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October 4, 2019

Financial Analysis For Businesses in Dubai

The market in Dubai is flourishing. There are a great number of small and medium businesses emerging and the economy is said to gain momentum in 2020 as per the researchers. Thus, in order to start or expand businesses, the companies need to assess their financial viability and future scope along with the current scenario. For this, every business needs financial analysis. Financial analysis forms a crucial part of the business plan as it serves as a guiding tool for the company to understand its shortcomings, the expected future risks, and in what time the business will start to earn revenues over the break-even point. This also helps the marketers to chalk out marketing strategies as per the budget of the company and the situations that prevail in the market. There are various companies/start-ups in Dubai who provide financial analysis services.

What is the financial analysis?

Financials analysis, as the name suggests, analyses the financial position of the company. This generally includes analyzing the existing company’s financial statements — the balance sheet, profit and loss account, and the cash flows.For the existing companies who plan to expand their business the financial statements are taken as a base to reach to the estimates, while for the upcoming businesses/startups, the investment details, hiring plan, management team, employees, location and other information is considered as a base to create these statements.This enables the analyst to determine the stability of a company or the business idea.It not only chalks out the estimates for the coming years, but also gives a reality check about the current financial health of the company.

Contents of financial analysis

While the contents of an analysis may differ from business to business, financial analysis generally consists of the following sections in a business plan:

  • Financial assumptions

Before preparation of any financial statements you need to specify the assumptions that have been considered. This section provides a rationale about the future projections and ensures that the considerations that have been undertaken are mentioned distinctively.

  • Projected balance sheet

The balance sheet has two sides i.e. is the asset side and liability side. It shows the net worth of your business at a particular point of time. It divides your data into three parts i.e. assets, liabilities and equity. Balance sheet analysis should be simple and informative.

  • Cash flow projection

Cash flow projection is the statement showing expected inflow and outflow of cash from your business. This helps to plan how much expenditure needs to be incurred to keep the optimum level of cash in the company as a working capital.

  • Projected income statement

In this statement, we include the record of revenue and expenditure which is expected to be incurred in future. It also depicts the estimated amount of profit a business can earn. It is better to present the data in form of graphs as it helps to make the information easy to understand.

  • Break even point analysis

Break-even analysis shows the amount of sale a business needs to perform for covering its costs. Here, the cost is classified as fixed and variable cost.

Significance of financial analysis for business

The following points highlight the significance of financial analysis for businesses:

  • On the basis of financial analysis,investment decisions can be taken. It also helps investors in deciding whether to invest in the business or not.
  • Financial analysis can be used as a document to apply for short term and medium-term loans from financial institutions.
  • The financial statements such as balance sheet, profit and loss account and income statement help in predicting the financial position of business.
  • Financial analysis is an important tool as it helps to predict and evaluate the growth and future financial prospects.

Takeaways

The financial plan is a great way to analyze the viability of the business idea and helps to understand the business prospects in the due course. This section of the business plan includes quantitative data on the basis of which different decisions like investment decisions and capital decisions can be taken.A visual representation of the data in the form of graphs, tables and pie charts makes up for a more interesting read and understanding for the readers.

DNA GROWTH

DNA Growth is a global professional services provider specializing in Business and Financial Planning. We have a strong team with a strength of 40 members and have worked in 50 plus countries.We aim at helping clients with accurate and foreseeable forecasts that help them plan for the future in a better and structured manner.

Get in touch with us:- https://www.dnagrowth.com

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