financial analyses of companies for investment

Financial Analyses of Companies for Investment

Generally speaking, the main objection of this article is to offer a comprehensive outline of the role of financial analyses of companies for investment. Such studies are needed during especially a proper investment decision-making process. Rising youth population, growing value of currency rates and thus decreasing production and labor costs are of great importance in attracting foreign direct investments in Turkey. However, a set of critical steps through appropriate analytical tools should be taken by foreign entrepreneurs and of course by every business lawyer during their decent selection process for their stakeholders.

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What is the Financial Analysis of a Company?

Overall, fundamental intention of a financial analysis of a company is to produce an in-depth examination for key parameters in a certain sector, trending issues and the most trustworthy companies. More specifically, a due diligence analysis requires the target company’s current and potential profit sources, assets, financial and administrative structures. Undoubtedly, such assessments may play a pivotal role in starting up a project by making a long term-deal between a buyer and a supplier company. Both partners of a contract have a similar opportunity to test financial affairs, credibility, and capacity of the other side.

What are Key Parameters For a Financial Analysis?

The most important point about a financial analysis is to collect data from open, accessible, legal and credible resources. Furthermore, every action about the data collection process must be compatible with Turkish intellectual property regulations. In this context, the principles and standards enumerated in the Industrial Property Code (Numbered 6769) must not be violated. Thirdly, any information or data about a business sector or a certain company requires a full-fledged analysis.

There a number of key resources to take a look at any kind of information about Turkish companies or any kind of specific business sector including:

  • The Ministry of Commerce database
  • Turkish Statistical Institute statistics and surveys,
  • reliable domestic or international sectoral statistics.

What Kind Of Evaluation Must Be Included In a Commercial Intelligence Report?

To clarify, a comprehensive financial analysis of a company should contain certain evaluations on inter alia,

  • current assets,
  • the capacity for taxes and debts,
  • financial risk scores,
  • payment performance to the market,
  • administration information.

What Are Key Advantages Of a Financial Analysis?

Financial analyses are very instrumental in

  • Understanding the relevant sector,
  • Measuring the payment risk, creditworthiness and financial adequacy of the involved provider| buyer |seller or supplier

Conclusion

Regard being had to the above, it is useful to reiterate that the Turkish business environment is deemed very attractive by foreign entrepreneurs. Nevertheless, the decision-making process for a proper partner is far from an easy process. In this context, this article sheds light on the particular role of financial analysis of a company. It is displayed that a professional reporting-centric analysis may have a crucial impact upon improving a right investment strategy. They are very helpful for business lawyers to produce guiding principles for their clients as well.

 

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