Key Financial Indicators and Ratios for Engineers and Architects

Engineers and Architects - Complete Controller

Financial reporting and audit report

The calculation of indicators is based on the balance sheet and profit and loss statement. There are two approaches to the measure of indicators. There is a momentary one when the calculation is made based on balance sheet data at the end of the period and the estimate for the mean values ​​over the analyzed period. The second option is preferable if, for example, a company makes significant payments at the end of the month. The use of average for the period of values ​​of the settlement account allows it to eliminate the resulting distortion of the liquidity indicator. In process auditing, you can also use bookkeeping to determine the numbers. LasPass – Family or Org Password Vault

Principles of financial accounting

The fundamental principles of accounting are a set of principles, concepts, and definitions that enable the identification, estimation, accounting, formation, and transfer of financial information in a clear, consistent, timely, and understandable manner. Accounting is a process of using fundamental principles, which is useful financial information. The purpose of financial statements is to provide information on the financial position, activities, and changes in the financial part of the bank, which can be helpful to a wide range of users when making critical economic decisions.

To effectively implement this process, it is necessary to consider the requirements regarding the transfer of financial information to interested persons. These requirements are divided into internal users (bank management) and external users of financial information.

Internal users are interested in the information contained in the financial statements. However, they also have access to additional management and financial information that helps them fulfill their planning, decision-making, and control responsibilities. Download A Free Financial Toolkit

External users are interested in information about the activities and indicators of the bank and changes in the financial situation, which can be helpful in a wide range of users when making economic decisions. Financial reports satisfy the everyday needs of most users.

Financial strategy

The financial strategy covers all aspects of a corporation’s activities, including optimizing fixed and circulating assets, profit distribution, non-cash settlements, tax and pricing policies, and security policies. It is focused on achieving the specified level of the main parameters of its activities: sales volume, cost price, profitability, financial stability, payment, and price competitiveness.

Financial ratios and indicators

The main requirement for the break-even operation of the enterprise in the conditions of market relations is economic and other activities that ensure profitability. The financial measures aim to reimburse expenses by the received incomes and profit reception to satisfy the economic and social needs of members of the collective and material interests of the proprietor. There are many indicators for engineers and architects for characterizing the activity. They include gross income, turnover, profit, costs, taxes, and other characteristics. The leading financial indicators for engineers and architects of the organization and their activities identify as financial stability, liquidity, profitability, and business activity for all types of enterprises. ADP. Payroll – HR – Benefits

The indicator dynamics are considered to identify the valid liquidity index, which allows for determining the firm’s financial strength or insolvency and reveals the critical state of the organization’s finances. Sometimes, the liquidity indicator is low due to an increased demand for the industry’s products. Such an organization has a high degree of solvency since its capital consists of cash and short-term loans. The dynamics of the leading financial indicators demonstrate that the situation looks worse if the organization has working capital only in the form of many stocked products that are current assets. Their transformation into capital requires a particular time for implementation and availability of the customer base. The leading financial indicators of the enterprise, which include liquidity, indicate the state of creditworthiness. The company’s current assets must be sufficient to pay off current short-term loans. In the best position, these values ​​are approximately at the same level. If the enterprise has circulating assets much higher in value than short-term loans, this indicates an inefficient investment of money by the enterprise in current assets. If the amount of working capital is lower than the value of short-term loans, this shows the pending bankruptcy of the firm.

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