Corporate financial analysis is the foundation for assessing the health, efficiency and risks of an organization. In the context of Vietnamese enterprises increasingly expanding in scale, becoming more competitive and requiring increasingly high financial transparency, financial analysis is no longer a “month-end – quarter-end” job, but must become a continuous process, based on standardized data and with powerful enough tools to handle large volumes of data.
This article will help you fully understand: what is financial analysis, its purpose, process, core indicators and how to apply them in business management. At the same time, you will also see how Bizzi solutions and EPM platform Sactona (Japan) help Vietnamese CFO/FP&A transform from manual Excel to modern, in-depth and real-time financial analysis.
What is financial analysis? Objectives and roles in corporate financial management
Corporate financial analysis is the process of collecting, standardizing and interpreting financial data from financial statements – including the balance sheet, income statement (P&L) and cash flow statement (Cash Flow). This is an activity that helps businesses evaluate their financial health, efficiency, profitability and potential risks.
The main objective of corporate financial analysis
- Performance measurement: See if your business is operating efficiently or wasting resources.
- Risk Identification: Identify early problems related to cash flow, liquidity or leverage.
- Decision Making: Serves decisions on investment, expansion, restructuring, borrowing or profit distribution.
- Linking budget and reality: Compare plan – reality – forecast, ensure operations according to strategic goals.
Financial analysis is different from financial statements. Financial statements only describe past results, while financial analysis goes deeper into explaining causes, comparing trends, and simulating future impacts.
The Relationship Between Financial Analysis and FP&A
In many Vietnamese businesses, actual data resides in ERP or accounting software, while planning – budgeting – forecasting data is scattered on Excel. This causes the FP&A team to spend 60–80% of time on manual data synthesis instead of in-depth analysis.
However, FP&A is essentially a strategic force, with the role of:
- In-depth analysis of financial results
- Forecasting future trends
- Planning, budgeting and scenario simulation
To do this effectively, they need a platform. EPM (Enterprise Performance Management) unified.
Bizzi – the exclusive distributor of Sactona in Vietnam – is providing a Japanese EPM platform with optimal cost, quick deployment and familiar Excel interface. This helps CFO/FP&A analyze Budget vs Actual variance, forecast accurately and make data-driven decisions.
5 steps corporate financial statement analysis
Professional corporate financial analysis always follows a standard process. Below are 5 steps widely used in international FP&A models.
Step 1: Prepare financial statements
Include:
- Balance Sheet
- Profit & Loss
- Cash Flow Statement
- Financial statement notes
- Internal management reports by unit or branch
Data must be guaranteed to be complete, standardized and consistent over time.
Step 2: Calculate financial indicators
Calculated according to 4 main groups:
- Ability to pay
- Profitability
- Operating efficiency
- Financial leverage
Metrics are the foundation for CFOs to evaluate businesses.
Step 3: Analyze trends and compare industry standards
- Comparison over time (YoY, QoQ)
- Compare with competitors in the same industry
- Compare with strategic goals
Helps to detect strengths and weaknesses.
Step 4: Quantitative and qualitative analysis
Quantitative: financial metrics, ratios, forecasting models.
Qualitative: Financial SWOT, customer behavior, market volatility.
Step 5: Draw conclusions and recommend actions
Conclusions must be directly related to strategic objectives:
- Costs need to be optimized
- Cash flow needs improvement
- The department is not operating efficiently.
- Opportunities for expansion or new investment
Core financial analysis methods
Below are the 3 most common methods that every CFO/Financial Analyst uses.
1. Financial Ratio Analysis
Objective: to assess financial health from multiple perspectives such as liquidity, profitability, performance and risk.
This is the most important method and is used in every FP&A model.
2. Cash Flow Analysis
Based on the Cash Flow Statement, answer:
- Does the business make money?
- Is cash flow from operations positive?
- Is there a risk of cash flow strain in the next 3–6 months?
3. Cost Analysis
Especially important for manufacturing and service businesses.
- Cost of Goods Sold (COGS) Analysis
- Operating Expense Variance (OPEX) Analysis
- Cost-to-Serve Analysis by Product/Distribution Channel
Bizzi has an expense & invoice management system that standardizes input data for more accurate cost analysis.
4 most important groups of corporate financial analysis indicators
Four groups corporate financial analysis index is the foundation for CFOs, CEOs and FP&A teams to evaluate financial health, operational efficiency and risk levels. This is also an important set of indicators used in budget planning, forecasting, fundraising, M&A and performance management in EPM solutions such as Sactona - a Japanese EPM solution exclusively distributed by Bizzi in Vietnam.
Below is a more detailed implementation for each group of metrics.
1. Liquidity Ratios
This group of indicators measures the safety of a business in the short term – whether the business has enough current assets to pay its debt obligations. This group of indicators is important for industries with fast business cycles such as trade, retail, FMCG or businesses with high cash flow pressure.
a. Current ratio – current payment ratio
Recipe: Current ratio = Current assets / Current liabilities
Meaning:
- 1 shows that the business has good payment ability.
