Business analytics tools, such as accounting reports, SWOT analysis, and the balanced scorecard, are used by stakeholders to evaluate a company’s operations and determine its effectiveness and efficiency in the global market. Other tools, such as decision trees and risk analysis, may also be used. It is important to select a tool that includes all necessary factors for evaluation.
Business analytics tools are several methods used by stakeholders to evaluate a company’s operations. In most cases, the purpose of the analysis is to determine the effectiveness or efficiency of a company in the global market. A few different tools are accounting reports, SWOT analysis, and the balanced scorecard. Everyone takes a different approach to reviewing the financial and non-financial aspects of the business. Both internal and external stakeholders can use business analytics tools as a determination of a company’s overall strength in the business environment.
Accounting reports are among the easiest analytical tools to calculate and use in business valuation. These ratios use information from both the income statement and the balance sheet to provide indicators of a company’s financial strength. Specifically, the ratios measure a company’s liquidity, profitability, asset use, and leverage along with other financial areas. While a good tool to use at the end of each month, financial reports have some flaws. First, the reports are useless on their own as they need another source for comparison; second, the reports only use information from the financial statement for the audit.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. In terms of business analysis tools, SWOT analysis is valuable because it examines both internal and external factors that may be related to a company’s operations. Strengths and weaknesses are internal factors; in essence, it’s the things a company does well and doesn’t do well. Opportunities and threats represent the external factors. Opportunities are new business elements or areas that a company can engage in, while threats represent potential market competitors or new opportunities.
The Balanced Scorecard is an increasingly popular assessment among other business analysis tools. The scorecard has four different perspectives: financial, business process, learning and growth, and customer. Each perspective looks at specific information related to its overall goal. Taken together, all perspectives should provide insights that help a company achieve its goals and develop strategies. The Balanced Scorecard may also be able to help a business plan for future operations.
Other business analytics tools are available to a business if needed. Owners and executives can often review other tools, such as decision trees, risk analysis, or game theory, among others. The important thing to remember is selecting a tool that allows a company to include all the factors necessary for the evaluation process. By hiring a consultant it may also be possible to review and improve a company’s operations. Either way, a business should use what works best for the business.
Protect your devices with Threat Protection by NordVPN
