Holy grail of financial analysis

Namo Advisors
4 min readMar 29, 2022


Financial Analysis allows you to know exactly where you stand in your business and ascertain your financial well-being. Consistent and focused financial analysis makes you better at operational and financial decision making. Investors and Management rely on robust MIS reports for analyzing their businesses and taking informed decisions.

Today we are going to learn more about the bedrock of every financial analysis. Any guesses?

The financial statements of your business undeniably depict the most honest picture of your situation. Statement of income, balance sheet and statement of cash flows, the trinity of financial world enables a lot of preliminary analysis and they together act as a guide post for in-depth analysis.

For the sake of brushing up your knowledge, the Statement of Income depicts your revenues, expenses, margins and leverage over a period of time; comparison between several periods shows us the historical trends and points towards the possible future growth and margins. The Balance Sheet is a summary of the assets and liabilities at a given point in time, the summary that shows your net worth, sources of money and where it has been used. The Statement of Cash Flows, summarizes the movement of cash during a period of time. It helps to ascertain efficient use of cash and has different buckets to categorize the generation/use of cash.

The most sophisticated financial models and analytical tools require beginning with the financials of a company. Similarly, while valuing a business, for mergers and acquisitions, the process starts with due diligence of financials, after which the financial forecasting and valuations are done.

You would be amazed to know that even the billion and trillion $ investment transactions rely on scrutiny of financials. Because as they say, the numbers don’t lie!

As an entrepreneur, while you are juggling many things simultaneously, it is important to have a tab on your financials, as they give a true sense of your business operations.

Typically, you should focus on:

· Revenue growth and important margins such as your Gross Margin and EBITDA Margin

· Revenue drivers and key operating metrics that define your business

o For e.g.: For a tech company: the number of Weekly/Monthly Active Users (MAU), Average Revenue per User (ARPU), Customer Acquisition Costs (CAC), Lifetime Value of Customer (LTV), etc. would be of utmost importance

· Cash flow for the period and liquidity position including the monthly burn rates and upcoming funding requirements

· Benchmarking your costs against peers and action plans to optimize costs

· Budgeting exercises and review of operations vs. Budget

On the other side of the table, as an investor, you should ensure that the financial statements are sound and do not have any red flags. Usually, a financial advisory firm is appointed to conduct financial due diligence before investing in any company.

Some things to keep an eye out for:

· Revenue deceleration or margin unsustainability

· Abnormal costs / income that disrupt the normal operating financials

· Unusually high expenditures

· Long due receivables from debtors or slow-moving inventories

· Negative free cash flow

As an entrepreneur running a startup or a small business owner, it is advisable to have a monthly round up of your financials — usually termed as Management information report (MIS report). This report consists of all the high-level analysis that is useful in gauging the direction of the business. The kind of metrics that are most important to you as a decision maker are included in the report, along with various financial analysis that are typically used by professionals across the globe.

A lot of times you wouldn’t have the necessary finance professionals within the organization to do the analysis for you and inform you about the important highlights. In these cases, you can hire a financial advisory firm such as Namo Advisors, where we help you with all the financial analysis critical to scaling your business.

Having a regular MIS report in hand, which analyzes your financial well-being also helps in taking many strategic decisions that could well push you to the next league.


At Namo Advisors, we help you with financial analysis, MIS reporting and strategic decision making under one-roof. Our team of professionals engage with you to understand your business goals and vision; prepare budgets and plans; and ensure that the plans are seen through. You can opt for various services under the CFO Services function of Namo Advisors as per your requirements.

For more information, write to us at info@namoadvisors.com or visit https://namoadvisors.com