The fiscal year is the period of time over which the economic entities (companies, budgetary organizations) make reports on their activities, as well as the period for which the act is drawn up and the state budget.
This concept is used in the financial analysis of the company.In the framework of the analysis of the balance sheet - its structure and dynamics of liquidity ratios, the calculation of net assets, profitability and asset turnover, return on operations on the basis of the profit and loss account.Financial analysis - the study of changes in the key indicators of the state of the company and to determine its financial stability, solvency, creditworthiness prospects.Financial stability reflects the company's ability to make optimal use of their funds to ensure uninterrupted cycle of production and sales of products (services), as well as to invest in the expansion and development of the business, updating the material and technical base.As a rule, the analysis of the dynamics of the above indicators of the last financial year compared to the previous three.
Who conducts for whom (and why) needs analysis of the company?There are two categories of users of the financial statements and the results of such analysis: internal and external.Internal employees engaged in financial analysis and management of the company for the purpose of exercising control over the financial and organizational activities, as well as to identify future prospects and reserves of the company.The sources of internal financial analysis are expanded balance sheet, all sorts of financial statements (including the profit and loss) statements for previous periods, for the current financial year to date.The main point of the internal financial analysis - calculation of the efficiency of capital, the relationship of costs, turnover and profits, borrowing and equity.In other words, we examined all aspects of the company.Often the figures and conclusions of this analysis are a trade secret.
objectives of internal financial analysis can be: increase in profit, the search for reserves to reduce costs and increase revenues, new market development, reduction of accounts receivable for the next fiscal year and subsequent periods.The results of the internal analysis are the owners and top managers of the company.
external financial analysis is carried out stakeholder organizations and individuals on the basis of open and public financial statements.These can be creditors, shareholders, suppliers, customers, business partners, investors.The results of external financial analysis is important for banks, leasing companies when considering lending to the company (whether it is calculated on the loan and interest);potential shareholders and investors in evaluating the appropriateness of an investment in this company;State - for taxation;liquidator - to identify opportunities to emerge from bankruptcy or in order to prevent insolvency and bankruptcy.
in different countries fiscal year is set differently, often coincides with the calendar year, but there are exceptions historically.For example, the fiscal year in the United States is set from 1 October to 30 September, in the Russian Federation - from 1 January to 31 December.
