Leading on from an assessment of management information systems (MIS) is the assessment of profitability in a business.
This can entail an examination of customer, location, business unit, product or service line profitability which may then lead onto re-engineering of the business to achieve better outcomes.
Profitability analysis should extend much deeper than “headline” ratios such as gross profit, earnings before interest and tax (EBIT), and return on investment even though such measures are often a useful starting point.
Performance measures and certain ratios can assume greater significance when the business has external debt, which may have covenants, performance measures or targets attached.
Meridian can help:
- In determining which ratios are appropriate and meaningful for your business
- By calculating and interpreting ratios for you, highlighting over or underachieving aspects of the business
- By identifying and interpreting trends in performance
- Training your team to compute, interpret and understand ratios, to give you greater financial independence