Financial Performance Analysis

Topics: Financial ratio, Financial ratios, Balance sheet Pages: 71 (21467 words) Published: April 15, 2013
In the present economy finance is defined as the provision of money at the time when it required. Every enterprise whether it is big, medium, or small needs finance to carry on its operation to achieve its target. In short finance is so indispensible and it is the blood of an enterprise. “Managing a firm’s finance is both an art and science. It requires not only a feel for the situation and analytical steel but also a thorough knowledge of the techniques and tools of financial analysis and the knowledge to apply them and interpret the results”

Finance is defined as the administrative function in an organization which relate with the arrangement of cash and credit to the organization to carry out its objectives as satisfactory as possible. Financial analysis is the process of identifying the financial strengths and weakness of the Firm by properly establish relationships between the items of Balance sheet and the Profit and Loss account. Financial Analysis is the critical examination of accounting information given in the financial statements.

Financial analysis is the process of determining financial strengths and weakness of an Organization of establishing the strategic relationship between the components of balance sheet and profit and loss account and the statement of change in the financial position. The information contained in the statements is used by management, creditors’, investors and others to form judgment about the operating performance and financial position of the firm. Through the financial analysis we can seek answers to the following questions. 1. What sources of long terms finance are employed by the firm and what is the relationship between the firms? Is there any change to solvency of the firm due to the employment of excessive debt? 2. Are the earnings of the firm adequate?

3. Do investors consider the firm profitable and safe for the purpose of investing their in the shares of the firm? 4. Is the firm in position to meet the current obligations? 5. How efficiently does the firm use its assets? Financial Performance Analysis is a subjective measure of how well a firm can use assets from its primary mode of business and generate revenues. This term is also used as a general measure of a firm's overall financial health over a given period of time, and can be used to compare similar firms across the same industry or to compare industries or sectors in aggregation. There are many different ways to measure financial performance, but all measures should be taken in aggregation. Line items such as revenue from operations, operating income or cash flow from operations can be used, as well as total unit sales. Furthermore, the analyst or investor may wish to look deeper into financial statements and seek out margin growth rates or any declining debt.

The project study was done at Kerala Small Industries Development Corporation Thiruvananthapuram and the topic here selected for this study is financial performance analysis. Kerala SIDCO is a promotional agency for small scale industries, set up in 1975 has four decades of services its credit. This corporation is rendering assistance to small Scale Industries (SSI) in the state, like providing infrastructure facilities, distribution of essential raw materials, marketing of the SSI products, undertaking civil and electrical works of state and central government owned enterprises and offices. Moreover, Kerala SIDCO supplies Bitumen to local bodies as modal agencies and paraffin wax to small scale industrial units.

My study is concentrated “To analyze the financial performance of Kerala Small Industries Development Corporation (SIDCO) “for the last five years. It helps to know the financial strength of the firm to make their best use and spot out financial weakness of the firm to make...
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