Make profit
Company’s basic purpose is to make profit to its owners. Without profits also company’s other goals can’t be reached. Profits are defined monetarily – company needs to have a concrete goal for its profitability that can be measured. Companies should keep the goal in mind when making everyday business decision and focus resources on the right things.
Due financial reporting helps companies to control risks related to business operations.
Financial management has an important role in management
Nowadays financial administration is more integral part of business and business management. Financial management is more active, rapidly responding and ready for change. Emphasis is now more on forecasting the future rather than evaluating the past.
From traditional accounting to strategic financial management
The role of an information provider has become closer to managing financial administration. The key for managing financials is flexible, agile, intellectually acting and new creating personnel in finance department. It’s important that financial administration chooses functional reporting systems and partners in cooperation because it’s not advisable to do everything by oneself.
Purpose of reporting
Reporting to management aims at providing information for management to support business decisions, to set goals and to estimate past operations.
Interpreting financial statements
Profit and loss account reflects how profits were made and how profitable the company is. Company’s economic situation – assets and liabilities – are informed in the balance sheet.
Making cash flow reporting and planning cash flows a habit
Cash flow calculations reflect the cash flow from operating activities better than the profit and loss account and the balance sheet. Because of accrual-based accounting actual cash flows aren’t revealed directly in the profit and loss account and in the balance sheet. Cash flow statement is a great tool for management when designing cash sufficiency in the short and long term.
Forecasting operations and results, benefiting from budget and planning profit path
Set up numerical targets for your activity, create appropriate key figures as indicators and set target values for the key figures. Keep track of your goals.
'' You get what you measure.''
