Analysis of financial and economic activity

Analysis of financial and economic activity of enterprise is, first of all, analysis of the enterprise performance that is carried out by third party specialists. At the moment in connection with the existing world economic crisis, strong aspiration of any business fulfilled in the necessity to obtain the top profit from the business, wherefore the role of the analysis of financial and economic activity of the enterprise has increased sharply. This is because after conducting of the analysis of financial and economic activity of the business, the quality of work of all enterprise services automatically improves, and, consequently, business performance indicators improve.

Analysis of financial and economic activity is intended to detect and prevent errors and defects in the enterprise activity and also, where applicable, to engage in the production previously unused reserves.

Analysis of financial and economic activity is a very complex and important for successful business development process that takes place in almost all types of enterprises based on any form of ownership.

Analysis of financial and economic activity assists in improvement of the enterprise operating efficiency, the most rational and efficient use of fixed assets, material, labor and financial resources, elimination of excessive expenses and losses, and therefore, implementation of costs saving. Immutable law of economy management is achievement of the best results at the lowest costs. Fundamental role in this plays the analysis of financial and economic activity, which allows by eliminating the causes of excessive costs to minimize the net cost of output products and, therefore, to maximize the amount of gained profit.

The role of analysis of financial and economic activity is great in strengthening of the financial condition of the organization. The analysis allows establishing the presence or absence in the organization of financial difficulties, identification of their causes and specification of measures to eliminate these causes. Analysis of financial and economic activity also provides an opportunity to ascertain the degree of solvency and liquidity of the organization and to predict the possible bankruptcy of the organization in the future. Analysis of the financial results of the organization activities establishes causes of loss, outlines ways to eliminate these causes, examines the influence of certain factors on the amount of profit, makes recommendations for maximizing of profits through the use of disclosed reserves of its growth and outlines ways of their use.