BWA –
simply explained

Key facts at a glance:

• The BWA is a controlling tool that enables the continuous monitoring of a company's economic development.

• The most commonly used type is the DATEV standard BWA.

• The BWA presents a company's income against its expenses in a monthly table. This allows for a more short-term insight into a company's financial situation than, for example, the annual financial statement.

Would you like to know what a BWA is, what it reveals, and what significance it has for a company? We explain.

What Does BWA Mean?

The abbreviation "BWA" stands for "betriebswirtschaftliche Auswertung" (business management assessment). It is a controlling tool that enables the continuous monitoring of a company's economic development. Companies prepare their BWA themselves or commission tax advisory and accounting service providers to do so. The figures for the assessment do not need to be collected separately but are already available to companies required to keep accounts through their financial bookkeeping.

There is no legal requirement for a BWA, and accordingly a wide variety of formats and models exists. The most commonly used type is the DATEV standard BWA.

What Does a BWA Reveal?

The BWA presents a company's income against its expenses — usually in a monthly table. This allows for a more short-term insight into the company's financial situation than, for example, the annual financial statement. Potential crisis indicators can thus be identified and addressed in a timely manner.

Various operational key figures are presented in the BWA. Among the central ones are the sales revenue. From these and other revenues, material costs and procurement are deducted. Changes in inventory are also factored out. This results in the company's gross profit. All operational costs are then subtracted from this. These include expenses for personnel, rent, repairs, or logistics.

This calculation gives the entrepreneur another BWA key figure, the operating result or earnings before interest and taxes — also known as EBIT. From this, expenses and income from corporate financing are typically deducted or added, and tax payments are factored in. This yields the final BWA metric, the preliminary result, i.e. the profit in the period under review.

In addition to the BWA, a trial balance (Summen-und-Saldenliste) and an open items list (OPOS-Liste) can also be prepared. These provide information on current account movements and outstanding invoice amounts.

What Makes a BWA Clear and Readable?

To make the assessment more meaningful, a whole range of comparative values can be included in the table:

• The respective values from the previous month and the same month of the previous year

• The cumulative values for the current year to date

• Comparative values from the company's own industry

• The company's own actual vs. target comparisons

The BWA usually also shows in percentages what share each item has of total output.

Since there are no legal requirements for the structure of a BWA, it can be designed according to individual needs. Visualisations, such as charts, are also worthwhile to make a business management assessment easier to understand and the underlying business development more visible.

After all, a BWA is not just a tool for internal use — potential partners also want to gain insight into the company's performance through it.

Who Is the BWA Important For?

Investors, prospective shareholders, potential company buyers — a range of prospective stakeholders may request a BWA for review. After all, future partners want to know the financial health of the company with which they intend to enter into contracts or in which they wish to invest.

For financiers, too, reviewing the BWA is central: in the lending process, the key figures provide important insights into the creditworthiness of the company.