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Briefing Paper Financial Analysis And Planning



Financial Analysis and Planning is the process of analyzing a company's historical financial and operational results. It is also a practice of preparing and analyzing projections for future operations and projects.  This process is done in order to understand what drives financial results by learning from the prior outcomes. This coupled with looking at alternative scenarios, helps to make better decisions on future operations.  Understanding the drivers of profitability in the past and modeling future plans will give a company the insight to greatly improve its future profitability.

3 Questions

1 Do we really understand why we were profitable - unprofitable last month? Last year?

2 What steps can we take to optimize our gross profit?

3 Do we have a good process in place to analyze the key decisions of our  strategic plan?


Many companies, large and small, do not understand their real underlying drivers of profit and loss.  With multiple locations, departments, products, vendors and customers, without financial analysis, it is difficult to understand what caused last month's level of profit or loss.  Many companies also make large, complicated decisions about future projects, locations, products or customers without proper planning and modeling of the various assumptions, and assessing the risks and rewards of those decisions.


- Website: Wikipedia (http://en.wikipedia.org/wiki/Financial_analysis)

- Book: Techniques of Financial Analysis: A Practical Guide to Measuring Business Performance by Erich A. Helfert.

Situation analysis

- Identify primary drivers of profitability and design reports to monitor them.

- Identify key in-process decisions and develop financial tools to analyze them.

- Research industry & competitor key metrics and compare to company results.

3 More Good Questions

4 Do we understand the true incremental costs of making each of our products?

5 Do we understand the affect that a large new quote will have on the bottom line, before we send it out?

6 How can we run the business better with a short term and long term cash forecast?

B2B CFO® Partners are experienced in financial analysis and helping you increase profit.


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