Though both works are part of financial management, preparing a proper report differently on both the works is important. The following description specifies the purposes and importance of financial reporting and analysis.
Financial reporting and analysis have become the backbone of business in the contemporary competitive world of business. Because its calculation and execution are resulting in the mantra of success in many business lines. Such practices can get the organisation and the business on the track of the productivity the management might require. It also helps in financial integrity and the worth of the business and the organisation. Such practices direct the management to take proper decisions and measures for particular situations. Without financial reporting, financial analysis is not possible at times, so they go hand in hand. Its importance is specified below minutely-
It can help to know the inner plus and minus points of the business house that can determine its position in the market. It also gives ideas on the company assets and liability ration of several business periods.
Every business plan needs to be operated and functioned with some planned tactics the plan management fulfils this criterion. This management keeps a watch on all the aspects of the business to determine its success and performance.
Managing dues refers to the short and long term obligations of the organisation towards the different stakeholders. It includes all sorts of financial obligation, liabilities, and claims of creditors.
Different lenders and investors and stakeholders are connected and concerned with a business and its growth thus the businessmen need to build and maintain a good and interdependent relationship.
What price should be paid for the services taken on the production and could the new production balance the wage amount given to the labours is important.
The main purpose of financial reporting is to know the business and in-house activities to act upon it accordingly. It helps to keep the transparency of the business ups and downs between the management and the stakeholders of the business. Because such reports are designed with all the financial information of the organisation which helps to analyse and predict future business progress and performance possibilities. Such reports also give ideas on how and what to invest in the business to derive positive results. Thus the report should be framed with proper balance sheets, financial statements and another transaction summary with controlled release for both the internal and external folk.
Financial analysis is done by studying the various financial data and reports of the organization. The analysis of the financial details is conducted to derive the conclusion on an entity or project is worthy enough to be invested with the capital. Because nobody wants to face loss at the business the invested capital in. So, such financial investment should be preceded by a good homework and analysis of the financial records. A financial analysis study helps to build a proper plan for the business observing the contemporary economic trends. This study can direct one for proper investments.