Skip to main content
Insights — Exbo Group

Financial Analysis Template: A Necessity for Businesses

Financial Analysis
Minute read

The financial health of your company depends on proficient financial analysis to aid in decision-making, performance evaluation, and charting the future.  

A well-structured Financial Analysis Template acts as a bridge between monthly accounting work and a client team so everyone involved in the financial analysis process gains insight into the company's financial activity. 

Even though your outsourced finance team will handle the intricacies of these templates, you should still understand their makeup and purpose to stay on top of your business’s financial health.

What is the Purpose of a Financial Analysis Template?

The foremost purpose is to provide a standardized framework for financial analysis. In doing so, financial information is presented consistently and coherently.

A common structure makes it simpler for stakeholders–including business owners, investors, and financial professionals–to interpret and compare financial data.

What are the Key Components of a Financial Analysis Template?

1.  Executive Summary: High-Level Insight

The Executive Summary section offers a high-level, concise overview of a client's monthly financial activity. By distilling complex financial information into key points, the Executive Summary clearly highlights changes in revenue, cost of goods sold (COGS), and drivers of changes in cash month-over-month. This at-a-glance view of a business’s financial health is particularly useful for busy executives who lack the time to dive into detailed reports.

2. Revenue & Cost of Goods Sold (COGS): Understanding Income and Costs

The revenue and COGS section demonstrates a company's income and cost structure. Documenting specific numerical values, customer/vendor names, and long-term trends allows for a deep dive into your company's financial performance, providing insights into which revenue streams are performing well and which could improve.

3. Expenses & Payroll: Cost Control

The Expenses and Payroll section highlights changes in departmental expenses, personnel costs, and professional fees. Tracking unique vendor charges, changes to personnel, and one-off transactions enables a business to identify cost drivers and manage them effectively.

4. Changes in Cash: Managing Liquidity

The Changes in Cash section is similar to a traditional cash flow statement, tracking changes in balance sheet items that impact ending cash. It offers a holistic view of how operational activities impact the company's cash position by linking the analysis to income statement items.

Final Thoughts

A strong financial analysis template provides a consistent framework and detailed analysis of revenue, expenses, and changes in cash, and it empowers businesses to make informed decisions, manage their financial health, and communicate with stakeholders—which ultimately leads to financial success. 

If you want to learn more about how your company could benefit from a strong financial analysis template, or you have questions about an already existing one, please reach out.