The Role of Financial Analysis in Strategic Planning
Abstract
Financial analysis plays a very important role in the strategic planning process. This article extensively discusses the role of financial analysis in setting long-term goals of an organization, effectively allocating resources, and increasing competitiveness. Through financial analysis, organizations are able to assess their financial potential, identify risks in advance, explore investment opportunities, and achieve financial stability. The study showed how financial indicators of enterprises are analyzed and provide useful information when making strategic decisions. Strategic planning is an important stage that determines the long-term prospects of an enterprise. At this stage, financial analysis is one of the main tools through which the current state of the enterprise, future development opportunities, and existing limitations are determined. Financial indicators — profit and loss statements, balance sheets, and cash flow statements — form the basis of strategic decisions. For example, enterprises with low profit margins or liquidity levels focus on strengthening their internal financial structure before implementing a growth plan. The article also examined the application of financial analysis methods (horizontal and vertical analysis, financial ratio analysis and trend analysis) in strategic planning. Through these methods, the enterprise identifies internal opportunities and external threats and determines its priorities. The study showed with practical examples how strategic decisions can be made on the basis of financial analysis on the example of a real enterprise.
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References
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