What role does the balance sheet play in corporate planning?
May 20, 2022 | 50,00 EUR | answered by Christiane Fuchs
Dear tax consultant,
My name is Emil Werner and I am the owner of a small to medium-sized business. In recent years, we have experienced steady growth and are now faced with the challenge of optimizing our business planning. I have noticed that the balance sheet plays an important role, but I am unsure of how exactly it should be incorporated into the planning.
Currently, we prepare our balance sheet once a year for the annual financial statements. This includes all assets, liabilities, and equity positions. But how can I use this information specifically to improve our business planning? Which key figures from the balance sheet are particularly relevant for planning and how can we analyze them to make informed decisions?
I am concerned that we may be overlooking important clues from the balance sheet and therefore not effectively shaping our planning. Are there specific tools or methods that can help us better interpret the balance sheet data and use it for business planning?
I would greatly appreciate it if you could provide me with some specific tips and recommendations on how we can incorporate the balance sheet into our planning to be successful in the long term.
Thank you in advance for your support.
Best regards,
Emil Werner
Dear Mr. Werner,
Thank you for your inquiry and your interest in optimizing your business planning by incorporating the balance sheet. As a tax consultant specializing in accounting and business planning, I can provide you with some specific tips and recommendations on how to effectively utilize the balance sheet to ensure long-term success.
First and foremost, it is important to understand that the balance sheet is an important tool for depicting the financial position of your company. It shows the assets, liabilities, and equity positions at a specific point in time, providing an overview of your company's financial situation. These information can be used to make informed decisions in business planning.
One of the first steps in incorporating the balance sheet into planning is analyzing key ratios. Key ratios such as equity ratio, liquidity ratios, profitability ratios, or leverage ratios are particularly relevant. These ratios provide insight into the financial stability, profitability, and liquidity of your company and can offer important guidance for planning.
To better interpret the balance sheet data and utilize it for planning, I recommend creating ratio systems and benchmarks. Compare your ratios with industry-standard values or with other companies of similar size to better assess your position in the market. Additionally, you can use scenario analysis or financial planning to explore different future scenarios and identify risks early on and seize opportunities.
Another tool that can help you interpret the balance sheet is creating financial analyses and reports. Here, you can track the development of key ratios over several years, identify causes for changes, and derive measures for improvement.
Finally, I recommend regularly discussing the balance sheet and derived ratios with your tax consultant. An experienced tax consultant can provide valuable tips and support you in planning.
I hope these tips are helpful to you and wish you success in incorporating the balance sheet into your business planning.
Best regards,
Christiane Fuchs
