In today's data driven market landscape, the analytics explored on finance courses could potentially play a significant role in keeping a business agile and competitive.
Financial Analytics is a key area that enables an organization across any industry to truly predict the future outcomes of their strategies and goals allowing for mindful and informed decisions to foster growth and achieve objectives.
Better insights into financial efficiency measures of a company, operational KPIs alongside product/service KPIs as well as customer profitability enables a business to augment revenues and eventually the value of shareholders. It should not come as a surprise that these concepts and more are explained in detail on any finance courses distance learning formats or on-campus full-time courses. Also, the modules go on to explain remedial actions that would help in overcoming any correlated shortcomings, thus modifying the approaches adopted by management to meet and exceed customers’, shareholder and stakeholder expectations.
In this article, you will be introduced to some of the key financial analysis elements and concepts that an organization, irrespective of size, depth or industry can work with:
- Predictive Sales Analysis (PSA):
Sales or revenue generation is the backbone of any organization, thus, implementing analytical techniques that augment sales and growth strategies in the current and following years can have huge impact on your business's bottom line. PSA applications enable you to evaluate how effective your forecast is and help your sales pipeline in the approaching months and years. Organizations that effectively implement PSA's tend to adopt an array of competencies and tactical approaches to gain an in-depth understanding about their customers, also a concept studied in the business management top up degree distance learning course. Now, there are two sure fire ways to estimate sales
- comparing past trends with the current and,
- making use of predictive techniques, such as a correlation analysis.
PSA is considered a powerful aid in planning and achieving hassle-free workflows by enabling clients to manage their respective operations. To further simplify, let's say you have completed a predictive analysis of your business and have found that in a particular month your sales will drop. In this informed situation, you can implement remedial strategies to boost sales in that period.
- Product Profitability Analytics (PPA): In order to maximize your return on investment (ROI) it is important to consider where your investment would earn the highest returns. (a much investigated concept on finance courses) Profit is calculated after all costs have been covered. Thus, to retain a competitive position and to make the most of your investments it is essential to contemplate where exactly you should invest and you would then address the costs and products lines separately. This can be a relatively time-consuming task if done manually, furthermore it leaves room for human errors.
An alternative is a PPA, a top-notch solution that helps determine the profit-line on the basis of each product / SKU. It enables you to quickly gain insight across all of yor offerings so that you can make an informed decision for your business. For example, if you get to know what products customers demand the most, then it would only be logical for you to promote those products.
- Customer Profitability Analytics (CPA): Be it a cloud hosting provider, a giant e-commerce platform, or just any business working on the World Wide Web, having clear data about who your potential customers are is always advantageous. A fair comparison can be drawn between profitable and non-profitable clients allowing you to focus efforts that translate into doubling revenues. Remember, there are always two kinds of customers, one that brings value to your organization and the other that brings risk to your organization. Identifying this vital information with only complement your future marketing, sales and strategic efforts. A CPA is aimed at just that and will help you as objectively and as practically assess and analyze the behavior of both types of customers.
- Shareholder Value Analytics (SVA): How successful your strategies are will be determined by the interpretation of the final outputs evaluated by media, experts, stakeholders and (most importantly) shareholders. SVA helps in adjusting the value of the business on the grounds of what returns a business provides to its stock/stake holders. It also determines the percentage of rick and value delivered to the shareholders. This is why most experts recommends complementing SVA with profit or revenue analytics for more comprehensive evaluation of the business.
- Cash Flow Analytics (CFA): You need fuel to drive your car, don’t you? In the similar context, your business needs capital to operate. Predicting the inflow and outflow of capital is important to ensure the health of your business. Herein, CFA and regression analysis tools can help in determining how much capital you may need for any future investment. This is now where the CFA benefit ends though, it also helps in managing cash flow and fostering corporate functions. The peace of mind most business owners experience at the end of each and every month is invaluable as you are informed in advance of any cash dips or potential panic situations.
- Value Driver Analytics (VDA): Only planning does not offer the desired results, it takes actions. For that you need to implement your well-researched strategies and one top of that you have to have a positive and pragmatic business approach. A great understanding of economic drifts that can disturb your financial motifs will help you forecast correctly and promptly. Your goals will define tour value and aid you in meeting your strategic business objectives. In connection with this, VDA will help you analyze these strategic business drivers so that the expected outcomes can be achieved. Not to forget, these drivers are majorly based on assumptions, so this always need to be updated and cross checked.
It is vital for CFO’s to embrace financial analytics so that they can achieve the goals and targets set out for the organization. Financial analytics provide in-depth and proactive data sets that offer better insights to all the departments on their functionality as well as into profit, cost and market trends, thereby ensuring a rewarding experience for you, your business and your staff.