How To Calculate Free Cash Flow From Cash Flow Statement 6 Basic Financial Analytics to Predict the Future Trends

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6 Basic Financial Analytics to Predict the Future Trends

What do you mean by “Financial Analytics”? It is a complete system that includes various tools to effectively increase the profitability or productivity of the company. Financial analytics collects and evaluates a company’s financial data to gain an understanding of various aspects of your business perspective. With the help of graphs and diagrams, the collected data is displayed. It gives you a visual picture of complex information and helps you recognize the scenario easily and smoothly. By analyzing data with the help of financial analytics, you can also predict behavior patterns, future trends, make informed decisions and nurture the growth of your business.

Here are 6 basic financial analyzes that will help you predict future trends.

  1. Predictive Sales Analytics or PSA

What do you think is the most important aspect of the company? Without a doubt, sales revenue comes first. 1 place and that is what decides the future of your company. When you adopt the PSA approach, you can easily predict the sales figure for a particular month. You can get an idea of ​​whether sales will drop in a certain period.

Accordingly, you can revise strategies to increase sales or implement new ones to calculate how effective your forecasting is. When you get a clear picture of your sales generation, your tensions and panic attacks are much less. You can adopt a range of competencies and strategic approaches to know your customers, plan effectively and achieve a hassle-free workflow.

  1. Product Profitability Analytics or PPA

In this competitive market, you need to know exactly when to invest. Creating a profit estimate, a clear analysis of the product and its price can take a lot of time.

In such a situation, PPA or Product Profitability Analytics comes as the best solution to evaluate the product and determine its profit line. It can help you make an informed decision by gaining an instant understanding of all the products and services offered. In order to strategically promote your products, you need to know the likes and preferences of your customers. Once you are aware of customer demand using the PPA analytics tool, product promotion strategy becomes easy.

  1. Customer Profitability Analysis or CPA

Who is your potential customer? Whether you’re an e-commerce giant, a cloud hosting provider, or any search engine business, prospect recognition can always benefit your marketing efforts. There are two types of clients-

  • The one who brings value to your company

  • The one who brings risk to your company

Your income can soar if you can differentiate between your unprofitable and profitable clients. Your marketing efforts can get a boost if you start recognizing your customers by extracting their detailed data. CPA or Customer Profitability Analytics can help you analyze the behavior of your customers.

  1. Shareholder Value Analysis or SVA

Estimate your business value based on the returns your shareholders receive from your business with the help of shareholder value analysis, or SVA. This tool also helps in determining the percentage of risk and shareholder value. When SVA is used with revenue and profit analytics, its execution is better and easier to understand.

  1. Cash Flow Analytics or CFA

While running a business, you need to understand how much capital your business requires to run smoothly. Cash flow analytics help predict capital outflows and inflows, future capital investment requirements, and the amount you may need to fuel corporate operations.

  1. Value Driver Analytics or VDA

A positive approach is a basic prerequisite for successful business management. In addition, planning and implementing your well-planned strategies are also important to achieve the desired results. Your business goals can be properly nurtured if you can understand the financial disruptions that can affect your business. In this regard, the VDA tool can help analyze the strategic drivers of your business to achieve the expected results.

With a better understanding of financial analytics measures, functional KPIs, customer and sales profitability, you can help your business increase its shareholder value and revenue. It will also help you understand your weaknesses to overcome them for a great end user experience. To achieve your organization’s goals, embrace financial analytics tools.

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