The beginning of the year is an opportunity to see the true picture of the business based on various results. What worked best? Where are the hidden reserves for growth? How to prepare the financial foundation for a successful start in the new year?

In this article, we will look at how to summarise the results without missing the important things and prepare for planning for the next year.

How to Prepare Your Annual Financial Statements Without Any Hassle

Effective financial planning and summarizing helps businesses make informed decisions and avoid mistakes. Follow these tips to make the process of preparing your annual accounts more accurate and convenient.

• Summarise your annual accounts in early January, not at the end of the calendar year. This way, you can collect and systematize all the data related to the previous period, even if payments were made late.
• Implement regular monitoring of the financial position to minimise the risk of unexpected results at the end of the reporting period.
• Use specialised financial tools throughout the year to collect and store data in a single system. We recommend using software that allows you to automatically integrate and process information to speed up the process of preparing annual reports.

Key Metrics for Assessing the Financial Health of a Business

To conduct the analysis and obtain correct analytics, it is necessary to collect financial statements for the entire year. It is important to compare indicators between different periods during the year, as well as to assess the dynamics of changes compared to the previous year.‍

Let's look at the key indicators to analyse and where to find them in Finmap:‍

1. Sales in monetary terms (figures in the Revenue section of the P&L report).
2. Net cash flow (the Balance section of the Cash Flow report).
3. Total business profit for the year (the total Profit section of the P&L report).
4. Monthly profit dynamics (the first graph in the P&L report).
5. Profit by business line - projects, facilities, outlets, groups of goods, services, etc.
6. Marginality by main areas and projects, as well as the company as a whole (Projects report).
7. Share of fixed costs in relation to sales (data can be obtained in the P&L report).
8. Business profitability for the year (Projects report).
9. Financial position of the business: analysis of assets and equity, ratio of working capital to current liabilities (Balance sheet report).
10. Additional key indicators for your business may include ROI, LTV, MRR, Break-even point, unit economics, etc. (data can be obtained in the P&L report).

If you have any questions or difficulties in preparing a detailed financial report, you may want to consider working with a financial expert. An experienced specialist will not only save you time, but also ensure that your reports are accurate and provide a detailed interpretation of the figures.

How to Assess the Financial Performance of a Business for the Year

The definitions of the indicators below will help you understand how to analyse them and what aspects you should pay extra attention to.

• Sales in monetary terms should be considered in the context of the main product groups, services and projects, comparing them with previous periods and analysing the factors that influenced the fluctuations.
• Net cash flow, according to the Cash Flow statement, demonstrates the ratio of the company's income and expenses on a monthly basis. Cash flow analysis allows you to identify periods with a negative balance and the sources of their coverage, which is important for planning future financial flows.
• Total profit for the year is a key indicator of business performance, which reflects the financial outcome of activities and allows you to assess the change in results compared to the previous year.
• Profit by business line helps to identify the most profitable products and services, allowing you to allocate resources more efficiently and focus on promising areas.
• Profitability is a critical The profitability of each project provides an understanding of which areas are the most profitable.
• The analysis of fixed costs in relation to sales allows us to estimate the share of each cost item, which allows us to determine their impact on the overall financial result and monitor the dynamics of changes.
• Business profitability, as a relative indicator of profitability, is used for comparison with market averages.
• Compared to the previous year's data, it provides an understanding of whether the efficiency of operations is increasing.
• The financial position of the company, assessed on the basis of the management balance sheet, allows you to identify changes in the structure of assets and liabilities, as well as assess the company's ability to cover its liabilities and the efficiency of using profits.

Timely summarisation and objective analysis of performance results are key factors in the financial sustainability and growth of the business.

Benefits of Annual Analysis for the Financial Health of the Company

An annual analysis is not only an assessment of the company's performance, but also an important tool for strategic planning, which allows you to:

• Adjust current business processes.
• Conduct an in-depth analysis of the financial condition of the company.
• Identify the most profitable areas of activity.
• Make decisions on the termination of unprofitable projects.

Annual reporting is also one of the key bases for building a financial business model, which in turn allows you to find answers to the following questions:

• how to earn more in a predictable and stable manner;
• how to keep the business above the break-even point;
• whether it is profitable to open a new line of business;
• and how to prevent crises.

So, to summarise, it should be noted that the summary of annual reports is an integral part of financial accounting, which helps not only to analyse the results of activities, but also to make informed management decisions on further development.

Use Finmap as a reliable support in the world of finance - and no reporting will be difficult for you anymore!