluate where you are in your strategic plan, which tells you where changes are needed in your plan. Because of this, financial analysis and data management are vital to running a successful business.

It 'very important to have a suitable accounting system installed across the enterprise so data acquisition is easy. You can not manage your business to profitability without a good accounting system. My CPA has a book coming out in the business to help the installation of the accounting system and show us how it works. All this is done with the guidance of the CPA but at a fraction of the cost. A good accountant is invaluable in helping capture of financial data. Having a consolidated accounting system that will work in place to minimize the cost of a CPA charges to analyze the tax liability and prepare your tax returns.

An accounting system is usually built around the following main tools of financial management:

- Income statement (profit and loss)

- Statement of Cash Flows

- Balance Sheet

- Budget

- Breakeven Analysis

Having a financial management system in place, you can easily identify signs of early warning or identify areas particularly profitable. Not having a system that can analyze and organize the financial data does not allow you to effectively manage, grow and manage a business. Makes it impossible to measure the success (or lack there-) Planning and strategy. In addition, used incorrectly, inaccurate Financial Data can be disastrous for the survival of a company.

A system of accounting and financial management is only as useful as it is used consistently throughout the entire company. E 'extremely important for the implementation of the system in the same fabric of the business and can be used in a systematic manner. The accounting system is a reflection of health, or lack thereof, of a business and which business decisions are made. Make sure you set it up right, train your people on it and most importantly, use it!

Two main goals of any business must be profitable and cash flow to pay obligations. The income statement and statement of cash flow figure relief in this area. The income statement reflects the way in which a company is operating, and the cash flow statement shows how well a business is the management of liquidity. Gains or losses on the one hand and cash on the other.

The trick is to find a good balance between profits and liquidity, which, if not well planned, it can be very difficult to maintain. The rapid growth with high profits can drain the liquidity of a company in order to be profitable is no guarantee you'll stay in business. The role of existing and projected cash flow and income statement is to help identify problem areas so that you can plan effectively for them, such as raising more capital, infusing more equity or obtaining financing. In addition, these two statements are used to identify areas that can be better controlled and managed, preventing the need for additional capital and financing.

The break-even analysis is based on the cash flow and income statement. The declaration of a tie and the graph is extremely important because it shows the volume of revenues, which are necessary to accurately balance the sum of the fixed and variable expenses. The break-even analysis can be extremely useful when:

- Setting the product and price levels of service

- Deciding whether to buy or rent equipment / building

- Understanding profit projections based on different levels of sales

- Determine if the new employees are required

- Planning ahead for finance / capital needed for the future

- Make strategic objectives more tangible and achievable

- Measure the progress of your company towards profit goals

The budget records the ultimate effects of corporate decisions (or lack thereof) and project the effect of future plans. The balance sheet is a record of the company's liquidity and assets of the owners. These variables are directly affected by the statements of income and cash flow. The budget is often overlooked in finance, but has a lot of utility:

- Show the effect of past decisions

- Keeps track of a cash position of corporate cash

- Record the level of equity

- Show business conditions quickly

A budget analysis compares the actual performance of a company Projected performance on a monthly, quarterly and annual basis. The budget is a great way to avoid excessive costs, unabated and is closely linked to the strategic objectives of the company has set itself. Analyzing the income statement and statement of cash projections against actual performance is an excellent tool control, that can quickly solve problems before they become too serious. Small oversights and errors in projections of a company spread over time can have a disastrous effect. The budget analysis is guarding against that.

Working together, the income statement, cash flow statement, balance sheet, break-even analysis and financial statement analysis provides a complete picture of a company's current operations, liquidity, past operations and future profitability. Thanks to the collaboration of an accounting system interactively can be a very useful tool to determine future business scenarios and analyze the mistakes of the past. Understanding the financial implications of your financial decisions can mean the difference between success and failure of your business. Probably the most important is your financial statement of cash flows, but the understanding of all these financials and how they work together is the key to business success. The projections are based on assumptions - make sure they are well thought out and realistic as possible.

Source: http://laqueviveallado.blogspot.com/2012/09/the-importance-of-financial-analysis.html

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