Analysis of the financial performance of an enterprise is an effective tool for choosing a partner

Analysis of the financial activity of the enterprise serves as an effective tool with a qualified choice of a partner from both the domestic and external markets. As the main source of data on the financial sustainability of a potential counterpart is the accounting reporting.

In the conditions of a market economy today, enterprise accounting is based on the compilation of accounting data and the use of information link that connects the enterprise with counterparties that are the main users of such data.

In the conditions of modern management, any users of accounting information set themselves the task of analyzing the financial activity of an enterprise, on the basis of which it is possible to draw certain conclusions about subsequent activities. This analysis has its sources, purpose and methods.

As sources, accounting forms are used together with the annexes to it. Analysis of the financial activities of the enterprise is responsible for achieving its goal - to identify the possibility of in-depth consideration of the external and internal relations of the business entity with the establishment of its solvency, financial position and profitability.

The result of the work should be clearly formed picture of its activities, presented to the management or other persons interested in the financial condition of the enterprise.

For many decades, business valuation methods were based on data provided by the accounting system. Among them it is customary to distinguish the following methods:

- Comparison of market and book prices - an assessment of the effectiveness of the enterprise, consisting in the ratio of the book value of available resources with their market value. This method is used in the formation of the so-called investment portfolio to maximize the profitability of the enterprise.

- Market value added, reflecting the market value of the enterprise, taking into account the capital involved in a certain period. This indicator reflects the efficiency of the enterprise. It is determined by dividing the market value of borrowed and equity capital by the value of investments. Economists have proved that this indicator helps to cover the future value of income.

- Comparison of market value and earnings per share, showing the projected profit of the business entity multiplied by the total number of its shares. Thus, there is a private received value of the stock for its potential income.

- Economic value added, which is an estimate of income. This indicator reflects the economic profit that the business entity must have for the survival of the market.

Analysis of the financial performance of the enterprise will be incomplete without considering the profitability of investments, through which the effectiveness of various assets used in generating revenue is assessed. The use of this indicator requires a clear interpretation of the concept of "investment".