What do you understand by the term “Financial Analysis”? It is a complete system that involves several tools to effectively improve the profitability or productivity of a company. Financial Analytics collects and evaluates the financial data of the company 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 the complex information and helps you to recognize the scenario much easier and smoother. By analyzing the data with the help of Financial Analytics, you can also predict behavioral 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 Analytics or PSA
What do you think is the most vital aspect of a company? Without a doubt, sales revenue comes in at 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 given period.
Consequently, you can review the strategies to drive sales or implement new ones to gauge how effective your prediction is. When you get a clear picture of your lead generation, your stress and panic attacks are much less. You can take a variety of skills and strategic approaches to understand your customers, plan effectively, and achieve a smooth workflow.
- Product Profitability Analysis or PPA
In this competitive market, you need to know exactly when to make your investments. It can take a long time to estimate the profit, clearly analyzing the product and its cost.
In such a situation, PPA or Product Profitability Analytics is presented as the best solution to evaluate the product and determine its profit line. It can help you make an informed decision by getting an instant understanding of all the products and services it offers. To strategically promote your products, you must know the tastes and preferences of your customers. Once you are aware of customer demand using PPA analytics tool, product promotion strategy becomes easy.
- Customer Profitability Analysis or CPA
Who is your potential customer? Whether you’re an eCommerce giant, a cloud hosting service provider, or any search engine friendly business, recognizing your prospects can always benefit your marketing efforts. There are two types of client-
- The one that adds value to your company
- One that brings risk to your company
Your revenue generation can increase if you can differentiate between your profitable and unprofitable customers. Your marketing efforts can get a boost if you can start to recognize your customers by mining their insights. CPA or Customer Profitability Analytics can help you analyze your customer behavior.
- Shareholder Value Analysis or SVA
Attach 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 SVA is used with revenue and profit analysis, its execution is better and easier to understand.
- Cash Flow Analysis or CFA
When running a business, you need to understand how much capital your business requires to run smoothly. Cash Flow Analytics helps predict capital outflows and inflows, 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 for running a successful business. Furthermore, well-planned planning and implementation of strategies are also important to achieve the desired results. Your business goals can be properly fostered if you can understand the financial disturbances that can affect your business. Related to this, the VDA tool can help analyze the strategic drivers for your business to achieve the expected results.
With a better understanding of financial analytics, functional KPIs, customer profitability, and sales, you can help your business increase shareholder value and revenue. It will also help you understand its drawbacks in order to overcome them and achieve a great end-user experience. To achieve your organization’s goals, embrace financial analysis tools.