How to Write a Business Analysis Report: Tips and Prompts

Many students ask “How to write a business analysis report?” Business process analysis is the systematic acquisition of data for the purpose of identifying, defining, evaluating, and presenting the process as the basis for its organization and improvement. The reason for the analysis, as a rule, is the competitive position of the company in the market. Comparison of prices, costs, and products (services) can clarify the necessary requirements and stumuli for improvement. Here are some indicators of the actual situation:

• a long time of product delivery and emerging problems with the order timing;
• the opaque course of the process and its insufficient depth;
• an overly wide range of products and parts;
• frequent change of cost centers during the passage of the order;
• significant in-house transportation and storage costs, freezing of materials and space;
• high conversion costs when changing product or technology;
• the low proportion of processing time in the total time of the order;
• high costs and high capacity utilization, etc.

These indicators relate primarily to key processes. However, it does not mean that all research should be focused solely on them.

How to Write a Business Report for University

Read these tips and understand how to write a business report for university. The following data can be used here:

• requirements (quantitative, qualitative, economic, environmental, temporary);
• the technological sequence of events and actions (transformations), defining the structure, and characterizing the process by type and purpose;
• actual structure (sequence of work performed), as a spatial-logical sequence of passing an order through organizational units and work systems;
• process-oriented data, such as the duration of the process (the duration of order processing), the use of personnel, space, the cost of creating and not creating value events (transportation, storage, and warehousing).

The following tools are needed to define the data:

• production documentation and regulations;
• conducting an audit;
• conducting interviews and self-description of employees;
• description of the sequence of work;
• workshop with participants in the process.

When studying the data obtained answers to the following questions.

1. What process is analyzed?
2. What functional areas or organizational units are involved?
3. What functions should be performed?
4. What are the results of these functions?
5. What implications must come from these results?

How to Write a Good Business Report

In order to know how to write a good business report, explore the indicators used to analyze business processes. Analysis means, first of all, an assessment of performance, which is obtained using indicators. For a continuous improvement process, as well as for effective management, it is necessary to build a system of indicators, which consists of two or more factors. There are three types of indicators: structural, relative and measurable, and indices.
One of the most important stages of work on the business valuation is the preparation of a report. The success or failure of the work done depends largely on what is included in this document, in its form and sequence. When writing a business report, the appraiser has the following tasks:

• to state the logic of the analysis;
• to note all the important points of evaluation;
• to prepare a report so that its consumer can, if desired, repeat the analysis and come to the conclusion that the appraiser has drawn.

The solution of these problems is possible with the implementation of of the exact requirements. Note, for users to read information, the report should be logical, well-structured, sufficiently detailed, and, what is more, it must contain the accurate information supported by documents. It is impossible to make a report with irrelevant data.
The structure of the report, regardless of the purpose of the assessment, is universal, namely, based on the principle “from general to specific.” Based on the objectives of the assessment and the specifics of the object, some changes may be made to the structure of the report. For example, a separate section can be allocated to the analysis of data on enterprises-peers. If the general economic situation in a country or region is important for the assessment of an enterprise, then special sections can be devoted to them. The analysis of a financial condition can enter into the section in which the characteristic of the enterprise (firm) is given.

Business Report Structure

A good report should have:

1. Description of the object being evaluated, its name and exact address.
2. List of legal rights and restrictions associated with this property.
3. Description of the physical state of the object and its cost characteristics.

In addition, the report should clearly formulate the purpose of the assessment, justify the use of one or another type of value, and record the date when the assessment was made. If any limiting conditions are applied to the report conclusions, they must be indicated. The examples of constraints presume writing a preliminary or partial report. An important point of the report is the rationale for the choice of the evaluation methods. It should be carried out by an independent appraiser. Therefore, the report requires confirmation of the appraiser’s lack of personal interest in the appraised object and its market value.
The business analysis report, its content, volume, and presentation style largely depend on the purpose of the exploration, the nature of the object being evaluated, and the needs of the report's customers. Therefore, a report for an investor is different from a report for a lender or a tax inspector. Such a document also depends on the complexity and size of the enterprise being evaluated. If the users of the report are persons who are not familiar with the enterprise, then providing a detailed description of the firm activities is necessary. If the report is compiled for company employees, a detailed description is not required. The report on the business valuation of an enterprise includes some important sections.

