Question

Recommend how PROJECTED financial statements and other measures of business performance could be used to evaluate its activities and processes.

Answer 1

By projecting your revenue and expenses,you can get a more accurate view for how successful your business can be.Creating financial projections is not an easy task but it is a very important part of developing a sound strategy.Projected financial statement can also be guide to help your business grow without running out of cash.To generate and support additional revenue,additional cash is always required.Projected financial statements help you assess what additional assets are needed to support increased revenue.The projected financial plan indicates how much additional debt or equity you need to remain solvent and healthy.

To measure business performance,you need to track relevant business metrics,also known as key performance indicators,that displays a measurable value and shows the progress of business.When conducting financial review of your business,you might want to consider assessing your business cash flow,working capital,cost base and growth.Other measures include efficiency ratios,sales grwoth,liquidity ratios,and financial leverages.