Analysis of the enterprise is to obtain a certain number of key parameters, with which you can see the most accurate picture of the financial condition, profit or loss, any changes in liabilities and assets, settlements with creditors and debtors. In this case, specialists should be interested in both the current state of the organization and the expected results of economic activity.
Analysis of the enterprise pursues the achievement of certain goals, formed taking into account the informational, organizational, methodological and technical capabilities of conducting analytical work on the basis of accounting and financial reporting.
The basic principle for considering the relevant material is deductive. However, it must be applied repeatedly. The analysis of the enterprise's activity reproduces the historical and logical sequence of various events and economic factors with the focus and strength of their influence on the results.
Based on practice, economists have developed some rules for reading reports, among which the main ones can be distinguished:
- horizontal analysis of the enterprise, providing for a comparison of specific reporting positions with the previous period;
- vertical analysis, which consists in determining the structure of the resulting financial indicators with determining the degree of influence of each of them on the overall indicator;
- trend analysis, represented by comparing each individual reporting position with the corresponding results of previous periods and determining the trend, separating it from individual characteristics and random influences of individual periods;
- analysis of relative indicators - the calculation of individual relations between certain positions with the determination of their relationships;
- a comparison is made in comparing the similar results of the enterprise and its competitors, as well as industry average data;
- factor analysis provides for the consideration of the influence of some circumstances on the outcome using stochastic and deterministic research methods.
Among the main indicators that evaluate the effectiveness of the organization - profitability (for example, investment), which is calculated by the ratio of net profit to investments that are invested in the company. Efficiency assessment based on these calculations can only be done if specialists have comparable data for similar firms.
The same can be said about the profitability of the enterprise, calculated as the ratio of net profit to cost. Cost analysis of the enterprise will become most effective if it is carried out in all areas of economic activity of the enterprise.
It should also be noted that assessing only the financial performance of an enterprise does not provide a complete picture of its business activities and does not allow diagnosing some problematic issues.