Posts Tagged ‘financial analysis’
The economic and financial analysis assumes greater importance in our country mainly from the 90′s by the profound economic effects that occurred in Cuba with the disintegration of socialism in the countries of Eastern Europe. Given current conditions in which to return the Cuban economy, where market relations are at the first order in trade relations and thus is becoming more necessary to the proper functioning of the economy and improving efficiency in the use of resources in the hands of companies, is the central objective of economic policy of the party and the Cuban state.
The importance of accounting data has plunged more expensive because it now has scientific and technical development, has perfected the theory of scientific management which also requires the flow of information truly and accurately to enable better understanding by managers and businessmen for making decisions.
It is important for each of the activities taking place within firms, through this they use to create various external funding and focus on solving specific problems affecting companies such as accounts receivable or pay, to shape policy while credit to customers and obsolete inventories dependent rotation.
It is clear that the very changes that our economy recorded in the urgent search for a model of efficiency in the system. Business managers necessarily require companies to seek new forms of leadership and disregard of accounting as tool of control and analysis in decision-making.
To ensure the proper performance of the behavior of production efficiency, it is necessary to make a deep analysis and calculation of cost estimates to reflect in monetary terms permit to use by management, preferably on standards will not find these on the index set and as the financial status depends on the results of production and they in turn influence the lower costs, higher net income and profitability.
With financial analysis assesses the reality of the situation and behavior of an entity beyond the purely accounting and financial laws, it has relative character, because no two businesses are alike or activities, or size, each has the characteristics that distinguish positive and some can be harmful to others. With the use of accounting information for control and planning is an extremely necessary for executives.
The analysis may be economic or financial, the latter to interpret the financial facts on the basis of a set of techniques that lead to decision-making, and studies the financing of the company, preferably from the financial statements.
The key point was to denote these concerns was the financial crisis plaguing the world right now starting the most powerful economies in the world does not know how to end the crisis as well as cyclic presented them. Another troubling thing is that the financial principles have been hit and it is impossible to explain these things to its connotation in these economies, which has long been considered extremely healthy. However, the reality of the facts was commissioned to demonstrate the difficulties that accompany technological change under capitalism.
We can say that businesses are becoming increasingly competitive and corporate profitability is depending increasingly on operational efficiency. This situation is desirable from a social standpoint, since consumers are getting better quality goods at lower prices, but they certainly intense competition has made life more difficult for corporate managers. Companies can no longer afford to sit back and simply assume that the strategies that led to the site that are still work in the future.
A point at which managers agree is the idea of efficient financial planning through mathematical models to develop a set of assumptions for each state of the economy that increasingly closer to reality. Knowledge of the future can be classified into three types: certainty, uncertainty and ignorance, and each require a different type of planning, commitment, contingency and sensitivity.
Many companies have a financial model can sometimes use more than one, perhaps a detailed model that integrates capital budgeting and operational planning, or a simpler model focused on the global impact of financial strategies. Most financial literature authors assume that no model can find the best financial strategy, also because the models do not put emphasis on financial analysis tools, incremental cash flow, present value and market risk.
The very developments of enterprises that have resulted in close to its forecast short-term situation requires greater efficiency, which should be given by the relationship that exists between the receipts and payments, inventory management and achieve proper management of cash.