Financial indicators ... measure of operational efficiency that allows to evaluate the performance of a company // financial analysis

in #business4 years ago (edited)


Currently, organizations are facing an economic scenario characterized by a changing market, where the vast majority has used the so-called financial management indicators, as a support to know the performance, results and success of economic activity raised The management of organizations, investors, and even creditors should be able to classify the complex financial information available in financial reports. It is there where financial indicators are used as a short form to help in making timely decisions and identifying opportunities and risks in the performance of the company.

In Venezuela, the use of financial indicators is an element present within organizations, especially in Small and Medium Industries (PYMES), the fundamental basis of the national productive apparatus. Therefore, financial indicators are the product of establishing numerical results, based on relating two figures or accounts, either the General Balance and / or the Statement of Profit and Loss. The results thus obtained by themselves do not have much significance; only when they relate to each other and compare with those of previous years or with those of companies in the same sector, in turn the analyst is concerned about knowing thoroughly the operation of the company, you can get more significant results and draw conclusions about the real financial situation of a company.

Therefore, it is necessary to apply financial indicators as deemed necessary and useful to evaluate the financial situation of the company in question. It should be noted that the interpretation of the results of the financial indicators is directly related to the activity, organization and internal control of the company, as well as to the changing periods caused by the various internal and external agents that affect it.

Hence, financial ratios have been classified, for better interpretation and analysis, in multiple ways, as well as some professionals prefer to give greater importance to the profitability of the company and begin their intervention with the components that make up this variable, without However, there are other professors who raise the solvency first and then the profitability and stability, defining the latter in the same category of efficiency. In the same way, there are hundreds of reasons or indicators that can be calculated based on the financial statements of an economic entity, but not all are important when diagnosing a situation or evaluating a result.


Now, in some countries, the transformation process that brings with it technological advances, the automation of processes, economic development, the growth of many companies, hinders the permanence and progress of businesses in their environment. The demands implicit in these changes make it indispensable that business units are prepared to manage their financial resources in an adequate manner; in such a way, that rational financial decisions are taken in accordance with the objectives of the company.

In the case of Venezuela, organizations or companies are vulnerable to suffer some unforeseen financial imbalance, characterized by insolvency and low liquidity, as a result of ineffective financial policies or deficiencies in strategic, administrative, productive or financial performance. Therefore, every company must know its financial condition to identify existing problems, important variations and the factors that cause them, for it must have appropriate tools that allow it to detect errors and apply the appropriate corrective measures, predict the future and achieve better planning. Each organization requires making decisions, coordinating multiple activities, directing personnel, evaluating performance based on previously determined objectives, obtaining and assigning different resources; that administrators carry out numerous activities, oriented towards specific areas or problems.

In addition to the above, the importance of financial analysis is that it allows identifying the economic and financial aspects that show the conditions in which the company operates, with respect to the level of liquidity, solvency, indebtedness, efficiency, performance and profitability; which facilitates the making of managerial, economic and financial decisions in the business activity. The best way to evaluate the performance of the administration of a company is through the analysis of the utilities. Which, can be increased through the proper management of resources that a company has, and this can only be measured through financial analysis.

However, it is very important that the financial analysis must be applied by all types of companies, be it small or large, and indistinctly of their productive activity. Commercial, oil, industrial, metal-mechanic, agricultural, tourist, construction companies, among others, since this financial analysis constitutes a measure of operational efficiency that allows evaluating the performance of a company.

It should be noted that this tool facilitates the decision-making process of investment, financing, action plans, allows identifying the strengths and weaknesses of the organization, as well as making comparisons with other businesses, as it provides the necessary information to know the operational behavior of the company and its economic-financial situation, for which it is based on the data exposed in the financial statements, which are used to calculate and examine the financial indicators.


In this sense, the financial analysis must be done systematically, in order to determine the liquidity and solvency of the company, measure its operational activity, the efficiency in the use of the assets, its capacity of indebtedness and cancellation of liabilities. contracted, their profits, the investments required, their performance and profitability.

By virtue of this, it is important to be very cautious when calculating the financial indicators, since the factors that affect one of the elements that participate in the relationship may affect the other, which can cause significant variations in the financial reality of the business. . This means that we must be alert to any change that any of these elements or components may suffer, in order to effectively analyze the variation that is reflected in the final value of the indicator. Hence, that the importance of calculating financial indicators lies in the interpretation of the value that each indicator or ratio gives, since that value alone provides very little or no information; and its calculation should not only be limited to the application of the formula, but each numerical result has a meaning.

Thus, the financial indicators provide great information about the operation and financial position of the company, basically when they are calculated for a series of periods, this allows to determine averages and trends and also when they are compared between several companies of the same branch; Therefore, only through financial indicators is it possible to compare companies of the same activity, regardless of their size.

In summary, the financial situation includes significant activities to achieve the success of a company; It is basically responsible for the administration of financial resources, and for this purpose it must create and implement effective strategies that allow it to obtain financial resources, analyze the financial aspects that contain the decisions taken in other internal areas of the company, evaluate the investments required to increase sales, analyze and interpret the financial information presented in the financial statements and diagnose the economic and financial conditions of the company.

Greetings ... @ yonglerosales

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