Financial Performance Analysis
1.1 INTRODUCTION TO THE STUDY
In the present economy finance is defined as the provision of money at the time when it required. Every enterprise whether it is big, medium, or small needs finance to carry on its operation to achieve its target. In short finance is so indispensible and it is the blood of an enterprise. “Managing a firm’s finance is both an art and science. It requires not only a feel for the situation and analytical steel but also a thorough knowledge of the techniques and tools of financial analysis and the knowledge to apply them and interpret the results” Finance is defined as the administrative function in an organization which relate with the arrangement of cash and credit to the organization to carry out its objectives as satisfactory as possible. Financial analysis is the process of identifying the financial strengths and weakness of the Firm by properly establish relationships between the items of Balance sheet and the Profit and Loss account. Financial Analysis is the critical examination of accounting information given in the financial statements. Financial analysis is the process of determining financial strengths and weakness of an Organization of establishing the strategic relationship between the components of balance sheet and profit and loss account and the statement of change in the financial position. The information contained in the statements is used by management, creditors’, investors and others to form judgment about the operating performance and financial position of the firm.
Through the financial analysis we can seek answers to the following questions. 1. What sources of long terms finance are employed by the firm and what is the relationship between the firms? Is there any change to solvency of the firm due to the employment of excessive debt? 2. Are the earnings of the firm adequate? 3. Do investors consider the firm profitable and safe for the purpose of investing their in the shares of the firm?
In the present economy finance is defined as the provision of money at the time when it required. Every enterprise whether it is big, medium, or small needs finance to carry on its operation to achieve its target. In short finance is so indispensible and it is the blood of an enterprise. “Managing a firm’s finance is both an art and science. It requires not only a feel for the situation and analytical steel but also a thorough knowledge of the techniques and tools of financial analysis and the knowledge to apply them and interpret the results” Finance is defined as the administrative function in an organization which relate with the arrangement of cash and credit to the organization to carry out its objectives as satisfactory as possible. Financial analysis is the process of identifying the financial strengths and weakness of the Firm by properly establish relationships between the items of Balance sheet and the Profit and Loss account. Financial Analysis is the critical examination of accounting information given in the financial statements. Financial analysis is the process of determining financial strengths and weakness of an Organization of establishing the strategic relationship between the components of balance sheet and profit and loss account and the statement of change in the financial position. The information contained in the statements is used by management, creditors’, investors and others to form judgment about the operating performance and financial position of the firm.
Through the financial analysis we can seek answers to the following questions. 1. What sources of long terms finance are employed by the firm and what is the relationship between the firms? Is there any change to solvency of the firm due to the employment of excessive debt? 2. Are the earnings of the firm adequate? 3. Do investors consider the firm profitable and safe for the purpose of investing their in the shares of the firm?