Regardless of the nature of one’s business, profitability remains to be one of the primary goals of all businesses. Without profitability, a business cannot be sustained. Additionally, a business that is highly profitable can reward its stakeholders with a larger return of investment and its employees with additional perks. Therefore, measuring current and past profitability as well as projecting the future profitability of the business is an important exercise.
Just how exactly is Profitability measured today?
Businesses compute either manually using Excel spreadsheets or by using a profitability analysis software. Regardless of whether it is manual or automated, it is usually computed through income and expenses. This means there is a listing of income and expenses during a period of time (usually a year). It sounds very elementary but it really isn’t all that simple.
In fact, a striking 90% of all the CFOs and accountants that Performance Canvas have spoken to claim that their departments struggle with manual calculation of profitability and their inability to find answers to critical business questions raised by the management.
Many accountants have expressed that a question such as “Which is last year´s most profitable project in the group (across legal entity boundaries)?” proves to be a difficult question that requires a lot of manual undertaking for them.
Others also claim they do not have a sophisticated costing process that can produce accurate and reliable results. Many companies still rely on spreadsheets because of their familiarity with it but all of them also admit that they are met with a lot of limitations such as its inability to scale, unreliability of the figures, and security issues among other things.
The Aid of Profitability Analysis Software
In order for decision makers such as CFOs and finance managers to make decisions that directly affect profitability, it is important to move away from manual spreadsheets. Profitability analysis software like Performance Canvas Financials by DSPanel is a giant leap for any company.
The core of the Profitability analysis software is to answer questions like the one mentioned above and many more. It does so by making virtual allocation postings into a special member of the Business Process dimension which will make it possible to get a fully multi-dimensional allocated report across a multi-company and multi-currency organization. Through the advanced account mapping features it is possible to do so even if the account and project numbering is inconsistent in the organization.
The insight gained in Profitability Analysis will aid companies in determining strategic direction as well as in correctly setting the assumptions in the budgeting and planning process.
For budgets, this functionality is possible to apply in any Scenario. These key performance metrics can be further used to quality assure the budget figures and test them for validity.
Simply put, questions like “what are your 10 most and least profitable products for FY XXXX” are questions that can be easily answered with Performance Canvas Financials.
To know more about Profitability Analysis in Performance Canvas Financials, visit www.performancecanvas.com or email firstname.lastname@example.org to schedule a live online demo.
DSPanel offers cutting edge technology platform for business analytics, planning, and visualization. DSPanel designs, builds, and operates with the end users in mind. Performance Canvas was created by DSPanel to answer the unarticulated needs of the market not addressed by previous available solutions. With Performance Canvas, information is transformed into valuable business insights for the business executives to utilize in their decision-making process. DSPanel currently has over 2500 organizations deploying their solutions.