Analyzing financial data is critical for businesses to detect specific details in their structure in economic terms and avoid scenarios of complexity in managing their finances. Understanding this data is also important for credit institutions in order to know their clients and their solvency.

What exactly is financial data analysis, and why is it important?

It is the process of determining the worth of a company and its financial situation. The history of the data is examined in this process to determine how stable or unstable its operation is.

The information found in this type of analysis refers to your sales, the purchases you make from your suppliers, and determining the type of customers you have and their recurrence.

It also serves to estimate benefits and make projections of future statistical data, which is extremely useful not only within a company but also for financial entities.

What factors are considered in a financial analysis?

The balance sheet, income statement, cash flow, and liquidity, among other things, are critical factors for a company’s valuation or a lender’s credit evaluation.

• Balance: it depicts a company’s resources over a specific time period. This section displays all assets, liabilities, and debts.

• Income statement: this contains information about the company’s performance over a specific time period. It includes the company’s income, expenses, losses, and profits.

• Liquidity: the amount of cash a company has available to pay debts, supplier invoices, and expenses. Low liquidity may indicate that the company does not have enough capital to meet its obligations.

• Profitability: the resources generated by a company after all operating expenses have been met. It is a critical piece of information because it allows for the projection of its current and future states.

CRiskCo’s API provides additional factors

What has been discussed allows you to understand the landscape of a business so that you can understand its finances and risks, where specialized software, such as the CRiskCo interface, provides other elements useful for credit evaluation, such as the Z score, debt service ratio, ICR, profit margin before taxes, general liquidity ratio, return on capital, acid test, DSO, ADD, CEI, customer and supplier risks.

All of these indicators provide data such as the concentration of suppliers and customers, the likelihood that a business will default on payments, its ability to pay off a debt along with the interest generated, profits, the return on capital invested, the average debt collection period and the ability to achieve it, and so on.

All of this serves to provide a detailed report with statistical data projections based on financial information, thereby easing the work of lenders.

CRiskCo’s API can perform this type of analysis in a matter of minutes, allowing financial institutions to better understand each client and the credit risk that they may represent, allowing them to offer products that are tailored to their specific needs.