- < 1 warns of cash flow shortfall risk.
For example: The Current ratio of an F&B business decreased from 1.2 to 0.8 in 2 consecutive quarters, showing that most of the short-term assets are "stuck" in inventory or uncollected debts.
b. Quick ratio – quick payment ratio
Recipe: Quick ratio = (Current assets – Inventory) / Current liabilities
Meaning:
- Reflects the ability to pay without selling inventory.
- Important for slow inventory businesses (fashion, manufacturing).
c. Cash ratio – cash ratio
Recipe: Cash ratio = (Cash + Cash equivalents) / Current liabilities
Meaning:
- Measures the amount of debt that can be paid immediately in cash.
- Suitable for measuring liquidity risk during crisis or low season.
2. Profitability Ratios
Profitability ratios show how much profit a business is generating from its sales, assets, and equity. These are the metrics that investors and management prioritize in monitoring.
a. Gross profit margin – gross profit margin
Recipe:
(Gross profit / Revenue) × 100%
Meaning:
- Evaluate core performance in production or sales.
- Declining gross margin reflects increased cost of goods sold or strong price competition.
b. Net profit margin
Recipe: (Net income / Revenue) × 100%
Meaning:
- Measures the actual profit remaining after all costs.
- The most important index for investors.
c. ROA – return on assets
Recipe: ROA = Net income / Total assets
Meaning:
- Shows how effectively a business uses its assets.
- Important for manufacturing, logistics or large fixed asset businesses.
d. ROE – return on equity
Recipe: ROE = Net income / Equity
Meaning:
- Measures the efficiency of using equity capital.
- High ROE but large debt can be a signal of risk (related to leverage group).
e. ROI – return on investment
Recipe: (Return on investment – Investment cost) / Investment cost
Application:
- Evaluate the effectiveness of branch expansion
- Investing in marketing and technology
- Production and warehouse projects
3. Efficiency Ratios
This group of indicators reflects the ability of a business to use assets, inventories and working capital to generate revenue and cash flow. This group directly affects the liquidity situation.
a. Inventory turnover
Recipe: COGS / Average inventory
Meaning:
- Low turnover → large inventory, capital occupation.
- High turnover → goods sell fast, better cash flow.
b. DSO – days sales outstanding (average number of days to collect payment)
Meaning:
- Measure customer debt collection speed.
- DSO increases → high risk of bad debt, cash flow is "stuck".
c. DPO – days payable outstanding
Meaning:
- Measures supplier creditworthiness.
- A reasonable DPO helps businesses improve cash flow.
d. Asset turnover
Recipe: Revenue / Total assets
Meaning:
- Measures how effectively assets are used to generate revenue.
- Important for businesses with large fixed assets.
4. Leverage Ratios
The group of leverage ratios reflects the capital structure and financial risk of the enterprise. This is the basis for assessing the debt repayment capacity and the safety level of the growth strategy.
a. Debt-to-equity ratio (D/E)
Recipe: Total liabilities / Equity
Meaning:
- Measures the ratio of debt to equity.
- D/E is too high → the business is growing based on debt, high financial risk.
b. Debt ratio
Recipe: Total liabilities / Total assets
Meaning:
- Measures the percentage of assets financed by debt.
- 70% is generally considered a risk level (depending on the industry).
c. Interest coverage ratio
Recipe: EBIT / Interest expense
Meaning:
- < 1.5 → businesses have difficulty paying interest.
- Important when businesses borrow capital to expand.
Applications and practical benefits in business administration
For financial analysis to truly create value, businesses must not only stop at "calculating the right index", but more importantly, know how to apply those indicators to management decision making, risk control and operational performance improvement. This is the difference between a data-driven business and a business that just reports to complete the process. Below are the most practical and impactful applications that CFOs, CEOs and FP&A teams often use in management activities.
Detect risks and assess business viability
The ability to identify risks early is crucial to a company’s financial resilience. Financial indicators are a “warning system” that helps businesses avoid falling into a state of cash flow shortage, illiquidity or declining profits without realizing it.
1. Identifying signs of financial distress
Some common signs:
- Current Ratio decreases continuous → short-term assets are not enough to pay short-term debts.
- DSO increased sharply → slow debt collection speed, bad debt risk.
- Net Profit Margin Decrease → costs increase or revenue does not grow as expected.
Real life example: A consumer goods distribution business records DSO increased from 45 to 75 days , cash flow is extended by 1 month → affecting payment ability during peak period.
2. Assess debt repayment capacity and financial stability
- Interest Coverage Ratio is the most important indicator to determine whether a business is under excessive debt pressure or not.
- If < 1.5 → weak ability to pay interest, businesses are susceptible to financial risks when the market fluctuates.
