Every business maintains financial records to pay corporate
taxes, but wouldn't it be nice if your accounting records could
increase your business' profits? Analytics is the process of
analyzing data and information to discover meaningful performance
patterns to describe your business processes, predict your future
results or improve your operations and it is a powerful tool.
Financial statement analysis
You can use financial statement analysis to monitor and adjust
the performance of your business. Analysis can be performed to
How often your inventory turns over, or
How long it's taking for your accounts receivable to be
paid by your customers, and
How much money you're making each time you complete a
project such as kitchen renovation.
Why does it matter how long it takes for your customers to pay
for your services and goods? Because there is a relationship
between how long it takes for customers to pay and how much money
is ultimately collected. The longer someone takes to pay, the less
likely you are to collect on your accounts receivable. In addition,
information on accounts receivable turnover can be used to ensure
your company has the cash it needs to fund its operations.
Data becomes information when it has value. One of the drivers
of that value is the ability to use the data to recognize useful
patterns. When your business's financial information is
compared to industry information it is easier to identify patterns
both positive and negative.
A mid-size construction business – another example
You're a mid-size construction business and you want to
expand, but there are a number of different types of jobs you can
use to drive that expansion. You compare your financial results to
other mid-size construction businesses and you notice that you turn
over your construction-in-progress account 50% faster than your
competitors with a 3% better margin. Looking at your operations you
realize that you can complete small jobs quickly giving you an
Based on this analysis, you should be concentrating on growing
through increasing your volume of small jobs while making sure you
maintain (and protect) the operational processes that allow you to
finish jobs faster. If you were eyeballing a large construction
project as a way to grow you probably shouldn't do the job as
it works against your competitive advantage.
You're an engineering firm, you're analyzing your
financial information and you notice that your bad debt expense is
higher than the average for similar size firms in your industry. On
further inspection you realize that your accounts receivable
turnover is slow. Your billing and collections practices are not as
strong as your competitors and its costing your business money.
Any weakness you identify between how your business performs and
how your competition performs is a cost that means you have less
resources to compete against them with. Any strengths identified
through analysis need to be protected, and any weaknesses
Crowe MacKay can help you leverage your financial records
through analytical analysis. In addition, we have industry data
that can help spot trends, both positive and negative, in your
financial statements. If you have any questions about using
analytics to improve your business performance we are happy to
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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