Analysis of the Company's Financial Statement at Month-End
A financial statement analysis at the end of the month is essential for assessing the current position, identifying issues, and planning future actions.
This enables more informed managerial decisions and helps achieve strategic goals.
Beyond traditional reporting metrics such as income, expenses, net profit, liabilities, and others, financial analysts should also focus on operational metrics like sales dynamics, average transaction value, profitability, and conversion rates. These metrics offer deeper insights into business performance, help identify strengths and weaknesses, and fine-tune strategies.
This article will delve into key indicators worth monitoring.
Sales Analysis
When analyzing sales, it's important to consider all revenue sources, transaction volumes, and primary sales channels. These metrics provide a clearer understanding of how the business generates income. Key indicators for analysis include:
Total Revenue: The total income from all sales during the month.
Sales Dynamics: Growth or decline compared to previous periods.
Number of Sales (Transactions): The total number of completed deals in a month.
Sales Channels: Evaluation of the effectiveness of each channel (online, offline, partners).
Average Transaction Value Analysis
The average transaction value (ATV) reflects the revenue generated from each sale. It also helps assess the profitability of individual transactions. Since customer acquisition costs are often fixed regardless of the transaction value, businesses should aim to increase the ATV per customer. Key metrics for analysis:
Average Order Value (AOV): Calculated as total revenue divided by the number of transactions.
ATV Dynamics: Changes in this metric compared to previous periods.
Factors Influencing ATV: Discounts, promotions, seasonality, product range expansion.
Profitability Analysis
Among the indicators requiring monthly analysis, profitability is critical as it evaluates the financial viability of specific products, departments, or the entire business.
Gross Margin: The difference between revenue and the cost of goods/services sold.
Profit Margin Percentage: The ratio of gross profit to revenue.
Top Profitable Products/Services: Identification of the most profitable items.
Customer Dynamics Analysis
Sales analysis should also include customer analysis. How is the customer profile evolving? Is the business driven by new or returning customers? These insights can be obtained by tracking:
Total Number of Customers: Over a month or other periods.
Share of New Customers: How many are first-time buyers?
Repeat Sales: The percentage of customers making repeat purchases.
Customer Lifetime Value (CLV): Revenue generated by a customer over their lifetime with the business.
Conversion Rate Analysis
How many potential customers become actual buyers? In which areas of the business are conversion rates higher? At what stage do most potential customers drop out? The following metrics can answer these questions:
Conversion Rate: The ratio of completed sales to total contacts (leads, visitors).
Channel-Specific Conversion: Which channel generates the most sales?
Bottlenecks in the Sales Funnel: Identifying stages where customer drop-off is highest.
Inventory and Stock Turnover Analysis
Stock inventory represents the company’s frozen capital, but frequent stockouts can lead to customer churn. Therefore, it's crucial to analyze inventory and stock turnover:
Inventory Turnover: The speed at which products are sold and replaced in stock.
Expired or Slow-Moving Goods: Analysis of "frozen" funds.
Understanding seasonality allows businesses to identify new sales channels and plan cost-saving periods to maintain financial results during off-seasons. Metrics for analysis include:
Identifying Peaks and Troughs in Sales: Understanding sales trends.
Impact of Holidays, Promotions, and Marketing Campaigns: How these events affect sales.
Financial Efficiency Analysis
After calculating all the metrics mentioned above, the next step is analyzing the company’s financial efficiency. This analysis helps quickly respond to critical changes.
Return on Sales (ROS): The proportion of profit within revenue.
Customer Acquisition Cost (CAC): The cost of attracting a single customer.
Marketing ROI: Profit generated per unit of marketing investment.
Analytical Tools
No matter which metrics a business uses, the tools for calculating these indicators are critical. Spreadym could be a suitable solution for precise and convenient analysis.