Join Rudolph Rosenberg for an in-depth discussion in this video Know when to stop analyzing, part of Financial Analysis: Introduction to Business Performance Analysis.
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…Beware of analysis paralysis.…Once you get the hang of analyzing your business and…you have identified the right metrics, those that tell you what is going on in…your company, you can fall into the trap of over analyzing.…Once you have identified that something is happening and…that you found the source of an issue, for example.…You can be tempted to carry on with the analysis and dive deeper into the issue.…And if you make another great finding, why not dive further on into the numbers.…I can already tell you that there is an art in finding a good time to…stop analyzing.…
I can even tell you that if you dive further and…further into the numbers, you will always get to…a point where the numbers will contradict what you identified a minute earlier.…The reason for that is that there is a biased never analysis which is…that you look into the factors that you know are affecting your business, but…never into the factors that you don't know about.…Let me explain this a bit further by using an example.…Let's imagine you just hired a new sales representative.…
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.