When the financial statements that are made can provide appropriate and relevant information to users, evaluation becomes an important thing to look at financial performance. With financial performance, you can see a picture of the company’s financial condition in a certain period both regarding aspects of raising funds and channeling funds, which are usually observed.
Financial performance reports are part of important company documents. Making a company’s financial performance report states how the company’s condition in terms of fund collection and distribution of funds. So all processes of entering and leaving funds are carefully measured. This helps companies measure indicators of the company’s financial performance in the last period.
Benefits of Financial Performance Reports
Basically, financial performance reports are very useful for a company. Information on financial performance can be utilized in the following ways.
a. Used as a basis for determining the company’s strategy for the future.
b. Measuring the achievements achieved by the company in a certain period that reflects the level of success of the implementation of its activities.
c. Assessing the contribution of a part in the achievement of overall company goals.
d. The basis for determining investment policies in order to improve company efficiency and productivity.
e. Look at the company’s overall performance
f. Give instructions in making decisions and company activities in general and company divisions in particular.
Financial performance can be assessed based on several analyzes such as comparative analysis of financial statements, financial ratios, position tendencies, percentages per component, sources and uses of working capital, breakeven, sources and uses of cash, and analysis of changes in gross profit.
Financial Performance Rating
An assessment of a company’s financial performance is one way that management can do in order to meet its obligations to investors to achieve the goals set by the company. To assess a company’s financial performance, you can use benchmarks such as ratios or indexes that link two financial data on financial statements.
The types of comparisons in financial ratio analysis include two forms. First, comparing the ratio of past, present, or future for the same company. Second, by comparing the ratio between one company with other similar companies.