Financial Health of a Company refers to a company’s financial position at a given period of time. Financial health has various dimensions such as how much the company is earning, how much it saves and the amount used for spending on non-discretionary expenses.
In layman’s language it is the description of a company’s financial state. A company which has a sound financial health generally knows how to manage funds, makes all payments on time and deal well with its finances and so on. On the other hand, a company with a bad financial health would generally not make payments on time and owe a lot of money to its creditors.
Assessing Financial Health of a Company
For assessing the financial health of a company, it is important to know the company’s competitors, financial statements, prospects and market. Some of the steps through which you can assess your financial health are given below.
- Checking the financial statements
- Checking your suppliers and customers
- Checking your assets
- Investigating competitors
- Checking tax records
- Checking obligations
In order to maintain a good financial health of your company, you need to develop a good financial plan in order to make sure that your company is on the right track and you are not putting your business at any sort of a financial risk.
