The financial statement analysis is a complex activity carried out by the utilisation of accounting techniques providing the extraction and the incorporation of the balance data through special formulas with which it is possible to carry out surveys on the operating result (comparison of data in time and space) to get information about the management and the company.
Through the comparative balance analysis of the different available elements you can get the formulation of a realistic “judgement” about the health of your company. The balance analysis proposes to turn the balance data into information or graphic indicator allowing to understand if your company direction will get good or bad results.
The balance sheet analysis, the economic and financial one of the companies is mainly based on:
Through the reworking of the balances can be created several indicators (indexes), but is worth pointing out that there are both significant indicators and not. Conseq uently the pieces of information do not depend on the number of indexes, but on their “capability” to highlight the state of the company.
The INDEX balance analysis is a strong and powerful tool allowing to the entrepreneur and the analyst to develop indexes and graphs that represent the economic performance, the balance sheet and the financial position. When the entrepreneur has to interpret the results of the balance through the indexes you should always consider that:
The financial statement analysis by indexes is carried out through the elaboration of special ratios created among the different quantities represented in the balance. As an example, there are indixes that compare only the values indicated in the balance sheet or income statement only, but there are also indixes that compare the balance sheet with the income statement.
You can get the best results in terms of interpretation and evaluation analysing a series of balances and studying the trend of the significant balance data, so that it is possible to understand in which direction your company is moving to (dynamic financial statement analysis).
If an entrepreneur wants to know the health of his/her company with a "checkup company" might wonder what guidance he/she can get from the indixes of the balance, besides those that can be inferred by comparing two consecutive balances or by analysing economic situations periodically.
The answer is that each index balance corresponds to a reference to the causes that determine it and consequently, examining them carefully, it is easy to identify the most appropriate remedies.
Here as it follows, we present the indicators that Project Srl provides in its basic package. Besides naturally to those that the customer may require in addition.