How to analyze the income and expenses of an enterprise
How to analyze the income and expenses of an enterprise
The analysis of incomes and expenses allows to receiveinformation on the amount of income and expenses, sources of profit, causes of losses, as well as gives an idea of the financial performance of the company as a whole. The work on the analysis of revenues and expenses is carried out on the basis of the primary documents and accounting statements of the enterprise.
Instructions
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Economic analysis of income and expenditure allowsto assess the financial condition of the enterprise, to conclude that it is stable. The analysis contains accurate and complete data on the performance of the company for a certain period. Based on the analysis of income and expenditure, you can give not only a current assessment of the financial position of the enterprise, but also make forecasts for the future period.
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Analysis allows you to plan economicactivity of the enterprise, set long-term goals, develop a development strategy. Thus, the economic analysis of income and expenditure is part of the company's strategic development plan. The analysis of incomes and expenses is necessary during changes in the organizational-legal form of the enterprise, for example at its reorganization in the form of transformation.
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For the analysis of incomes and expenses for help comefinancial statements: Profit and Loss Statement, Balance Sheet, Cash Flow Statement. Sources of information are also primary documents: invoices, shipping notes, sales book and others. Useful data is also contained in the financial plan section of the company's business plan. The necessary information can be obtained by analyzing the dynamics of the main technical and economic performance of the company for the past 3 years.
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As a result of the analysis of documents, the specialist doesthe conclusion about the increase in profit, the rate of sales growth, the profitability of sales, the proceeds from the sale of products and others. There is a break-even point - that volume of sales, at which the company does not receive revenues, but also does not bear expenses. In this case, specific figures give an idea of how the sales volume should be, so that the company has a margin of financial strength. An assessment of the factors affecting the profitability and efficiency of the company's activities is given.
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The analysis of incomes and expenses of the enterprise allowsnot only to assess the company's performance, but also helps management to make the right management decision. Analysis of the results of financial activities makes it possible to create such conditions for the operation of the enterprise, in which it will maintain financial stability. So, the analysis of incomes and expenses helps to choose an optimum way of an exit of the company from a crisis condition, to predict profitability, to estimate potential risks. On the contrary, the inaction of management and the underestimation of risks can lead to insolvency, a shortage of cash, and as a result, to bankruptcy of the company.