Practical meaning: These indicators allow businesses to proactively adjust credit policies, debt structures, inventory control and cash flow optimization before risks become serious.
Support for management decisions: investment – borrowing – profit distribution
Financial analysis indicators are the foundation for helping management make accurate decisions at the strategic level.
1. Investment decision
The indicators should be used:
- ROA : measure the efficiency of using current assets.
- ROD : evaluate the expected benefits of new projects, plant expansions, marketing, or technology investments.
For example: The project to open a new branch has an expected ROI of 18%/year → feasible when higher than the cost of capital (WACC).
2. Loan decision
Key indicators:
- Debt Ratio → measure debt risk level.
- Interest Coverage Ratio → prove to the bank that the business has the ability to pay interest.
Businesses with an interest coverage ratio > 3 are more likely to have their credit limits approved.
3. Profit distribution decision (Dividend or reinvest?)
CFOs typically combine:
- EPS , P/E → assess market expectations.
- Free Cash Flow (FCF) → see if the business has enough free cash flow to pay dividends or needs to reinvest.
Budget vs. Actual Analysis
This is the core activity of the FP&A team and the “backbone” of modern financial management.
Biggest challenge:
Budget data is often located on Excel, while actual data is scattered across ERP, sales software, warehouse, and human resources.
→ Variance analysis takes hours or days.
Solution:
Sactona – Japanese EPM solution distributed by Bizzi – provides:
- A single source of truth.
- Difference analysis Budget vs. Actual in real time.
- Drill-down from the overview level to each account, each department, each transaction.
Real benefits for CFO/FP&A:
- Adjust plans faster than 30–50%.
- Identify unusual differences during the period (no need to wait until the end of the month).
- Make decisions based on accurate data instead of disjointed Excel.
Tools and software to support corporate financial analysis
More and more businesses are realizing that financial analytics tools are not just “utilities”, but are essential platforms to support modern management models.
Excel in financial analysis: advantages and limitations to overcome
Although Excel is a familiar tool for finance teams, it reveals many limitations as the business expands.
Advantage:
- Flexible
- Low cost
- Easy to use
Limit:
- Prone to errors due to manual data entry
- No version control
- No ERP/CRM data integration
- Not suitable for real-time analysis
- Lack of security when sharing internally
So, businesses are moving from Excel to EPM to free up FP&A teams from “manual work” and focus on strategic analysis.
How does EPM help automate financial analysis?
This is an important step to help businesses move from manual reporting to real-time financial analysis. Sactona – Japanese EPM distributed by Bizzi – is designed to suit Vietnamese businesses thanks to its fast deployment time and Excel-like interface.
1. Multi-source data integration (ERP, CRM, POS, accounting)
- Automatically collect from multiple systems.
- Standardize data into a unified structure.
- Eliminate errors due to manual data entry.
Result:
Businesses have single source of truth – the foundation for all financial analysis.
2. Real-time dynamic financial KPI dashboard
Index groups are updated automatically:
- Liquidity
- Profitability
- Efficiency
- Leverage
CFOs can:
- See the trend of fluctuations immediately
- Drill-down to each branch, department, and account
- Get alerts when the index exceeds the threshold
3. Friendly Excel interface
A big advantage of Sactona is:
- Excel-like interface
- Excel-like formula
- No programming required
- Finance teams can operate independently without relying on IT
This helps Vietnamese businesses accelerate deployment and optimize costs better than complex EPMs such as Oracle, SAP SAC or Anaplan.
Frequently Asked Questions
What are the most important financial metrics to track?
According to 4 groups:
- Liquidity: Current Ratio, Quick Ratio
- Profitability: ROA, ROE, Net Margin
- Effectiveness: DSO, DPO, Inventory Turnover
- Leverage: Debt Ratio, Interest Coverage Ratio
What indicators should small businesses use for financial analysis?
Minimum to monitor:
- Current Ratio
- Net Profit Margin
- DSO
- Debt Ratio
How are financial analysis and budgeting different?
- Financial analysis : Evaluate the past and present.
- Budget : Build future plans.
Both are closely integrated in the FP&A cycle.
How does Sactona help with financial analysis?
- Automate data aggregation
- Create realtime KPI dashboard
- Compare Budget vs Actual
- Excel interface for quick and easy deployment
Conclude
Corporate financial analysis is a continuous journey that requires a combination of standardized data, powerful tools, and modern analytical thinking.
If a business relies solely on Excel, analysis will be slow, error-prone, and lack the full picture.
EPM solutions such as Sactona – do Bizzi Exclusive distribution in Vietnam – helps CFO/FP&A:
- Automate financial analysis
- Fast data consolidation
- More accurate forecasts
- Make decisions based on real-time data
👉 Contact Bizzi to receive a demo and consultation on an EPM application roadmap suitable for your business.
Register here to receive the earliest consultation schedule and experience the Sactona solution!
