Financial analytics is a set of tools or system that is used effectively to increase a company's profitability. By assessing and collecting information related to various aspects of your business opportunity decision making becomes smoother and ultimately more beneficial for the company. Once the data has been collected it is usually displayed through charts and graphs so that complex information becomes visually much easier to understand. It also seeks to analyze the data and predict future trends and behavioral patterns. Many executives are using financial analytics to solve their business problems.
It can also be accurately defined as the process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment. Typically, financial analysis is used to analyze whether an entity is can reap large profits or eventually turn into a loss. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement.Another essential feature is assessing a company's past performance to determine whether the future performance of the company will be a success. The focus today is on getting timely relevant information that can enable professionals to take better decisions and consequently improve the company's performance.
Financial analytics can be done to assess the following elements of a firm 1) profitability -an ability to earn income and sustain growth 2) Solvency- an ability to pay creditors in the long term 3) stability- the company's ability to survive and stay at the top of the business for a long time. It also involves comparison of the performances of two or more firms.
Financial executives must now think beyond the traditional financial information and switch over from general ledger systems and decide how best to provide for the measures and analytical methods required to formulate decisions and plans.
To achieve financial objectives developing data warehouses integrated with advanced analytics will prove to be very useful. This refers to this advanced ability to support decisions. In today's competitive environment executives are finding more and more ways in which the financial function can bring in greater money to an organization.
Finance functions are becoming more and more efficient by the day they require fewer resources to manage them and more easily align with the business structure of an organization. Business organizations are updating their business processes allowing users to access and collect information from any geographic location
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