1.1 INTRODUCTION TO THE STUDY
In our present day economy, finance is defined as the provision of money at the time when it is required. Every enterprise, whether big, medium or small, need finance to carry on its operations and to achieve its target. In fact, finance is so indispensable today and it is right said that it is lifeblood of an enterprise. Without adequate finance no enterprise can possibly accomplish its objectives. Finance may be defined as the provision of money at the time when it is required. Finance reface to the management of flows of money through an organization. It concerns with the applications of skills in the manipulation, use and control money. Financial analysis
Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. * Continue or discontinue its main operation or part of its business; * Make or purchase certain materials in the manufacture of its product; * Acquire or rent/lease certain machineries and equipment in the production of its goods; * Issue stocks or negotiate for a bank loan to increase its working capital; * Make decisions regarding investing or lending capital;
* Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business.
Financial analysts often assess the firm's:
1. Profitability -its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both Solvency and Liquidity are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time. 4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of the income statement and the balance sheet, as well as other financial and non-financial indicators. The present study aims to know undertake the financial analysis in OUSHADHI Pharmaceutical Corporation (I.M) Kerala limited, Thrissur, Kerala.
1.2 OBJECTIVES OF THE STUDY
* To understand the financial management system followed by the corporation. * To analyze and interpret the various financial/accounting ratios affecting the financial position and profitability. * To conduct a financial statement analysis of Balance sheet and Profit and Loss account. * To find other areas of improvement for the better financial management of the corporation. * To develop strategies for improving the whole financial management system of the corporation 1.3 SCOPE OF THE STUDY
The scope of study includes understanding the concepts, principles, meaning, objectives, functions and importance of financial management and financial statement analysis. The study in OUSHADHI Pharmaceutical Corporation (I.M) Kerala limited, Thrissur, Kerala, will provide adequate information about the financial analysis of the company.
1.4 LIMITATIONS OF THE STUDY
* The reliability and accuracy of calculation depends very much on the information found in the Balance Sheet and its reliability. * The study is based on the compilation of secondary data only. * The data is limited for 8 years from 2003 to 2011; hence the result can be applied for the selected period only.