General Research

As usual, the report begins with a statement of the task, which sets out the essence of the assignment, lists a summary list of information sources used (financial reports, contracts and contracts, audit certificates), and provides a brief description of the enterprise (location, ownership, ownership, type of activity, ownership of capital and its distribution). It also specifies the type of value that should be determined in the evaluation process; provides methods and main stages of evaluation; presents general conclusions about the value of the estimated enterprise.

Brief Description of the Enterprise and Industry

This section describes the main activities of the enterprise. It introduces the organizational structure of management, its history, past successes, presents the list of finished products and services, terms of contracts and contracts, availability of suppliers, contractors, organization and personnel, production and financial management. It also describes the main sections of business planning, the qualification of personnel, and its level of turnover. Particular attention is paid to the characteristics of the industry to which the firm belongs. It reflects the current situation and the trend of its development, the characteristics of markets and factors affecting demand. The section also provides benchmarking for the industry and the position of the evaluated company in comparison with similar companies.

Analysis of Financial Condition

Financial analysis is a key stage of evaluation, as it serves as a basis for understanding the actual position of the company and the degree of financial risk. The results of the financial analysis directly affect certain discount rates used in the valuation method related to discounting cash flows and the multiplier used in the valuation method based on a comparative analysis of similar companies. An analysis of the company’s financial condition is aimed at considering the annual balance sheets, profit and loss statements, and the calculation of the relative coefficients for a number of previous years. When analyzing the financial condition and forecasting its changes, several groups of relative indicators are calculated, such as liquidity, financial stability, profitability, and business activity. Comparisons can be made with both industry average indicators and indicators of enterprises-analogs. The conclusions about the impact of the company’s financial performance on its market value are very important, as well as the findings of the most important characteristics of the company’s financial condition.

Evaluation Methods

The assessment methods section briefly describes the generally accepted theories of the enterprise valuation. The company-analog method, the basis of which is a comparative approach, determines the value of an enterprise based on the comparison with similar enterprises which shares are freely traded on financial markets (capital market method) or with enterprises already purchased (sold) during a defined period of time
The method of discounting future incomes takes into account, first, the amount of income that the owner of the assets expects to receive in the future, second, the risk assumed by the owner of the assets, and third, the timing of receipt of these incomes. The method of discounting future income requires an analysis of income, expenses, capital investments, capital structure, and residual value of assets.
An analysis of income requires the forecast of possible income from the sale of finished products (services) by the enterprise for defined periods of time. This analysis includes an analysis of market dynamics, the impact of competition and inflation, pricing factors, the expected growth in production volumes (construction and assembly works or repair works), the sale of services (leasing of free space, sale, security right, production capacity), and other factors, which affect the industry in which the company operates.
Cost analysis involves the study of the formation of fixed and variable costs, a retrospective of the dynamics of the level of variable costs as a percentage of sales, the impact of inflation on costs, costs for loans, and future tax rates.
Investment analysis requires consideration of the need for working capital, cost budget, and investment policy. In the process of analyzing the capital structure, the current capital structure, a rational capital structure, the cost of various components of capital, the weighted average cost of capital taking into account its structure (borrowed capital, preferred shares, owner's capital), and the degree of risk are estimated. The main indicator in the income approach is the net cash flow, which is calculated as the difference between the inflow and outflow of cash over a defined period of time.
The method of accumulating assets is an indirect method for determining the value of an enterprise. When using this method, all assets of the enterprise (land, buildings and structures, machinery and equipment, materials and production stocks, receivables, financial investments, goodwill, trained personnel, brand, patents, and own technologies, etc.) are valued at market prices cost. The valuation of land, buildings, and equipment is carried out in three ways: cost, comparative, and income capitalization. For further calculations, you should choose the average value from the considered methods.

Conclusions and Appendix

This section ends with a conclusion on the value of the estimated enterprise. The advantages and disadvantages of the applied methods are compared. The appendix includes determining the risks, determining the discount rate using various methods, and data on compared transactions with real estate objects.
It is necessary to figure out what effect the report (project) should achieve: either simply to tell about something or to prove some reactionary point of view on a known problem as accurately as possible. It is fraught to be unable to meet expectations. For this reason, internal audit should not create overstated expectations among the users of the project results without complete self-reliance. The content of the project work depends on them. In any case, an early clarification of expectations allows you to combine the desired and the actual data.
You also need to know the report user. It will allow subjective factors to be taken into account when generating a report. In many situations, they are of great importance. There are some situations when a seemingly insignificant subjective factor (for example, the type and size of font) distracts from a high-quality business report.