WK #4 (Strat): Financial Strategy |
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The Financial Analysis of a Company provides the foundation of the Business Strategy Analysis.
The
trending and analysis of the company financial results allows for an
understanding of the basic financial health of the business and the capability for growth. In
many cases this
analysis will illuminate issues with profitability, balance sheet and cash flow that do not
show up in the monthly reporting process. Although the Income Statement
and Balance Sheet analysis are very important, in many cases the Cash
Flow analysis highlights financial problems that were not previously understood.
The analysis process consists of arranging the reported financial
data in a spreadsheet so that trends can be examined and ratios
(percentages) can be calculated. The analysis also presents key
data in a graphical manner to illustrate trends and issues. Once
the data has been trended and graphed, the data can be compared to
industry standards and conclusions can be drawn.
Revenue and Profitability Trends
- Revenue and Average Selling Price (ASP)
- GM%, GP%, and Productivity
- Asset utilization – ROI, Inventory turns, A/R days
- Cash Flow
Sales & Profitability Expectations
- Customer Segment growth
- Company Growth & Profitability by Customer Segment
Growth strategies and vulnerabilities
- Protection, penetration, extension, diversification
- Vulnerabilities - Company and competition
- System Throughput Constraints
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