A Study On Financial Statement Analysis - Heritage
A Study On Financial Statement Analysis - Heritage
A Study On Financial Statement Analysis - Heritage
SYNOPSIS REPORT
ON
AT
Submitted
By
A.SANDHYA
H.T.NO: 1304-20-672-093
SYNOPSIS
1 INTRODUCTION
5 RESEARCH METHODOLOGY
This analysis is done by outsiders who do not have access to the detailed internal accounting records
of the business firm. These outsiders include investors, potential investors, creditors, potential
creditors, government agencies, credit agencies and the general public.
2. Internal Analysis:-
The analysis conducted by persons who have access to the internal accounting records of a business
firm is known as internal analysis. Such an analysis can, therefore, be performed by executives and
employees of the organization as well as government agencies which have statutory powers vested in
them.
II. On the basis of modus operandi:-
According to the method of operation followed in the analysis, financial analysis can also be of
1. Horizontal analysis:-
Horizontal analysis refers to the comparison of financial data of a company for several years. The
figures for this types of analysis are presented horizontally over a number of columns. The
figures of the various year are compared with standard or base year. This type of analysis is also
‘Dynamic analysis’ as it is based on the data from year to year rather than on
2. Vertical Analysis:-
Vertical analysis refers to the study of relationship of the various items in the financial statements of
one accounting period. In the types of analysis is the figures from financial statement of a year are
compared with a base selected from the same year’s statement. It is also known as ‘Static analyses.
Procedure of Financial Statements Analysis
Broadly speaking there are three steps involved in the analysis of financial statements. There are:
i)Selection,
ii)Classification,
iii)Interpretation.
The first step involves selection of information (data). The second step involved is the methodical
classification of the data and the third step includes drawing of internees and conclusions.
The following procedure is adopted for the analysis and
Interpretation of financial statements:
1) The analyst should acquaint himself with the principles and postulates of accounting.
2) The extent of analysis should be determined so that the sphere of work may be decided.
3) The financial data given in the statements should be re-organized and re-arranged.
4) A relationship is established among financial statements with the help of tools and techniques of
analysis such as ratios, trends, common size, funds flow etc.,
5) The information is interpreted in a simple and understandable way. The significance and utility of
financial data is explained for helping decision-taking.
6) The conclusions drawn from interpretation are presented to the management in the form of reports.
OBJECTIVES OF FINANCIAL STATEMENTS
Broadly the objective of the Analysis of Financial statement is to understand the
information contained in the financial statement with a view to the weakness and strengths
of the firm and to make forecast about the future prospects of the firm and their by enabling
the financial analyst to take different decision regarding the operation of the firm. The
objectives of the analysis can be identified as:
a. To assess the present profitability and operating efficiency of the firm as a whole as well as for
its different departments
b. To find out the relative importance of different components of the financial position of the firm.
c. To identify the reasons for change in the profitability\financial position of the firm.
d. To assess the short-term as well as the long-term liquidity position of the firm.
e. To examine the solvency of the firm.
f. To find out the ability of the firm to meet its current obligations.
NEED FOR STUDY
To establish relationship between various figures or the income statement and balance sheet.
SCOPE OF THE STUDY
The last technique i.e. The ratio analysis is the most common, comprehensive and
powerful tool of the AFS. The importance of ratio analysis lies in the fact that it
presents facts on a comparative basis. As such, this study focuses only on this (ratio) analysis.
RESEARCH METHODOLOGY
RESEARCH DESIGN
This is a systematic way to solve the research problem and it is important component for the
study without which researches may not be able to obtain the format. A research design is the
arrangement of conditions for collection and analysis of data in a manager that aims to combine for
collection and analysis of data relevance to the research purpose with economy in procedure.
The formidable problem that follows the task of defining the research problem is the
preparation of design of the research project, popularly known as the research design, decision
regarding what, where, when, how much, by what means concerning an inquiry of a research study
constitute a research design. A research design is the arrangement of conditions for collection and
analysis of data in a manager that aims to combine for collection and analysis of data relevance to the
research purpose with economy in procedure.
SOURCES OF DATA
Data we collected based on two sources.
Primary data.
Secondary data.
Primary data
The Primary data are those information’s, which are collected afresh and for the first time,
and thus happen to be original in character.
Secondary Data:
The Secondary data are those which have already been collected by some other agency and
which have already been processed. The sources of Secondary data are Annual Reports, browsing
Internet, through magazines.
1. It includes data gathered from the annual reports of HERITAGE FOODS INDIA LTD
2. Articles are collected from official website of HERITAGE FOODS INDIA LTD
LIMITATIONS OF FINANCIAL STATEMENTS
It is only a study of interim reports.
Financial analysis is based upon only monetary information and non monetary factors are
ignored.
Different people may interpret the same analysis in different ways.
It does not consider the changes in prices level.
Changes in accounting procedure by firm may often make financial analysis misleading.
BIBLIOGRAPHY
1. Khan, M Y and P K Jain, Financial Management, Tata McGraw-
Hill Publishing Co., New Delhi, 2007.
2. I M Pandey, Essentials of Financial Management, Vikas Publishing
House Pvt Ltd, New Delhi, 2095.
3. Ramesh, S and A Gupta, Venture Capital and the Indian Financial
Sector, Oxford university press, New Delhi, 2095.
www.googlefinance.com
www.heritagefoods.in
www.workingcapitalmanagement.com
www.icicibank.com
www.autoindia.com