Business analysis provides answers to very specific questions, such as:
- Is the company too indebted and is it burdened by too much interest expenses?
- Is the company facing bankruptcy or not generating enough revenue (doesn’t have enough work)?
- Has the company been making accurate business reports during the last few years?
- Is the management of the company familiar with the money management ˝wisdom˝ and capable of making rational financial decisions?
- In what way does the company invest in its assets, and how does it raise funds to finance its investments?
- What is the market value of the analysed company and is it worth investing in?
Besides providing answers to the above and other similar questions, business analysis is a solid ground for financial planning.
As G. Santini and S. Bebek, authors of the book “A Guide to Understanding Personal Finances”, state: Financial planning is nothing else than ˝when you start with it, you actually try to foresee the future you would like to have˝.
