Comparative Analysis of Neepco Through Ratio Analysisgh Ratio Analy

Introduction to Financial Statement Analysis Meaning of Financial Analysis is to classify the data in simple form given in Financial Statements and to compare with each other to find out the strong points and weakness of the business and to take decisions for future. For instance, if all items relating to Current Assets and placed in one group while all items relating to Current Liabilities are placed in another group, the comparison between the two groups will provide useful information. Actually the figure given in financial statements do not speak anything themselves. The analysis of these figures helps the interested reader by given tongue to these mute heaps of figures. Financial Analysis is prepared primarily for decision- making. They play a dominant role in setting the framework of managerial decisions. Financial statement analysis is ‘the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account’. There are various methods or techniques used in analysing financial statement, such as comparative statements, trend analysis, and common – size statements, schedule of changes in working capital, fund flow and cash flow analysis, cost- volume- profit analysis and ratio analysis. In the words of Myers, “Financial Statement Analysis is largely a study of relationship among the various financial factors in a business as disclosed by a single set of statements, and a study of the trend of these factors as shown in a series of statements.”
The purpose of financial analysis is to diagnose the information contained in financial statements so as to judge the profitability and financial soundness of the firm. The analysis and interpretation of financial statements is essential to bring out the mystery behind the figures in financial statements. Financial statements analysis is an attempt to determine the significance and meaning of the