Financial Performance Analysis - 1727 Words

REVIEW OF LITERATURE Financial statement analysis is the process of examining relationships among financial statement elements and making comparisons with relevant information. It is a tool in decision-making processes related to stocks, bonds, and other financial instruments. Analysis of financial statements provides valuable information for managerial decision. Financial analysis is commonly called analysis and interpretation offinancial statement. Analysis of financial statements means establishing relationship between the items in financial statements for determining the financial strength and weakness of business. It is the process of scanning of the financial statements to judge profitability solvency, stability,†¦show more content†¦Other factors should also be considered such as a companys products, management, competitors, and vision for the future. (Fieldsend, Longford and McLeay, 1987). Following are the cautions while doing financial analysis. First, a single rat io does not generally provide sufficient information from which to judge the overall performance and status of the firm. Only when a group of ratios is used can reasonable judgments be made. If an analysis is concerned only with certain specific aspects of a firm’s financial position, one or two ratios may be sufficient. Second, It is preferable to use audited financial statements for ratio analysis. If the statements have not been audited, there may be no reason to believe that the data contained in them reflect the firm’s true financial condition. Third, the financial data being compared should have been developed in the same way. The use of differing accounting treatments, especially relative to inventory and depreciation can distort the results. (Whitis and Keith, 1993). Time-series analysis is applied when a financial analysts evaluates performance over time. Comparison of current to past performance, using ratio analysis, allows the firm to determine whether it is progressing as planned. Using multiyear comparisons can see developing trends, and knowledge of these trends should assist the firm in planning future operations. As in cross-sectional analysis, anyShow MoreRelatedAnalysis of a Financial Performance of an Organization6927 Words   |  28 PagesAnalysis of a Financial Performance of an Organization | | Table of Contents Executive Summary....................................................................................................4 Introduction................................................................................................................5 Company Background...............................................................................................5 Financial Report Analysis....................Read MoreFinancial Analysis of Sainsburys Performance2960 Words   |  12 Pagescompetitor. 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Email: Priteshpanchal6017@gmail.com Mukesh B.Tagariya Assist. Professor Smt. Jayaben B. Patel College of Commerce Studies and Research, Anand. Email: mbtagariya@gmail.com ABSTRACT The present study of the research entitled â€Å"A STUDY ON FINANCIAL PERFORMANCE USING RATIO ANALYSIS OF HINDALCO ALUMINIUM COMPANYRead MoreAnalysis And Evaluation Of The Business And Financial Performance Of An Organization1365 Words   |  6 Pagesinformation pack from OBU and in that they offered wide variety of topics to choose from evaluation and analysis of organisation to critical review of key factors affecting organisation or brands. But topic no. 8 made most sense to me which is â€Å"Analysis and evaluation of the business and financial performance of an organisation over a three year period†. Reason is my incline towards handling financial data and number crunching. Personally I feel comfortable dealing with numbers, even during my studies