Financial Analysis

Financial Model & Analysis

Financial Analysis is a process to analyze the financial status and related entities of a company to be in a better position to evaluate its strength and profitability. It also helps deduce the credibility of investing into the business. A financial model, on the other hand is the financial representation through which analysis is made possible.

 

Cash flow statement 

It is a detailed record of all the accrued and prepaid cash flows into and out of the business. Cash flows evidently point out trends/mistakes in the accounts especially the ones difficult to detect from an income statement or a balance sheet.
Income Statement (profit and loss account)

This is one of the most common type of financial models and forms the basis of financial analysis. It follows a general format to record the revenues and expenses incurred in an accounting period. The aim of an income statement is to reach a net income for that term.
Balance sheet (Statement of Financial Position)

A balance sheet is a systematic representation of all the assets, liabilities and capital of a business. Similar to an income statement, a balance sheet also follows a general format based on a common accounting formula: Assets= Liabilities + Capital
Break even analysis

Break Even Analysis helps the business find out the least amount of revenue it must generate to make a profit. This helps the business do a prior planning to acknowledge all risk factors.
The breakeven point formula = Fixed costs / Price (unit) – variable costs

 

Ratio Analysis 

Different types of ratios helps a business analyze its financial progress at a certain point in time. This helps in building useful tactics and strategies to cope or maintain the financial position.

Financial Analysis is a business’s need, which is why SparklesSoft pays additional attention drafting afore mentioned statements. This helps in a better representation and in turn a better overall judgment of the true strengths and weaknesses of a business.