Financial status and analysis of origin of earnings
How is the company really performing?
In order to weather a crisis more effectively, one should know exactly which (financial) measures are at hand.
The IDW standard in restructuring stipulates that before restructuring measures are taken the current earnings, financial and assets positions have to be evaluated, including their further development. The opportunities and risks that derive from the evaluation of the branch and market development have to be taken into account as well as any other essential influences on the earnings, financial and assets position.
A valid reporting system for a clear view
The essential instrument to analyze financial results in certain branches is the Management Result Account (MRA). The constitution of the MRA has to occur very fast in a restructuring situation, meaning in only a few weeks, in order to cope with the high pressure to act quickly, since the information needed by the involved parties and the decision that has to be made concern directly the securing of the financial liquidity.
Since most companies in a crisis do not have sufficient controlling, the establishment of reliable controlling instruments is necessary in the medium-term to ensure the continuity in a sustainable manner:
- cost accounting
- cost center accounting/company operations accounting sheet
- profit center calculation