Financial statement spreading is a process of extracting and organizing financial data from statements such as balance sheets, income statements, and cash flow statements.
A key step in credit analysis, which is the evaluation of a company’s financial health, it allows banks, lenders and other businesses to evaluate the credit-worthiness of borrowers.
Credit analysis is important for businesses because it helps them make informed decisions about lending, investing, and other financial transactions. It enables businesses to assess the risk and potential return of financial transactions, and to identify potential problems or opportunities.
There are several types of credit analysis, including fundamental analysis, which involves evaluating a company’s financial statements and other public information; and technical analysis, which involves analyzing market trends and patterns.
Financial statement spreading is fundamental to multiple types of credit analysis, as it provides the data that is needed for analysis.
How financial spreading helps lenders and financial institutions
Financial statement spreading can bring many benefits to businesses.
Fundamentally, it provides a comprehensive and up-to-date view of a potential borrower’s financial performance, which can help with risk management and decision-making.
Financial statement spreading can also help businesses identify trends and patterns in a potential borrower’s financial performance over time. By comparing financial statements from different periods, businesses can assess whether a borrower is growing or declining, and whether it is generating sufficient profits to meet its obligations. This can be valuable information for businesses that are considering lending money to a company or investing in it.
Financial statement spreading can also help businesses identify red flags in a company’s financial statements, such as unusual transactions or discrepancies. This can alert businesses to potential problems or risks that may not be apparent from a surface-level analysis of the statements. By detecting these issues early, businesses can mitigate the risks and protect their interests.
In short, financial statement spreading is a valuable tool for businesses because it enables them to make more informed and accurate decisions about financial transactions. It can save time and reduce costs, and help identify risks and opportunities that may not be apparent from a superficial analysis.
How OCR and Nanonets can help
Optical Character Recognition (OCR) technology can automate the process of extracting data from financial statements, reducing the need for manual data entry and minimizing the risk of errors. This can help save time and effort, freeing up resources to focus on more important tasks.
Nanonets is an OCR platform that uses machine learning to extract data from scanned documents, excel sheets, and various other types of documents. It also offers a range of features that make it well-suited for financial statement spreading, including the ability to handle multiple document types and customizable data extraction templates. With its API, Nanonets can be easily integrated into existing financial systems, and its user-friendly interface allows businesses to train and deploy models without the need for specialized technical skills.
- It can automate the process of extracting financial data from statements, such as revenue, expenses, and profits.
- It can classify and organize statements by type and period, which can facilitate the analysis of trends and comparisons.
- Nanonets can validate accuracy and completeness of the extracted data, ensuring that the financial statements are reliable and trustworthy.
- It can handle large volumes of data, making it suitable for businesses of all sizes.
In conclusion, financial statement spreading is a valuable tool for businesses, and Nanonets is a powerful solution for achieving it. With its OCR technology and API, Nanonets makes it easy for businesses to automate the data entry and processing of financial statements, improving efficiency, accuracy, and risk management. If you are looking to improve your business using financial statement spreading, consider getting in touch with Nanonets here.
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- Source: https://nanonets.com/blog/financial-statement-spreading/