Analyse of financial results for the company: A step-by-step algorithm


What to do when assessing the financial performance of an organizationThe assessment of profitability is a crucial block in the analysis and

evaluation,of the company’s financial situation. It is done to determine if there are any opportunities for improvement.How much are the

organization’s expenses at the current income level?How significant is net profit’s influence on the formation equity capital?How effectively assets and

liabilities can be used relative to profitWhat factors can prevent financial results from growing?We have actually summarized the stages involved in

analysis in the tasks above. They will be returned to. We will now tell you which questions to ask when you start your research. These are the

questions you should ask at the beginning of your research:Where can I find information?What period should you use to calculate?How do you draw

correct conclusions?Where can I find information? A balance sheet and a statement of financial results are required to analyze the company’s

financial results. This report contains all four types of profit and loss. It will be the main one. This is the balance sheet, which has one line.What

period are the calculations? the analysis can be done for a maximum period of two years if you use the Russian format annual financial statements. For example, a five-year study

would need reports for four consecutive years.How can you draw the right conclusions? A common misconception is that financial analysis is reduced

to the calculation and display of a number of ratios. Conclusions are secondary and fine when they are based on the principle “There was so many,

there are so many.” It is actually better to use a small number of indicators to get to the core of the matter and understand the values. An analyst

shouldn’t waste his time with meaningless numbers.Sometimes, the problem in understanding and drawing conclusions is the lack of knowledge

about how financial results are calculated and what they mean. These questions are key.How to calculate the financial results of a companyThese are

some simple rules to follow:The difference between income and expenses is called the financial result. Positive results are called profits. It is called a

profit if it is positive. It turned out that it is incorrect to associate profits with revenues and loses with expenditures. These indicators are

fundamentally different.The financial results will vary. The amount of income and expenses that you consider will determine the financial result. For

example, if in general all, you get a net profit (loss). If you only have the main activities, the profit (loss), from sales is what you get. It is also known as the operating result.

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