Read Why do business professionals choose ready-to-use KPIs? to find out the answers to these questions:
Financial statement analysis relates to evaluation of accounts prepared by an organization. This documents' assessment offer an important and detailed insight into the financial standing of the organization. Further, it makes possible the judging as to whether all the stake holder groups associated with the firms are receiving their dues in timely manner or not.
Such a financial position assessment is done by several internal and external elements so as not to leave the process incomplete from any angle. This auditing act is to keep the firm in line with its financial aims and purposes.
Financial ratios are frequently utilized by auditors to know about the financial health of the organization. The statistical approach followed by these create a strong ground for their usage. Various types of these indices enable viewing the organization from uncountable aspects.
One can keep an eye on this activity by constructing a balanced scorecard in this direction. It will have all the 'seemingly significant' KPIs (Key Performance Indicators) on it to help in measuring and calculating the moves. Further, one can bring the deviations back within the prescribed range by correcting the situation.
This is the actual scorecard with Financial Statement Analysis Indicators and performance indicators. The performance indicators include: liquidity ratios, current ratio, quick ratio, asset turnover ratios, average receivables collection period, inventory turnover, debt-to-equity ratio, interest coverage ratio, net profit margin, gross profit margin, return on shareholders equity (roe).
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"Before writing a single line, I formulated some guiding principles, one of them was: "If our clients ask, "How can I find a good KPI for..." - I want this book to provide a perfect answer."