Foreword (Introduction)

Financial Analysis is the process of Identifying the Financial Strengths and

weaknesses of the Firm from the available accounting data and Financial
statements. The analysis is done by establishing relationship between the different
items of Financial Statements. Under this Analysis first of all having identifying the
information relevant to the decision under consideration from the total Information
contained in the Financial Statements. The Information is arranged in such a way
that significant relationships are brought to light prominently. The final phase of
Financial Analysis is interpretation and drawing of inferences and conclusions.
Financial Analysis is distinct from preparation of Financial Statements & e!uires
higher level of knowledge" e#perience" and discerning ability. Financial Analysis is
the basis of further course of action and is thus a process of selection" collection and
evaluation of accounting data and information.
Rakesh Kumar Jaiswal
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I
Acknowledgements

$e e#press our sincere thanks to %r. &.'. Agrawal" %anager (Accounts), For
motivating us to under take this Summer Training 'ro(ect for diagnose the
Information )ontained in Financial Statements so as to *udge the 'rofitability and
Financial Soundness of this Service )enter. This 'ro(ect is result of his inspiring
&ision to place on record the +#cellent growth achieve by the )enter.
$e are indebted to %r. ,eera( (Sr. Account Officer), %r. %anas an(an
Shahoo (Account Officer) of -+' who graciously shared their co.operation.
/ur special thanks to %r. S.S. Upadhyaya" 01% (Finance) for providing me a
%ilestone /pportunity to take the Training from this type of Blue-chip (a!aratna2
"ompan# of $o!t. of %n&ia.
$e are grateful to other members of FI,A,)+ 0epartment )omprising %r.
a(eev 3umar am (Sales 'a(), %r. am &ilash &erma ()urchase), %r. akesh
3umar (*(ise), %r. %unna am ()a#roll), %r. Siddh ,ath Singh (Su+contractin,)
& %r. %.'. Srivastava ("ash - Bank).
$e are Thankful to one and all in the /rgani4ation for e#tending their
)ooperation to complete this 'ro(ect. 5ast but not the least" we are Thankful to -
0epartment specially to %r. San(ay Sinha" Sr. %anager (.R) & %r. San(ay Shah" Sr.
+#ecutive (.R) for providing the re!uired /rgani4ation structure chart for the
/ptimi4ation of this 'ro(ect.
Rakesh Kumar Jaiswal
II
Objectives
The 'urpose of Financial Analysis is to diagnose the Information contained in
Financial Statements so as to (udge the 'rofitability and Financial Soundness of the
Firm. Just like a /octor e(amines his )atient +# recor&in, his Bo&#
temperature, Bloo& pressure, etc. +efore makin, his conclusion re,ar&in, the
illness an& +efore ,i!in, his 'reatment, a Financial Anal#st Anal#sis the
Financial Statements with !arious 'ools of Anal#sis +efore commentin, upon
the Financial .ealth or 0eaknesses of An *nterprise. The Analysis and
interpretation of Financial Statements is essential to bring out the mystery behind the
figures in Financial Statements. Financial Statements Analysis is an attempt to
determine the Significance and meaning of the Financial Statement data so that
forecast may be made of the future earnings" ability to pay Interest and 0ebt
maturities 6both current and 5ong.Term2 and 'rofitability of a Sound 0ividend 'olicy.
III
Methodology
7roadly speaking there are three steps involved in the Analysis of Financial
Statements. These are8
6i2 Selection"
6ii2 )lassification" &
6iii2 Interpretation
The First step involves selection of Information 60ata2 relevant to the purpose of
Analysis of Financial Statements. The Second step involved is the %ethodical
classification of the 0ata and the Third step includes drawing of interences and
conclusions.

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