What is the management of financial performance?

Financial performance management is a number of processes used to monitor long -term and short -term financial results. This term is most often related to investment management, but can also be applicable to business operations. The main purpose of financial performance is to compare real results with budgets or predictions and make adjustments to achieve specific financial objectives.

In the investment industry, financial performance management concerns the rate of return on the financial portfolio. The portfolio consists of multiple financial instruments with different risks and return rates. Although it is impossible to predict the future, statistics are used to provide the forecast of the financial performance of these tools for a certain period of time.

Specific benchmarks of power are set up on the basis of forecast and the actual performance is measured against these values. Based on the results, changes in the portfolio are made to the portfolio. There is a constant process of adjusting, which is notRed reaction to changing market conditions and circumstances.

In the traditional business environment, the management of financial performance concerns the company's profitability. Regular review of income and expenditure provides valuable information about business operations, risks and problems. Typical financial statements are not ideal for this purpose because these reports are a summary of the overall activity. Instead, many companies create adapted reports of sales, costs, money streams and fixed costs.

These values ​​are compared with budgets or forecasts that are created as part of the long -term management strategy. Positive or negative deviations are then analyzed to help decide. Commercial decisions on how to increase sales, reduce costs and otherwise manage the financial power is carried out and then implemented.

This whole process of checking, comparison, analysis and decision -making is repeated continuousITě. It is a necessary aspect of the company management. Companies that do not carry out these tasks and actually implement business changes tend to last lasting financial difficulties. In many situations, businesses that have failed could be saved if the relevant changes were made.

There are courses in the field of financial performance management from most business universities or local universities. Reference books and online sources are another way to learn more about different techniques used in financial performance. Reading case studies is a great way to learn from others' experiences.