Financial analysis is an instrument that facilitates the evaluation of the present and the past of a company, in order to determine how it will evolve. It is a key tool for proper business management, as it allows the identification of opportunities and threats.

According to “Radiografía del emprendimiento en México”, the main causes of a company’s failure are: poor business administration with 29%, lack of liquidity with 35%, and problems obtaining loans for SMEs with 25%.

These three aspects are related to each other and, through a thorough financial analysis, it is possible to solve them jointly. Knowing the problematic points in the performance of a business.


What is a financial analysis?

A financial analysis is a group of techniques that are used to diagnose the financial situation of the organization, using various indicators and ratios to analyze the current state and make projections about future expectations.

Through an objective analysis, the company in question can understand its critical points, amend its decision making and develop action plans that allow the new proposed objectives.

Among other things, this analysis allows a company to determine whether or not to use SME loans or other sources of financing for a company, in order to improve liquidity and boost its activities.


5 Ways Financial Analysis Helps Improve a Business

Some of the ways this type of analysis benefits a business are:


1. Optimize management

It points out points where planning should be improved and facilitates the correction of certain aspects that are not giving benefits, to undo imbalances and optimize management.


2. Create a basis for decision making

Knowing the present situation of the company and its history allows making projections about economic progress, both in the short and long term, that it is possible to achieve and identifying the best ways to achieve growth.


3. It makes it easier to control and monitor the organization

By knowing the most beneficial factors in financial performance and those that hinder it, it becomes easier to establish control, anticipate problems such as negative cash flow, and solve them in time.


4. It is useful to maintain and attract investors

One of the main sources of financing for a company, internally, are investors, who, seeing a transparent analysis with positive indicators, will have the confidence to deposit their capital.


5. Facilitates the optimal use of business credit

A financial analysis not only helps to determine when it is convenient or necessary to resort to external sources of financing, but also allows you to identify the best ways to integrate that capital to take advantage of it and generate real growth in the business.


The most suitable loans for SMEs, with Pymes Capital

For all these reasons, a solid analysis helps to generate an equally solid management, capable of identifying and solving the problems of a company to promote its growth. For this, a business loan is a great way to inject liquidity at the right time to boost the competitiveness of a business.

To facilitate the financing of small and medium-sized companies, Pymes Capital offers flexible financing alternatives and online application processes. Find out about Pymes Capital solutions and get the financing you need easily, and guarantee the growth of your business.