How to read business results
The economic analysis of the results of a company’s operations is essential to know whether it makes or loses money with its activity. Oriol Tafanell, Financial and Human Resources Director of 11Onze, explains the basic concepts that we need to understand in order to be able to interpret the annual accounts of a company.
Any businessman, entrepreneur or investor must have a minimum of economic and business notions that will help him in the analysis for the appropriate decision-making about an investment, financing needs or the financial health of a business. Decisions that will be based on correctly interpreting the company’s annual accounts.
Before calculating the profit or loss of a company based on the difference between income and expenses, we must have a good understanding of the calculation method to be followed and the different concepts. As Tafanell explains, “the first thing we have to ask ourselves when we read a company’s results is, are they talking about operating profit, before tax or after tax”.
The operating result “is what tells us if the company is well managed”, says the Financial Director of 11Onze. Essentially, it is derived from the activity to which the company is dedicated and is calculated by the difference between income and operating expenses during the reference period.
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