7/28/2019 Absract - Financial Statment Analysis

1/2

ABSTRACT

Analysis means establishing a meaningful relationship between various items

of the two financial statements with each other in such a way that a conclusion is being drawn.

By financial statements by means of two statements

Profit and loss account or Income Statement

Balance Sheet or Position Statement

These are prepared at the end of a given period of time. They are the indicators of

profitability and financial soundness of the business concern. The term financial analysis is also

known as analysis and interpretation of financial statements. It refers to the establishing

meaningful relationship between various items of the two financial statements i.e. Income

statement and Position statement. It determines financial strength and weakness of the firm.

Analysis of financial statements is an attempt to assess the efficiency and performance of an

enterprise. Thus, the analysis and interpretation of financial statements is very essential to

measure the efficiency, profitability, financial soundness and future prospects of the business

units. Financial analysis serves the following purposes.

Need and importance of study

Financial performance of an enterprise will affect other types of performance and also the

productivity of finances is good, the productivity of men and material would be good.

Moreover the study of non-economic and qualitative performance, which studies the non

economic factors like customer satisfaction, citizen satisfaction etc.

7/28/2019 Absract - Financial Statment Analysis

2/2

Objectives of the study

To calculate the important financial ratio of the organisation as a part of the

ratio analysis thereby to understand the changes the needs and trends in the

firms financial position.

To assess the performance of Reddys on the basis of earnings and also to

evaluate the solvency position of the company.

To identify the financial strengths and weaknesses of the organization.

To give the appropriate suggestions to the investors. To help them to make

more informed decisions.

Source of data

The data is collected from the following sources.

Three year annual report of Reddys from 2008-2011

Interaction with the related finance department.

Scope of study

The scope and period of the study is being restricted to the following.

1. The scope is limited to the operations of the Reddys.

2. The information is obtained from the primary and secondary data was limited to the

Reddys.

3. The profit and loss, the balance sheet was on the last six years.

4. Comparison analysis was done by comparison of sister units.

Limitations of study

1. The study is confined to a period of last 4 years.

2. As most of the data is from the secondary sources, hence the accuracy is limited.