It is important to determine the progress of business, so as to establish the viability of the business.For a business to keep existing it must cover up the operating cost and also make some profit.The profits that made are ploughed back to the business.The profits that are generated can be used either to expand the products of the business or pen to new areas.The success of the business if by careful analysis of the statement of the business rather than the mere look of the structures of the business.The decision on the viability of the business will be based on this information.The financial decision making tools will be of help to make you understand about the progress of the business. A n accurate picture of the performance of can be provided by the tools.The financial statements, ratios and other are the tools.
The financial statements are for instance the balance sheet ,income statement and statement of cash flow.The importance of the financial statement is that will help one to determine the use into which the resources were applied.The liabilities in the statement serve to determine the debt profile of the business.Through the help of the debt profile one will come with the mechanisms that will help to reduce the leverage of the business.The income statement serves to determine the amount of profits made by the business.This is important since from the income statement we can be able to determine kind of the expense that take more of the income that are generated so that necessary steps can be taken.
Financial ratios are also an important tool for decision making.It is important to note that there are different functions for the different ratios, for example the liquidity ratios are used to determine if the business can meet is obligations when they fall due.It is important to note that the ratios are used to find whether the a business has a sound financial base.The determination by the ratios that business has problems will prompt the business to take necessary measures.the financial statement can be used to compare the performance of the business with similar business.The comparison will be helpful since one can determine how to be competitive in the market.
The other crucial tool for decision making is the forecasting.The future sale to be made can be determined by forecasting.To meet the expected sale forecasting will be important in a acquiring the necessary resources for the same.
The important too to use when finding where to invest is the investment analysis.This tool will help one to identify those projects that are in market thus will in the long run reap profits for the organization.