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ABSTRACT

SADANANDAM

MBA FINANCEROLL NUMBER: 11S11E0013

COLLEGE NAME: MALLAREDDY INSTITUTE OF

TECHNOLOGY &SCIENCE

Under the guidance

Mr .

TITLE OF THE PROJECT:A STUDY ONFINANCIAL ANALYSISORGANIZATION: ULTRA TECH

2011-2013

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ABSTRACT

MEANING OF FINANCIAL ANALYSIS

The first task of financial analysis is to select the information relevant to the decision under

consideration to the total information contained in the financial statement. The second step is to

arrange the information in a way to highlight significant relationship. The final step is

interpretation and drawing of inference and conclusions. Financial statement is the process of

selection, relation and evaluation.

NEED OF THE STUDY

Financial statements refer to such statements which contains financial information about an

enterprise. They report profitability and the financial position of the business at the end of

accounting period. The team financial statement includes at least two statements which the

accountant prepares at the end of an accounting period. The two statements are: -

1. The Balance Sheet2. Profit And Loss Account

They provide some extremely useful information to the extent that balance Sheet mirrors

the financial position on a particular date in terms of the structure of assets, liabilities and owners

equity, and so on and the Profit And Loss account shows the results of operations during a

certain period of time in terms of the revenues obtained and the cost incurred during the year.

Thus the financial statement provides a summarized view of financial positions and operations of

a firm.

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FEATURES OF FINANCIAL ANALYSIS

To present a complex data contained in the financial statement in simple andunderstandable form.

To classify the items contained in the financial statement in convenient and rationalgroups.

To make comparison between various groups to draw various conclusions.Purpose of Analysis of financial statements

To know the earning capacity or profitability. To know the solvency. To know the financial strengths. To know the capability of payment of interest & dividends. To make comparative study with other firms. To know the trend of business. To know the efficiency of mgt. To provide useful information to mgt

Procedure of Financial Statement Analysis

The following procedure is adopted for the analysis and interpretation of financial statements:-

The analyst should acquaint himself with principles and postulated of accounting. Heshould know the plans and policies of the management so that he may be able to find out

whether these plans are properly executed or not.

The extent of analysis should be determined so that the sphere of work may be decided. Ifthe aim is find out. Earning capacity of the enterprise then analysis of income statement

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will be undertaken. On the other hand, if financial position is to be studied then balance

sheet analysis will be necessary.

The financial data be given in statement should be recognized and rearranged. It willinvolve the grouping similar data under same heads. Breaking down of individual

components of statement according to nature. The data is reduced to a standard form.

A relationship is established among financial statements with the help of tools &techniques of analysis such as ratios, trends, common size, fund flow etc.

The information is interpreted in a simple and understandable way. The significance andutility of financial data is explained for help in decision making.

The conclusions drawn from interpretation are presented to the management in the formof reports.

OBJECTIVES OF THE STUDY

1. To understand, to analyze and to suggest methods of improving profitability management.2. To identify the key factors affecting the profitability.3. To have an insight into the management of profit in an organization.4. To assess the working capital employed by the company.5. To highlight the short comings in the area of finance with the aid of comparative analysis and

common size analysis funds flow analysis and to give recommendations with a view to

increase efficiency of the company.

6. To identifying the financial strength and weakness of the company.7. Analyze the future earnings of the company, based on these give

The various suggestions.

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SCOPE OF THE STUDY

1. In our present day economics, finance is defined as the provision of money at the timewhen it is required. Every enterprise whether big medium or small needs finance to

carry on its operations and to achieve its target. In fact finance is so indispensable

today that it is rightly said that it is the life blood of industry without adequate finance

no enterprise can possible accomplish it objectives

2. Finance is therefore viewed as the most important area in every enterprise. Thereforethe management requires giving special attention on this .The conventional approach

to finance function in business high light the procurement of funds on the mot

economic and favorable terms to concern. But it ignores the efficiency and prepares

of the same for the successful running of the enterprise. In every organization funds

are needed for various ventures and projects.

3. The basis for financial planning and analysis is financial information, financial needto Predict compare and evaluate the forms earning ability. It is also required to aid in

economic decision making., Investment and financial statements or accounting

reports.

4. It contains summarized information of the firms financial affairs,. Organizedsystematically. They are the means to present the firms situation to owners, creditors

and general public, preparation of the statements is the responsibility of top

management. They should be prepared very carefully and contain as much

information a possible because they are very useful to judge the financial

efficiency of the company.

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