Top Financial Analysis Tools And Techniques Every Financial Analyst Should Know

Financial analysis tools are the medium used to understand the the financial situation of a company and for decision making that concerns investment in a particular project. Such tools can be developed based on the needs and requirements of a business and can be utilized for deriving necessary information.

Whenever a financial analyst is dealing with an issue related to financial implications or economic trade-offs with regards to investment, operations, or financing, a big variety of analytical techniques are available at his/her disposal. To choose the appropriate one is an important aspect of the analytical task. And in order to do that, first, you need to be familiarized with all the available tools and techniques.

So, here is a list of the most common financial analysis tools & techniques used by analysts:-

1. Comparative Statements 

Comparative financial statements is the most basic tool used in financial analysis. It takes two statements from the same organization and compares them to each other in order to establish a variety of trends or factors of growth and loss. Comparative statements can be derived using a company's income statements and balance sheets. With the help of this tool, businesses are in a position to gather meaningful information about profits and losses over similar periods. 

2. Statement of Changes in Working Capital 

This is one of the most crucial components in determining the success ratio of a business. The statement of changes in working capital is a financial analysis technique that is calculated by deducting the total current liabilities from the total assets of the company. If you are capable to accurately analyze the working capital, it can help the business understand its ability to keep up with expenses. It also helps identify the factors that contributed to the success of the company, and the ones that hurt its position.

3. Common Size Statements 

Common size statements come in handy if one wants to compare multiple company data at the same point. It is also useful to understand and estimate the average performance of an entire industry. A common size statement is a useful method for a business to understand its position in the industry. However, this technique only works best when businesses calculate and similarly record their financial data. 

4. Ratio Analysis 

Ratio analysis is often considered as a technique to analyze consolidated financial statements. It helps businesses not just understand more about the overall health of a business, but it also helps figure out the relationship between the internal parts of the business. Ratio analysis helps to highlight the meaningful relationships among several business departments, notes any significant financial discrepancies, and helps evaluate the overall financial performance of the business.

Is Financial Analysis Your Poison?

A deep study of financial analysis is a must for businesses looking to understand the past financial trends and the overall present performance while making more accurate financial statements. To get a deeper understanding of financial analysis, consider enrolling yourself in one of the many online programs for financial analytics. Scout the internet for online programs for financial analytics, and find the one that is credible, suitable, and flexible with your schedule. A financial analytics online course can help you determine the use of various financial analysis tools in a real-life situation.

Impact of Marketing Research on Business Performance

A well-developed business strategy must be in place for a business to develop and grow. The success of this business strategy depends on marketing. The big question here is whether the customer is ready to accept the product or service offered. Market research is the only way we can hope for a reliable and accurate answer.

Marketing Research

Marketing research is a powerful tool for businesses to stay ahead and elevate their performance. Customers are the most crucial component of business success. It is important to understand their needs and improve their satisfaction as it directly influences business growth. To recognize business opportunities, minimize losses, understand market demand design perfect marketing campaigns, and keep track of the competition, market research is essential. It enables organizations to classify their objectives and take advantage of the current trends by reaching out to their target audience.

Primary Research Methods

An organization needs to determine the type of market research it needs. This would depend on the business goals and external factors influencing them. There are four basic methods to ensure that businesses run the operations smoothly and determine the level of opportunities they have to maintain in the market:-

●       Surveys (Quantitative)

Surveys provide a vast amount of data that helps answer the question of the size of the market and which consumers should be targeted.

●       Focus groups

Once the target audience has been identified, focus groups can be created for further research. It helps to define products and services better and assess ways to improve them.

●       Case study (Qualitative)

Case studies provide a full understanding of individual interactions with a product or service.

●       Interviews (Qualitative)

One- to- one interviews allow one to dig deeper to get to know the users' opinion, level of satisfaction, and ideas for improvement.

Secondary Research

In the secondary research method, data is collected from available sources like internet existing marketing research data, social media, libraries, newspapers, government data, etc.

Quantitative and Qualitative Research

Quantitative research identifies the market, locates the area for growing sales, helps find and understand target customers and provides useful statistics for determining the product or service prices.

Qualitative research gives a better perception of the customer's habits, feelings, opinions or interests which can be used to build a better product or improve a service.

Significance of Market Research

Once the research has been conducted, the results can be incorporated into the organization's business plan. Developing a strategy will be easier and clearer. Analyzing the research data will provide the perfect pricing, logistics, and favorable locations for expanding the business. It would also provide the perfect target audience, possible risks, the ideal timing to make an entry into the market. Market research also helps in building customer loyalty. Data Analytics plays a complementary role and makes market research even more effective in business growth.

Market Research Programs

Several market research programs are available in India to give you proper guidance in the area of market research. MICA, International Institute for Procurement and Market Research, International Institute of Market Research and Analysis offer market research programs. A market research and data analytics course are available at MICA, on completion of which a post-graduate certification is awarded.

Marketing research is a great tool to enhance business performance.