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WK #4 (Strat): Financial Strategy PDF Print E-mail

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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