As the new finacial controller of a meduim-sized manufacturing company, you quickly need to assess the company's finanical position. Explain the process you would work through and the documents you would review. also state which of you new colleagues you would speak with and the kinds of question you would ask them.
As the new financial controller of a medium-sized manufacturing company, the first step in assessing the company's financial position is to gather and review relevant financial documents. This will help you gain an understanding of the company's current financial health. Here is a step-by-step process to follow:
1. Financial Statements: Start by reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement. These documents provide a comprehensive overview of the company's financial performance, assets, liabilities, revenue, and expenses.
2. Budgets and Forecasts: Analyze the company's budget and forecasts to compare projected financial performance with actual results. This will help you identify any deviations and understand the assumptions made during the planning process.
3. Audit Reports: Study the most recent audit reports to assess the accuracy and reliability of the financial statements. These reports are issued by external auditors and highlight any areas of concern or potential risks.
4. Accounting Policies and Procedures: Familiarize yourself with the company's accounting policies and procedures to ensure compliance with relevant accounting standards. Understanding how financial transactions are recorded and reported will help you interpret the financial statements effectively.
5. Key Performance Indicators (KPIs): Identify the KPIs that are most relevant to the business. These could include metrics such as revenue growth, gross margin, inventory turnover, and accounts receivable days. By analyzing these indicators, you can assess the company's financial performance against industry benchmarks.
6. Communication with Colleagues: Engage in discussions with key colleagues within the organization to gather additional insights. Some colleagues you should talk to might include:
- Controller/Finance Manager: Discuss the existing financial infrastructure, systems, and processes. Get an understanding of any ongoing financial projects or initiatives.
- Chief Financial Officer (CFO): Understand the overall financial strategy, goals, and priorities from the CFO.
- Operations Manager: Discuss the manufacturing processes, production costs, and operational efficiencies. Gain insights into any areas that might impact the financial position.
- Sales Manager: Learn about sales trends, customer contracts, and any upcoming or ongoing sales initiatives.
- Accounts Payable/Receivable Manager: Review payment terms, outstanding receivables, and any overdue invoices.
Questions to ask your colleagues might include:
- What are the company's major revenue streams and how have they been performing?
- What are the key expenses and how have they been managed?
- Are there any upcoming capital investments or major projects that will impact cash flow?
- Are there any challenges or risks that could affect the financial position?
- Are there any financial or accounting issues that need immediate attention?
By following this process and collecting the necessary information, you will be able to comprehensively assess the financial position of the medium-sized manufacturing company and identify areas for improvement.