Generación de ozono

Following are the advantages of Financial Analysis

With the help of ratios we can determine the ability of the firms to meet its current-obligation.

 Overall operating efficiency and performance of the firm.

 Efficiency with which firms is utilizing its various assets in generating sales Revenue.

 Ratios help in inter-firm and intra-firm comparison.

 They help in determining the financial strength by highlighting the liquidity.

 They are useful in comparison of performance.

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INTRODUCTION

The ever changing, external & internal environment in which the organization operates to achieve its goal has often leaded to change in the financial structure of the firm. This change may be in the assets structure, capital structure or any other such type of the change have often been found out of bring changes in the liquidity position, level of activity & profitability of organization.

To be aware of various positions parties concerned with the organization often go for the various type of analysis one of them being financial analysis, that is done to know about the present performance of the firm in which they are either going to invest or do business, with. The responsibility of management to look after the effective & efficient utilization of resources of the overall sound financial situation of the organization, increase their requirement to have a detailed report on probably each & every aspect of financial position which may be liquidity, activity, profitability.

The presentation of an elaborate system of ratio analysis was made in 1909 by Alexander wall, who criticized the bankers for its lopsided development owing to their decisions regarding the grant of credit on current ratios alone.

61 Wall, one of the foremost proponents of ratio analysis, pointed out that, in order to get a complete picture, it is necessary to consider relationship in financial statement other than that of current assets to current liabilities – relationship that might be measured quantitatively and used as checks on current ratio. Since then, comprehensive analysis by means of calculation of a series rapidly became „all the range‟.

Based upon their wide range of requirement the general trend is of going for the financial ratio analysis, which is also considered to be the most effective one capable of giving detailed & accurate information, more detailed & accurate than any other type of financial analysis.

Financial ratio analysis is an arithmetic relationship between two figures. Financial ratio analysis is a study of ratio between various items of groups of items in financial statement. It also based upon various financial ratios, which are calculated from the data provided in company‟s balance sheet & profit and loss account.

As per I.M. Pandey “Financial ratio in the relationship between two accounting figures, expressed mathematically “.

In addition to the analysis based on current year financial ratio comparison with previous year help us in establishing various methods. Which are further helpful in predicting the future of the concern as well as present financial situation?

62 This report is submitted as a part of brief study of financial condition of “KCL”. This report has been prepared for the management purpose to make them aware of the unit in the various fields of finance.

Detailed analysis is also a part of this report, which is based upon various ratios calculated & various trends seen. Each & every ratio has been analyzed briefly & adequately followed by various inferences & suffusions based on this analysis, which is beneficial for the Top-level Management in the better financial control & planning for future.

This report is just a part of feedback to the Top-level Management for the various plans they made regarding allocation of financial resources etc, which were implemented, in the current financial year.

This report can give a deep insight into various matters if any implementation of the plans for achieving the objective of the firms.

Various other factors are there which limit the accuracy & correctness of the report. Even then a great effort has been kind of analysis & interpretation on personal level.

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NATURE

Ratio analysis is a powerful tools a financial analysis. In financial analysis, a ratio is used as a benchmark.

For evaluating the financial position & performance of the firm. The relationship between two accounting figures, expressed mathematically, is known as a financial ratio. Ratio helps to summarized large quantity of financial data & to make qualitative judgment about the firm‟s financial performance.

This relationship is an index or yardstick, which permits qualitative judgments to be, formed about the firm‟s ability to, meets its current obligations.

It measured the firm‟s liquidity. The greater the ratio, the greater the firm‟s liquidity & vice-versa. The point to be note is that a ratio reflecting a quantitative relationship helps to form qualitative judgments. Such is the nature of all financial ratios.

64 USES OF FINANCIAL ANALYSIS FOR DIFFERENT PARTIES

The analysis and interpretation of financial is an important accounting activity. The end users of business statement are interested in these statements primarily as an aid to determine the financial position and the results of the operations. There are different parties interested in the financial analysis of their statement and their aims and to different parties:

To the financial executives : The first party interested in the financial statements

analysis is the finance department of the business concern itself to the financial managers such analysis provides a deep insight into the financial condition of the enterprises and the view of the past performance which helps in future decision making. The financial statements give vital information concerning the position of the enterprise as well the result of the operations.

To the top management: The top management of the concern is also increase in

the analysis of these statements because it helps them reaching conclusions regarding:

Performance appraisal of overall business activities.

Enquire about current financial position and long-term strategic planning. Queries concerning the relationship of earning to trends in sales etc. Queries concerning the relationship of earning to investment.

65 To the creditors: The analysis of these statements is very essential to the

creditors. Also some aspect of enterprises operations are of interested to creditors in regard to liquidity of funds, soundness of financial structure, profitability of the operations, effectiveness of working capital management etc.

To the investors and others: Investors presents as well as prospects are also

interested in the measurement of earning capacity of the securities. Investors have been increasingly concerned with the cash generation capability of an enterprise, primarily in term of the flexibility available to such enterprise to acquire other business and new assets on an advantage basis for Thai purpose.

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