Management balance analysis can be done in different ways. The specific method is chosen depending on the goal.
For example, the essence of the vertical method is that the total amount of the report is taken as a single whole, i.e. 100%. The calculation of all other categories is carried out in shares of this value. With the help of vertical analysis, the structure of the company's funds and their sources is clearly visible.
Management balance analysis
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The horizontal method is based on cyprus email list the comparison of certain indicators for different reporting periods. Thanks to this, it is possible to see and evaluate the dynamics of the changes taking place. Experts recommend the combined use of horizontal and vertical methods, as this will allow a full and comprehensive assessment of the business.
It would also be useful to analyze the report by calculating coefficients, with the help of which one can judge individual aspects of the activity.
For example:
Liquidity. This ratio shows how quickly funds invested in assets turn into real finances. Liquid assets can be placed next to short-term liabilities to see if the company can meet them.
Profitability. This ratio can be used to evaluate the profitability of an enterprise. A positive profitability value shows how successfully the company manages its own funds and gives an idea of its value.
Debt. This ratio shows the current debt obligations of the organization. Moreover, both short-term and long-term debts are taken into account. The debt ratio is involved in forecasting possible financial risks, up to and including bankruptcy of the company.
Financial stability. This indicator can be used to judge the strength and stability of a business.
In reality, there are many coefficients, as well as methods of analyzing the management balance. Experts recommend the simultaneous use of several methods.
The problem of management accounting in a "group of companies"
Recently, the concept of "group of companies" has come into use for management accounting purposes. This is due to the fact that business is scaling and the organization of commodity and cash flows is becoming more complex.
The problem of management accounting in a group of companies
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The current legislation does not provide a precise definition of a group of companies, but from a factual point of view, it is a conglomerate of commercially oriented organizations that have a common business, which is characterized by the presence of intra-group business transactions between participants.
Since business owners are primarily interested in the overall performance of the group of companies, the task of the financial and economic service is not only to implement management accounting at each enterprise of the group of companies, but also throughout the group. As a result, consolidated management reporting of the group of companies is formed based on the data of this accounting.
The difficulty is that it is impossible to obtain reliable information and reporting on a group of companies by simply adding up the reports of each company in the group, due to the intra-group turnover between them. Consolidation of the management balance sheet from the balance sheets of the group companies requires a large number of corrective actions.