Along with financial numbers, there needs to be a review on other aspects. For example, specific business metrics which determine the health of the business need to be looked at closely. Also, what has been the progress on R&D and new product development? While these may not generate immediate revenue, they are crucial to keep the organisation competitive and create future streams of revenue.
Many times, the focus is too much either only on financial numbers or on some other business metrics. What is needed as part of a review is a much more holistic assessment of the business: financial numbers, headcount change and attrition, key costs (in most cases, salaries will make up the bulk), metrics that can help track growth in key product lines, customer wins and losses, product features, R&D outcomes.
While many of these points may be discussed through the year, an annual review gives a wider perspective. A financial year’s transition is also a good time to do this – sort of like ringing out the old, and ringing in the new.