Fin.Stt.Anal.

FINANCIAL STATEMENT ANALYSIS: 

11/23/2011 Prof. MS 1 FINANCIAL STATEMENT ANALYSIS

Financial Statement Analysis : 

11/23/2011 Prof. MS 2 Financial Statement Analysis

What is a Financial Statement? : 

11/23/2011 Prof. MS 3 What is a Financial Statement? A financial statement is an organized collection of data according to logical and consistent accounting procedures. Its purpose is to convey an understanding of financial aspects of business firm. It may show a position at a moment of time as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement. The following are the financial statements: Income statement (P & L A/c) Balance Sheet Statement of changes in financial position Statement of retained earnings.

Financial Statement Analysis: 

11/23/2011 Prof. MS 4 Financial Statement Analysis What are the important factors do the financial statement indicate?  Financial Soundness and  Profitability What is Financial Statement Analysis? “ FSA is largely is a study of relationship among the various financial factors in a business as disclosed by a single set of statement and a study of the trend of these factors as shown in a series of statements”  by Prof. Myres.

What is the Purpose of Financial Statement Analysis? : 

11/23/2011 Prof. MS 5 What is the Purpose of Financial Statement Analysis? FSA is the meaningful interpretation of financial stts. for parties demanding financial information. It is not necessary for the proprietors alone. For example the FSA may be serving the purpose of the following: The government may be interested in knowing the comparative energy consumption of some private sector and public sector cement companies. A nationalized bank may be keen to know the possible debt coverage out of profit at the time of lending. Prospective investors may be desirous to know the actual and forecasted yield data. Customers want to know the business viability before entering into a long-term contract.

What are the steps to be taken for FSA? : 

11/23/2011 Prof. MS 6 What are the steps to be taken for FSA? Identification of the user’s purpose Identification of data source (which part of the annual report or other information is required to be analyzed to suit the purpose) Selecting the techniques to be used for such analysis.

What are the Types of FSA? : 

11/23/2011 Prof. MS 7 What are the Types of FSA? External Analysis Internal Analysis Horizontal (or) Dynamic Analysis Vertical (or) Static Analysis

Tools & Techniques of FSA : 

11/23/2011 Prof. MS 8 Tools & Techniques of FSA Comparative Statement Analysis Comp. Balance Sheet Analysis Comp. Income Statement Analysis Common Size Statement Analysis Common Size Balance Sheet Analysis Common Size Income Statement Analysis Trend Analysis Ratio Analysis Fund & Cash Flow Analysis Break Even Analysis

Comparative Statements: 

11/23/2011 Prof. MS 9 Comparative Statements

Comparative Statements: 

11/23/2011 Prof. MS 10 Comparative Statements

Comparative Statements: 

11/23/2011 Prof. MS 11 Comparative Statements

Comparative Statements: 

11/23/2011 Prof. MS 12 Comparative Statements

Comparative Statements: 

11/23/2011 Prof. MS 13 Comparative Statements

Comparative Statements: 

11/23/2011 Prof. MS 14 Comparative Statements

Comparative Statements: 

11/23/2011 Prof. MS 15 Comparative Statements

Comparative Statements: 

11/23/2011 Prof. MS 16 Comparative Statements

Common Size Statements: 

11/23/2011 Prof. MS 17 Common Size Statements

Common Size Statements: 

11/23/2011 Prof. MS 18 Common Size Statements

Common Size Statements: 

11/23/2011 Prof. MS 19 Common Size Statements

Common Size Statements: 

11/23/2011 Prof. MS 20 Common Size Statements

Common Size Statements: 

11/23/2011 Prof. MS 21 Common Size Statements

Common Size Statements: 

11/23/2011 Prof. MS 22 Common Size Statements

Common Size Statements: 

11/23/2011 Prof. MS 23 Common Size Statements

Trend Percentage Analysis: 

11/23/2011 Prof. MS 24 Trend Percentage Analysis

Trend Percentage Analysis: 

11/23/2011 Prof. MS 25 Trend Percentage Analysis

Trend Percentage Analysis: 

11/23/2011 Prof. MS 26 Trend Percentage Analysis

Trend Percentage Analysis: 

11/23/2011 Prof. MS 27 Trend Percentage Analysis

Trend Percentage Analysis: 

11/23/2011 Prof. MS 28 Trend Percentage Analysis

Trend Percentage Analysis: 

11/23/2011 Prof. MS 29 Trend Percentage Analysis

Trend Percentage Analysis: 

11/23/2011 Prof. MS 30 Trend Percentage Analysis

Ratio Analysis: 

11/23/2011 Prof. MS 31 Ratio Analysis

Cash Flow Analysis: 

11/23/2011 Prof. MS 32 Cash Flow Analysis

What are the Limitations of FSA? : 

11/23/2011 Prof. MS 33 What are the Limitations of FSA? Disclose only monetary facts Influence of personal judgments Ignores price level changes Based on rigid accounting principles