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Topics: Balance sheet, Financial ratios, Generally Accepted Accounting Principles Pages: 57 (7262 words) Published: November 24, 2013

this is the financial analysys of sundram finance

CHAPTER – 1

INTRODUCTION

1 INTRODUCTION

The financial statement provides the basic data for financial performance analysis. The financial statements provide a summarized view of the financial position and operations of a firm. 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. The analyst first identifies the information relevant to the decision under consideration from the total information contained in the financial statements. Therefore, much can be learnt about a firm from a careful examination of its financial statements as invaluable documents and performance reports.

The analysis of financial statements is an important aid to financial analysis. They provide information on how the firm has performed in the past and what is its current financial position. Financial analysis is the process of identifying the financial strengths and weakness of the firm from the available accounting data and financial statements. The analysis is done by establishing relationship between the different items of financial statements.

The focus of financial analysis is on key figures in the financial statements and the significant relationship that exists between them. The analysis of financial statements is a process of evaluating relationship between component parts of financial statements to obtain a better understanding of the firm’s position and performance.

The first task of financial analyst is to select the information relevant to the decision under consideration from the total information contained in the financial statement. The second step involved in financial analysis is to arrange the information in a way to highlight significant relationships. The final step is interpretation and drawing of inferences and conclusions. In brief, financial analysis is the process of selection, relation, and evaluation.

1.1 INDUSTRIAL PROFILE

1.1.1 NON-BANKING FINANCIAL COMPANIES (NBFCS)

Non-bank financial companies (NBFCs) are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license. Operations are, regardless of this, still exercised under bank regulation. According to Reserve Bank Amendment of Act 1997, A Non-Banding Financial Company (NBFCs) means, A financial institution which is a company

A non-banking institution which is a company which has its principal business receiving of deposits under any scheme of arrangement or in any other manner or lending in any manner The non-banking financial sector in India has tremendous growth in recent years. NBFCs’ attracted a large number of small investors since the rate of return on deposits with them was relatively high. NBFCs are quite flexible sectors like equipment leasing, hire-purchase, housing finance, consumer finance and so on, where gaps between the demand and supply of funds have been high. The growth in number of NBFCs was facilitated by the case of entry, limited fixed assets and absence of any need to hold inventories.

1.1.2 CURRENT SCENARIO OF NBFCS
The base of today’s feebleness of Non-Banking Finance Companies can perhaps be traced back to early nineties. The buoyant capital market, in the first flush liberalization welcomed every issue with huge premiums and massive over subscription. This was the signal for several unscrupulous promoters to set up high profile finance companies and raise money from both the capital markets and through public deposits.

The Reserve Bank of India for its past, progressively relaxed its regulatory hold over the industry and made it possible for the companies with little financial strength and even fewer scrupulous to raise large...

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Jae K.Shim, Joel G.Siegel, Schaum’s Outline of Theory and Problems of Financial Accounting, 1999, 279-298.
John J.Wild, K.R.Subramanyam & Robert F.Halsey (2006), Financial Statement Analysis, 9th Edition, 2-90.
Jonas Elmerraji, “Analyze Investments Quickly with ratios”, 2005, 33-36
Kennedy and Muller, “Analysis of Financial Statements”,1999, 1.3 – 1.34
Khan M Y & Jain P K, “Financial Management”, 4th Edition , 2006, 6.1 - 6.81
Pandey I M, “A Management Guide for Managing Company’s Funds and Profits”, 6th Edition, 1 – 58
Peeler J. Patsula, “Successful Business Analysis”,2006, 18-19
Rachchh Minaxi A (2011), Introduction to Management Accounting, 3-88.
Reddy T S & Hari Prasad Reddy Y, “Management Accounting”, 3rd Edition, 2008, 3.9 - 3.25
Salmi, T
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