Join Rudolph Rosenberg for an in-depth discussion in this video Analysis vs. dashboards, part of Financial Analysis: Introduction to Business Performance Analysis.
A last point before we get into the nitty gritty of business analysis. Everything we will learn here will help you towards tracking and analysing the financial performance of a company. You will be able to use that knowledge to do two things. The first thing will be to understand how financial elements can be leveraged, to gain an understanding of the performance of a company, and lead to action oriented analysis. The second thing is that it will help you identify the metrics that you will need to track on a daily, weekly, monthly, quarterly, or even yearly basis, in order to stay on top of your business.
Those metrics can be put together on a dashboard that you will review regularly. There's a big difference between dashboard preparation and business analysis. A dashboard is a tool used to have visibility over what is happening within your company. You review it on a regular basis. And if you have the right metrics on it, you can scan all the key areas that need to be controlled, and know where the company is standing at any moment in time. It is like sitting in a control tower that tells you everything that is happening around you.
It is key to have at least basic dashboards in place to drive your company. An analysis on the other hand, is the link between the dashboard and the actions that you need to take. It is the understanding that is extracted from the dashboard. The further the analysis that you will be doing that will lead to a conclusion. To an action that you or another person within the company will be carrying out in order to improve the business performance of the company. We will be focusing more on that in later courses within this series.
This course, the first in our Financial Analysis series, introduces you to key concepts of business performance analysis. Author Rudolph Rosenberg focuses on the analysis of the profit and loss (the P&L) statement and on the key dynamics you need to understand in order to interpret the performance of your business. Understanding this data will help you make informed decisions that benefit your company in the long run.
Get started now with this quick primer. When you're ready for the next steps, check out Financial Analysis: Analyzing the Top Line with Excel and Financial Analysis: Analyzing the Bottom Line with Excel.