Analysis of a company’s ability to generate funds

The determination of the strengths and weaknesses, as well as the corporation’s capability to generate financial resources, is a process aimed at identifying and evaluating all potential sources of income for the enterprise. This analysis encompasses the examination of the current activities of the enterprise and potential opportunities for growth and development. The outcome of this assessment is a report that contains information about all the opportunities available to the company to obtain financial resources.

In what situations it is necessary

It is necessary to analyze an enterprise’s ability to generate cash when:

• the company is facing financial difficulties;
• the company is planning to enter new markets;
• the corporation is going to introduce new technologies;
• the company is planning restructuring;
• there is a decrease in demand for products or services;
• there is increased competition in the market;
• there is a change in economic conditions.

Stages of analysis

A complete analysis of a corporation to assess its ability to generate funds and find new sources of funds consists of four stages: gathering information, analyzing, assessing opportunities, and developing recommendations.

1. Information Gathering
   This stage involves gathering information on the following aspects of the company’s operations:
   • financial performance, which includes information on revenues, profits, and costs;
   • production processes, technology and equipment data;
   • marketing data, which includes information about the target market and competitors;
   • organizational structure, which includes information on management structure, personnel and corporate culture.
2. Analyzing information
   At this stage it is necessary to process the information received in order to identify possible sources of funds for the company. The analysis can be carried out using the following methods:
   • SWOT-analysis – allows to assess the company’s strengths and weaknesses, as well as threats to the external environment;
   • assessment of financial stability – allows to determine the company’s ability to generate profit and repay its debts;
   • analysis of marketing opportunities – allows to determine options for increasing production volumes or introducing new technologies;
   • Organizational capability review – allows to form an opinion on the prospects for optimizing the company’s structure and improving the efficiency of operations.
3. Assessing opportunities and developing a plan
   This step aims to evaluate all possible sources of income according to criteria such as potential profit and risk level. Based on the data obtained, it is necessary to develop recommendations on how to realize the most promising opportunities. The new plan should take into account all possible features of the company and prevent potential risks.

What the company gains

Analyzing and evaluating a company’s ability to find new sources of revenue provides the following benefits to the business:

• Improving financial stability, increasing efficiency, and increasing profits;
• identifying opportunities for cost reduction;
• assisting management in making decisions about business development;
• optimizing the use of resources;
• identifying new opportunities to expand the range of products or services, entering new markets;
• improving the quality of products or services, reducing production costs;
• identifying opportunities to adapt the business to new market and economic conditions.