What your mind reveals when you think “Financial Analysis”? It is a complete system that involves various tools to effectively improve the profitability or productivity of a company. Financial Analytics collects and evaluates the company’s financial data to understand the different facets of its business perspective. With the help of graphs and tables, the collected data is displayed. It gives you a visual image of complex information and helps you to recognize the scenario very easily and smoothly. By analyzing the data with the help of Financial Analytics, you can also predict behavior patterns, future trends, make conscious decisions, and foster the growth of your business.
Here are 6 basic financial analyzes to help you predict future trends.
Predictive sales analysis or PSA
What do you think is the most vital aspect of a company? Undoubtedly, sales revenue comes to no. 1 place and this is what decides the future of your company. When you take the PSA approach, you can easily predict the sales figure for a given month. You can get an idea if the sales figure is going to fall during a certain period.
Consequently, you can review the strategies to increase sales or implement new ones to calculate the effectiveness of your prediction. When you get a clear picture of your sales generation, your stress and panic attacks are much less. You can adopt a variety of competencies and strategic approaches to get to know your customers, plan effectively, and achieve a smooth workflow.
Product profitability analysis or PPA
In this competitive market, you need to know when exactly to make your investments. Estimating earnings can be time consuming, analyzing the product and its cost in a distinctive way.
In such a situation, the PPA or Product Profitability Analysis is the best solution to evaluate the product and determine its profit line. It can help you make an informed decision by gaining an instant understanding of all of your products and services offered. To strategically promote your products, you must know the tastes and preferences of your customers. Once you understand customer demand using the PPA analytics tool, promoting product strategies becomes easy.
Customer profitability analysis or CPA
Who is your potential client? Whether you’re an e-commerce giant, a cloud host service provider, or any company on search engines, recognizing your prospects can always benefit your marketing efforts. There are two types of clients:
Who adds value to your company.
One that brings risk to your company.
Your income generation can increase if you can differentiate between your unprofitable and profitable customers. Your marketing efforts can get a boost if you can start recognizing your customers by extracting their detailed information. The CPA or Customer Profitability Analysis can help you analyze your customer’s behavior.
Analysis of the value for the shareholder or SVA
Judge the value of your business based on the returns your shareholders receive from your business with the help of Shareholder Value Analytics or SVA. This tool also helps determine the percentage of risk and shareholder value. When using SVA with income and profit analysis, its execution is better and easier to understand.
Cash flow analysis or CFA
While running a business, you must understand how much capital your business requires to run smoothly. Cash Flow Analytics helps predict capital inflow and outflow, future capital investment requirements, and also the amount you may need to support corporate operations.
Value Driver Analytics or VDA
A positive approach is a basic requirement to run a successful business. In addition to that, planning and implementing your well-planned strategies is also important to achieve your desired results. Your business goals can be nurtured correctly if you can understand the financial shocks that can affect your business. In this regard, the VDA tool can help you analyze the strategic drivers for your business to achieve the expected results.
With the best understanding of financial analytical measures, functional KPIs, customer profitability, and sales, you can help your business increase the values and income of its shareholders. It will also help you understand your pitfalls to overcome them and achieve a great end-user experience. To achieve your organization’s goals, adopt financial analysis tools.