Financial Analysis for Business by Gordon Brent Pierce
- 1. ©2014 Gordon Brent Pierce. All Rights Reserved.
Some Importance form Gordon Brent Pierce
Brent Pierce talks about the Importance of a
Financial Analysis
For a start-up company, a financial analysis will help you lay out just how well your business
plan is going to work or is currently working in the competitive market. The goal is to
acquire investors and make a profit so your business can establish itself among businesses
related to your product or service. A financial analysis is designed to take a thorough look at
your expenses verses your revenue related to your business. This will help you understand
your financial situation and if your business is going to be successful.
Acquiring Investors:
People decide to invest in a business because they trust that business to give them the
results they desire. If your business is not financially stable, potential investors will stay clear
of your business and choose one of your competitors. Since start-up companies are not as
established as other more popular companies, it is crucial that you have a financial analysis
performed for your business. If there is a flaw in the financial aspect of your business plan,
action can be taken to fix the problem before it becomes a serious problem for you.
- 2. ©2014 Gordon Brent Pierce. All Rights Reserved.
Success of Your Business:
The financial situation of your business is directly related to how successful it will be. If you
are unaware of how much you are spending in relation to how much you plan to make, a
financial analysis will help you make educated financial decisions about your business. Since
it is just starting out, it is important to have a financial plan right from the start to make sure
you are gaining enough revenue to not only cover business expenses but to pay yourself and
other staff.
Starting a Financial Analysis:
If you know you cannot perform a thorough financial analysis of your business, hire
someone to do so. Someone with a college degree in financial analysis will be able to help
you understand things a little better. However, you should complete a few steps to help
with this analysis. Begin by writing down all of your start up expenses. This can include
utility fees, rent deposits, business registration expenses, starting inventory, and any other
expense you had when starting the company. Then, write down your operating expenses.
These include salaries, office supplies, raw materials, rent payments, and promotional
expenses. Anything that you have to continue paying for should be on this list.
Income Statement:
Using information provided in your start up and operating expenses list, a financial analysis
will come up with an income statement for you. This individual will review your expenses
and revenue and give you an estimate of your profit. The higher the profit, the better it will
be for your business. The goal is to increase your profit while still satisfying your investors.
The more investors you acquire, the more successful your business will be. Start-up
companies should perform a financial analysis once a month until they become an
established company.
- 3. ©2014 Gordon Brent Pierce. All Rights Reserved.
Some Interesting Information on the
Subject of Gold
As a technical foundation, here's what the average person should know about gold - the
element: gold is a chemical element with the symbol Au (which come from the Latin: aurum
“gold”). It has been a highly sought-after precious metal for coinage, jewelry, and other arts
since the beginning of recorded history. As a native metal it occurs as nuggets or grains in
rocks, in veins or vein structures and in alluvial deposits. Much less commonly, it occurs in
minerals as gold compounds, usually with tellurium. As metals go, gold is very dense, soft,
shiny and the most malleable and ductile pure metal known to man. Pure gold has a bright
yellow color and luster traditionally considered attractive, which it maintains without
oxidizing in air or water.
Most obvious to most of us, gold is one of the metals and has served as a symbol of wealth
and a store of value throughout history. It also has been linked to a variety of symbolisms
and ideologies.
The calendar year 2008 was an easy year to remember, as it marked a major economic shift
everyone across the globe. In September of that year the global markets were on a path to
what many analysts believed to be the brink of a meltdown. Not so coincidentally, before
the September crash, the price of gold was on the rise achieving a nominal high of
US$1,004.38.
- 4. ©2014 Gordon Brent Pierce. All Rights Reserved.
Gold has long been a valuable commodity. It has been used throughout history as money by
the Europeans in the later part of the 19th century, and also by the United States until
1971. As the U.S. system has now transitioned away from being backed by gold to a fiat
currency (money that has value only because of government regulation or law), gold has
assumed the role of the protector. When money is printed in times of economic uncertainty,
the overall value of money is devalued as it floods the system. The reason gold is so valuable
in these times is that is represents tangible asset, thus making it a hedge against inflation,
deflation, or currency devaluation.
What makes gold unique to other commodities is the role that speculation plays in its
market value? Unlike other commodities, the annual production is very low compared to
the available quantity that is stored above ground. According to the World Gold Council, of
the 2,500 tons of gold mined over the last few years, about 2,000 tones goes into jewelry /
dental production, and the rest goes to retail investor and exchange traded gold funds. Even
with this limited production, the price of gold rose 30 percent just over 2010, an example of
how changes in public sentiment affect the price much more than annual production.
For those of us who aren't seasoned economists and market analysts, we can look at the
trend of gold in the market to gain an overall perspective on how people are feeling about
the future in economic terms. Generally, we have seen that when gold increases in value,
there is a feeling of unease. Conversely, as gold trends downward, it often coincides with a
perceived return to stability in the market.