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Sample Operational Financial

In: Business and Management

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Sample Operational and Financial Analysis Report

Financial Analysis and Assessment
Sample Company
Industry: Contract Research Organization Periods: One fiscal year against the previous fiscal year
LIQUIDITY Generally, what is the company's ability to meet obligations as they come due? In this case, the company's liquidity position is about average for the industry in which it operates. Having average liquidity means that, generally, there are adequate liquid assets relative to short-term obligations. This does not necessarily mean that the firm will never have trouble paying the bills, but it indicates that as of this specific Balance Sheet date, the company is in a reasonable position. However, it is always important to keep in mind that liquidity is a volatile statistic that can move from good to poor very quickly. For this reason, it is more important to watch trends than raw data in this area. As of these two discrete dates, the company's liquidity trend is downward, so managers will probably want to examine the reasons for this shift and make sure that liquid resources are being used in the best ways for the company. For example, does the company have an adequate line of credit set up? Remember that typically, increasing sales (as this company has done) demands cash resources. Liquidity is the challenge that is never solved. Here are some additional ways the company might improve liquidity: 1) Bill customers as quickly as possible after service has been rendered. There are always ways to streamline this process. 2) Make sure to print and take action on accounts receivable reports each month. 3) Use as much trade credit (accounts payable) as possible. Accounts payable are a form of free credit, since they often do not carry interest charges. 4) If possible, the company might also use a monthly payroll schedule.
Financial Indicator Working Capital Current…...

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