How to manage business performance in different countries using financial assessment

As part of global outreach to diversify risk and growth expansion it is common that businesses venture into different countries. Some venture out on the same type of business whilst some may choose to open up different types of businesses in those foreign countries.

Such initiatives bring in new opportunities. But in order to adequately understand and have a proper grasp on its business performance, it is important to be able to track and measure its performance fairly and over a period of time.

Using financial statement to assess a business performance is an effective way to put everything in the same perspective. ?

A couple of things that you need to do and be mindful of will help you to come up with a new set of information. This new information will be valuable for you to make meaningful comparisons on business performances.

One effective and relatively easy way to help you in managing your foreign business performances effectively is by applying a common size financial statement.

A common-size financial statement is a financial report that displays each item as a percentage of a common base figure, such as sales or assets.?This type of financial statement is useful for comparing a company's performance over time or to its competitors.

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It is easy to create. Just take each line item on a balance sheet, statement of income, or statement of cash flows is divided by revenue or sales.

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1.????? One of the most significant benefits of a common-size analysis is that you can easily identify large or significant changes in your financial position. When such drastic changes happen, it allows you to take note and take necessary actions to address any concerns.

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2.???? It provides you with insights about the effectiveness of your companies' strategies. You can track performances from here. It tells you if your strategy is working compared to other similar entities or competitors.

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3.???? Whatever the common-size analysis shows you regarding your foreign companies' performances, you can take several steps to validate it and then reformulate or tweak your strategies again. Here are a few practical, yet effective means for you to make your common-size analysis even more robust.

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??????????????????????? i.??? Conduct site visits at your foreign companies. You can see and validate a lot through such visit and by talking to people on the ground. You can have firsthand information to match against what you see in the common-size analysis.

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????????????????????? ii.??? Connect and talk to local industrialist or business leaders is another great insight to what is going on the local scene and possibly what will be happening soon. These insights are not only relevant for you to match against the info from the common-size analysis but also what is to be expected ahead.

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??????????????????? iii.??? One more very powerful way to bring robustness to the information in the common-size analysis is for you to read widely. Reading widely gives you many more data points to connect and understand things better. As you read widely on your subject matter, you get deep understanding into what is going on behind the common-size analysis.

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Monitoring foreign companies' performance is a very important responsibility if you have overseas operations. You cannot afford to let it autopilot. Risk abounds in many foreign jurisdictions and if you do not have an effective way and trustworthy people to manage it, you are exposing yourself to great business risk.

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