How to analyze the income and expenses of the enterprise

Analysis of income and expenses provides information on the amount of income and expenses, sources of profit, causes of losses, and also gives an idea of ​​the financial activities of the company as a whole. Work on the analysis of income and expenses is carried out on the basis of primary documents and financial statements of the enterprise.

Instruction manual

1

Economic analysis of income and expenses allows us to assess the financial condition of the enterprise, to draw a conclusion about its sustainability. The analysis contains accurate and complete data on the results of the company for a certain period. Based on the analysis of income and expenses, it is possible to give not only a current assessment of the financial situation of the enterprise, but also make forecasts for the future period.

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The analysis allows you to plan the economic activity of the enterprise, set long-term goals, develop a development strategy. Thus, an economic analysis of income and expenses is part of the strategic development plan of the company. An analysis of income and expenses is necessary during changes in the legal form of the enterprise, for example, during its reorganization in the form of transformation.

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For the analysis of income and expenses, financial reporting documents come to help: Profit and Loss Statement, Balance Sheet, Cash Flow Statement. Sources of information are also primary documents: invoices, delivery invoices, 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 indicators of the company over the past 3 years.

4

As a result of the analysis of documents, the specialist concludes that there is an increase in profits, a rate of sales growth, profitability of sales, revenue from sales of products, and others. There is a breakeven point - the volume of sales at which the company does not receive income, but also does not bear the costs. In this case, specific figures give an idea of ​​how sales should be in order for the company to have a margin of financial strength. The assessment of factors affecting the profitability and effectiveness of the company.

5

Analysis of the income and expenses of the enterprise allows not only to assess the activities of the company, 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 enterprise under which it will maintain financial stability. Thus, the analysis of income and expenses helps to choose the best way out of the crisis, to predict profitability, to assess potential risks. On the contrary, inaction of the management and underestimation of risks can lead to insolvency, lack of funds, and as a result, bankruptcy of the company.

note

The analysis calculates the structure and dynamics of income and expenses, indicators of core activities, core and current assets. Reliable and accurate information avoids the company potential risks and threats in the process of its activities.

Useful advice

Analysis of income and expenses is necessary both for internal use (management and managers of the company), and for external use (investors, banks, potential partners).