Performance and financial analysis

Your numbers have a story to tell

Financial statements are not merely a legal obligation — they are the map of your business. Fryti Audit turns the figures into information you can act on: where you are making money, where you are losing it, how liquid you are and what needs to change for results to improve.

Most businesses keep their books because the law requires it: the month closes, the return is filed, the file is put away — and the information inside it is never read by the person making the decisions. Financial analysis begins where the obligation ends: it takes the same data and asks it the questions an owner asks, not the questions an inspector asks.

You need no new system and no additional software. We work with the books already being kept and the documents you already submit; the only thing added is the reading of them.

What the service covers

• Liquidity, profitability and debt analysis
• Monthly management reports with key performance indicators (KPIs)
• Performance comparison across periods, products or business units
• Cash flow analysis and forecasting for the months ahead
• Cost analysis and break-even analysis
• Forecasts and scenarios for planning purposes
• Reporting packages for banks, investors and the board

The indicators we track — and what they actually tell you

We do not send you a list of ratios; we send you a reading of them: what moved, why it moved and what should be done about it.

Liquidity — can you meet next month's obligations

Liquidity is not about profit; it is about timing. When the current ratio falls below one, short-term liabilities exceed current assets: the business has promised to pay faster than it collects. The quick ratio sharpens the question by stripping out inventory, because goods in the warehouse are an asset only until someone buys them.

Gross margin and net margin — where money is made and where it is lost

When these two margins move in different directions, the problem is located immediately. A falling gross margin means purchase prices have risen without being reflected in selling prices, or that commercial discounts have run out of control. A stable gross margin alongside a falling net margin means the problem is not the goods but operating expenses — rent, salaries, transport. Two entirely different diagnoses, calling for two entirely different actions.

Inventory, receivables and debt — the cash that sits frozen

In trade and in construction, cash is rarely lost — more often it freezes. Slow-moving inventory and customers who pay late keep capital away from the account while liabilities fall due on schedule. When days sales outstanding materially exceed days payable outstanding, the business is financing the supply chain with money it does not yet have. The debt-to-equity ratio, meanwhile, is the first thing a bank looks at: it shows how much room you have left for new financing.

Cash flow: why profit is not money in the bank

The question we hear most often is: “If I am profitable, why do I have no cash?” The answer lies in the accrual principle: revenue is recognised when the invoice is issued, not when the cash is collected, and expenses when they are incurred, not when they are paid. Profit shows the economic performance of the period — the bank balance shows something else.

There are four classic gaps. An invoice issued but uncollected raises profit without touching the account. Buying a piece of equipment empties the account immediately, but enters the result slowly, through depreciation over several years. Repaying loan principal reduces cash without being an expense at all — only the interest passes through the result. And goods bought for stock are cash gone out that sits in the warehouse as an asset.

The cash flow statement splits movements into three parts: operating, investing and financing activities. The first matters most — does the business itself generate the cash it needs, or is it being held up by borrowing and by owner injections. A business that reports profit year after year but has negative operating cash flow has a structural problem the income statement does not reveal.

Our forecasting also takes account of obligations with fixed dates, because those are not negotiable: salaries and contributions by the 15th, VAT by the 20th, and the advance instalments of profit tax on 15 April, 15 July, 15 October and 15 January. The full calendar is set out under tax deadlines; the role of the analysis is to make sure the cash is there when the date arrives.

Period-on-period comparison

A single figure becomes information only when it is compared. That is why every report sets the current period against the previous one, against the same period of the prior year and against the plan, where a plan exists. The year-on-year comparison matters particularly for businesses with strong seasonality: in plant nurseries, in construction or in hospitality, month against previous month almost always gives a misleading signal.

Where the data allows, we also break the result down by product, line, point of sale or project. This is the part that surprises owners most often: the total looks healthy, while inside it one product is eating the profit the others create.

Early signals we catch before they become problems

The real value of periodic analysis lies in reaction time. These are the signs we track from month to month:

• A gross margin sliding slowly but steadily, even though sales look stable
• Days sales outstanding lengthening, with old receivables that never move off the list
• Inventory growing faster than sales — cash converted into goods that do not turn over
• Negative operating cash flow in periods where profit is reported
• Fixed costs rising without a matching rise in revenue
• Dependence on a single customer or a single supplier
• Tax liabilities pushed from month to month as a temporary liquidity fix

None of these is an alarm on its own. Two or three together, repeated three months running, are. The difference between a small correction and a painful restructuring lies in how early the trend was noticed.

What you receive in practice

The output is a periodic report — monthly or quarterly — built to be read by a business owner, not by an accountant. It contains:

• A summary of the period: revenue, cost of sales, operating expenses and the result
• A table of key indicators, with the previous period's value and the direction of movement
• The cash position: the balance, expected collections and obligations falling due in the coming weeks
• Explanatory notes on every movement outside the norm — why it happened, not just how large it is
• Concrete recommendations, ranked by impact and by ease of implementation
• Follow-up on the previous report's recommendations: what was implemented and what it achieved

We discuss the report with you in a meeting — at our office or online — because the most valuable part of the analysis is rarely in the table; it is in the conversation about what the table brings to light.

How the analysis is used in decisions

The pricing decision

Changing a price is the decision with the fastest and least reversible effect. Margin analysis by product or service shows where you have room and where you are selling below real cost, while the break-even point shows how much must be sold to cover the fixed structure after each change. We apply the same logic to our own work: we do not publish a rigid fee list, but explain openly how we calculate the price and what it costs for your business.

The investment decision

Before a machine is bought or a second location opened, the question is not only what it costs, but how it affects cash flow in the months that follow and how long it takes to pay back. We build the calculation with scenarios — realistic and conservative — and look at how the liquidity position changes in each. Where the investment is financed by borrowing, we also test the ability to cover the instalment out of operating cash flow, not out of selling inventory.

The hiring decision

A new employee does not cost what the net figure in the contract says. The real monthly cost is the gross salary plus the employer's pension contribution of 5%, plus the time it takes for the position to become productive. The analysis sets that cost against the additional revenue the position is expected to generate and against liquidity in the months ahead; you can see the net effect yourself with the salary calculator.

Where the analysis reveals the need for a broader plan — structuring, annual budgeting or projections for loans and grants — the natural next step is business advisory. Combined with our monthly accounting, the analysis follows naturally from data we already maintain for you, while for companies subject to reporting obligations it complements the work of the audit or review engagement with a management perspective.