What is the best way to Measure Finance?

Finance is a very important aspect of any business. A business can never survive without proper sources of finance. There are several ways to measure finance. What method is the best for you depends entirely on you.

Financial analysis of a company reveals several aspects, such as to ensure that the business is going right ways and is meeting its financial targets. A financial analysis is conducted in several ways. E.g. yearly basis, half yearly basis, quarterly basis and sometimes, is also measured in a monthly basis. Most of the firms conduct quarterly business review through which the gains and losses of a firm are calculated and with the help of this data, action plans can be designed which will specifically target the weaker aspects of the firm, which significantly affects the financial aspect of the business.

As it is seen in most of the cases, corporate heads, measure their financial status by measuring their company's net worth. This is done basically by way of collection of relevant data which helps them run the business and forecast the performance of the rest of the fiscal year. In this case, the first thing that you need to do is to list all the assets of the company. Now it is important here to state, that the estimation of the assets' worth should be close to real. After this is done, the liquid assets are added to it. These assets include the cash available in bank accounts, no matter whether they are savings or not. Once all these have been added, you arrive at the total assets.

The next step is to calculate the total liabilities. In this, we start with outstanding loans and leases. They may also include mortgages if the company has not fully paid for its buildings and infrastructure. Add to them the direct financial debts of the company if there are any. After this has been done, we arrive at the total liabilities of the company. The liabilities should be subtracted from the assets in order to calculate the net worth of the business. If this is negative, then that means that the company is not in a very good shape.

Also there is another approach for measuring financial growth. This is through the calculation of the investment performance. Now, this can be done in order to manage assets as well as make a financial forecasting, which is based on historical data and financial analysis. Now in this case, the first thing to do here is to set it up on the basis of time. In case of small scale businesses, a monthly financial assessment is done mainly to manage the business better. This is applicable especially to new enterprises.

A company must also keep records of the findings of the assessment. This is mainly because financial analysis is not a very simple thing to do, and therefore it becomes all the more important to keep a record.