Financial analysis indicators: what they give, how to calculate, where to apply


The indicators of a company’s financial analysis make it possible to determine its current state, opportunities, and problems. This valuable

information is used both for making current management decisions and for strategy development. Investors, shareholders, and business owners are

also interested in getting such information. That is why every company needs a specialist, who can draw adequate conclusions about the results of

activities and make reasonable forecasts based on data from reports. In this article, we will try to review the ratios of each of the main groups and

learn how to interpret their meaning correctly. What does the analysis of financial indicators of an enterprise give The analysis of financial indicators

is one of the methods of evaluating the state of an enterprise and its possibilities in the future. It acts as a basis for strategic planning, helps managers

to identify resources and directions for further development of an enterprise, to find its strengths and weaknesses. Analysis of financial ratios is

carried out to identify the best ways to achieve the objectives of the company, such as increasing business activity – asset turnover, ensuring liquidity

and financial stability, increasing the profitability of the company. The analyst must understand a variety of figures from accounting and management

reporting to be able to determine the effectiveness of the current activities of the enterprise and develop recommendations for its increase.Main

groups of financial analysis indicators More than 200 ratios are used in financial analysis. They all characterize four main sides of a company’s

activity: liquidity asset turnover profitability market value For each of these groups of indicators different ratios are calculated. They may differ

depending upon the tasks of analysis and the users for whom the information is intended. Liquidity Indicators A company’s ability to pay its debts at

the expense of its current assets is one of the conditions of its financial stability. To adequately assess it, its liquidity ratios allow.

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