Financial analysis is an essential aspect in the management of cooperate and business organizations. Financial analysis, at its core, helps determine the performance of an organization in various aspects such as revenues, profits, return on investments, return on assets, among others. Financial analysis helps experts establish whether it is worth investing in a particular asset or project, depending on the preliminary forecasts (Osadchy et al., 2018). With financial analysis, a firm can determine whether it gains profits, grows as prospected, or makes wrong investment moves. As a result, the management can take prudent investment and expenditure decisions forward.
The calculations provided for Van de Putte Group give clues on several goals that the company aims to achieve. First, the company wants to assess its cash flows within the specified time frames. The calculations capture sales, administrative, and operating costs and the costs of raw materials used in the production of finished products. Usually, no company has the capabilities to acquire raw materials by themselves. There must be investment and involvement of third parties in the raw material acquisition chains, which results in additional coats. It implies the company must include the cost of acquiring raw materials at the prices of the final products if they need to make profits.
The company updates the raw materials inventory every 15 months. It takes the company one month to complete one production cycle (30 days). The company also orders raw materials after one month. Production costs and inventory of finished products are carried out every 15 days. The company pays suppliers after every two months. Customers pay their dues every month. Every time the company pays its suppliers, it receives dual payments from its customers, which helps them run day-to-day activities at the company.
Reference
Osadchy, E. A., Akhmetshin, E. M., Amirova, E. F., Bochkareva, T. N., Gazizyanova, Y., & Yumashev, A. V. (2018). Financial statements of a company as an information base for decision-making in a transforming economy.