Using a Financial Analysis Excel Template For Creating a Financial Modelby Jason Varner Financial Projections Template
Due to the changes in the economy, technology, trends, market, and many more related factors that caused risks and opportunities to the industries, financial analysis became a critical factor to be able to ensure that any opportunities won’t be wasted, avoid risks which could harm the business, preparing for a strategic plan, setting financial policies, etc. It is undeniable that financial analysis is very helpful for anyone that’s running a business or one that wants to earn more money.
Financial Analysis is not something easy to do so it is no wonder that you will need help to conduct one. But of course, this doesn’t mean that it’s an impossible task. You can take advantage of countless tools which you can use to help you in conducting a financial analysis. One of these tools are financial analysis excel template. A financial analysis excel template will serve as your base to start with your task and guide you on certain key points that you need to realize. The same with financial statement template in Excel which you also need to base on your analysis report.
There are five key elements to realize when conducting a financial analysis such as:
1. Revenues / Profits – the analysis will help you determine the revenue growth, revenue concentration of the market, revenue from the productivity of the employees, and the profits which can be earned in the period of business operations or through various investments.
2. Operational Efficiency – the analysis will help you determine whether you’re making full use of your resources efficiently and not wasteful. After all, lacking operational efficiency will cause harm to the potential profits and growth of the business. Thus, it is important to analyze this element properly.
3. Capital Efficiency and Solvency – both are elements which are more of an interest to the potential investors or lenders since it focuses on areas such as the Return on equity and Debt to equity. Both are important factors to keep the business running and to ensure that the business will stay solvent not just in the present but also in the future. Thus, analyzing the capital efficiency and solvency of a business will help determine beforehand if the business needs more finances or is earning enough to guarantee feasibility.
4. Liquidity – to address the business’ ability to generate enough cash to cover the expenses incurred for the business. Since the revenue growth or profits can’t really compensate for poor liquidity, the business will not continue its operations unless you prepare ahead of time to help your business generate more cash to pay for the expenses in the long run. The current ratio and interest coverage are usually used to measure a business’ liquidity.
Are you looking for a platform where you can download a financial analysis excel template? Then you can check out eFinancialModels. They offer financial modeling assistance and industry-specific financial model templates which you can choose according to whichever you prefer. You can also check the templates according to its uses here: Financial Models by Use Case so you will have an easier time looking for your preferred model for financial analysis.
Created on Dec 24th 2018 05:28. Viewed 662 times.
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