Financial Performance Analysis Tools For SMBs

By Marianne Chrisos - Last Updated on March 25, 2019
Financial Performance Analysis

Your financial standing is one of the most compelling and informative parts of your business success story. Being able to understand your financial performance is one of the most basic ways to understand your business growth and potential, allowing you to create goals and other performance indicators.

What are the best tools that you can use as a small business to analyze your financial performance? There are financial analysis techniques that can help you understand your small business’s financial position and identify room for improvement.

What are the best financial performance analysis tools for your business?

Here are the top five financial statement analysis techniques to start your financial performance analysis:

1. Comparative Income Statement

Gross profit, operating profit, and net profit information can all be assessed through analysis using a comparative income statement. This helps a business compare the changes in financial information over time. When the changes are understood – for instances if profits have gone down substantially year over year for three years – you can start to figure out where the challenges are and work on solutions.

2. Comparative Balance Sheet

A comparative balance sheet looks at the assets and liabilities of a company over two different periods of time. Assets are classified as current assets and fixed assets for comparison and liabilities are listed as current liabilities, long term liabilities, and shareholders’ net worth.

3. Average Analysis

When trend ratios are calculated for a business issue, they are often than compared with the industry average. These comparisons can help a business measure where they stand in comparison to peers and competitors and give them a better feel for the performance within the industry.

4. Ratio Analysis Ratio

This analysis is an attempt of developing meaningful relationships between individual items (or group of items) in the balance sheet or profit and loss account. Ratio analysis is not only useful to internal parts of the business but can also be useful to external parties. but also useful to external parties. This analysis usually highlights financial elements such as liquidity, solvency, and profitability.

5. Trend Analysis

This financial statement analysis technique that shows changes in the amounts of corresponding financial statement items over a period of time, helping you better spot trends over time. Changes in the statements are usually represented in dollars and percentage of overall financial amounts.

The tools you need to measure your financial performance

There are also several digital tools that support your financial performance analysis. Some of the best for SMBs include:

  • Sisense: This business analytics software gives users a simple way to prepare and analyze complex data, capturing the full scope of financial analysis and integrating data with visualization to help further create and convey meaning.
  • BusinessRadar: This software tool is useful for generating financial reports and forecasts for business management. You can create financial plans and accurate forecast, all connected to accurate and relevant data. All relevant aspects of financial statement analysis are included, such as income statement, cash flow, and balance sheet.
  • Qvinci: This financial consolidation product will automatically sync and consolidate financial reports from popular software programs such as QuickBooks, Xero, and Excel for up to 10,000 business locations. You may not have a business that expansive, but a tool that can consolidate data from multiple sources that many businesses are already using is a valuable asset.
  • CashStory: This software helps bring more relevant visibility to your business’s financial situation. It helps make your financial analysis relevant and available to everyone in your business, from managers and investors to CFOs, accountants, and controllers.

Finding the right method of financial analysis and the right tools to help you conduct it will depend on your business, but you have a lot of good places to start looking for the right financial performance analysis tool for your organization.

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a company near Dallas and contributing writer around the internet. She earned her master's degree in Writing and Publishing from DePaul University in Chicago and has worked in publishing, advertising, digital marketing, and content strategy.

Marianne Chrisos | Born in Salem, Massachusetts, growing up outside of Chicago, Illinois, and currently living near Dallas, Texas, Marianne is a content writer at a c...

Related Posts