Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.

1( 2)1*

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Significant Analysis for Financial Statements: An Empirical Study of National and Unilever Foods
Far+an ,ah-a1( S-ed Atif Ali2( .ara/ 0ir1( 0aria1 ,a2oo31( 4s1an Ah1ad 5han1. 2. Abstract <hoosing 9ital( relia3le and hustle free anal-sis is a 3it difficult situation for 1ost of the financiers and 1anagers as there are so 1an- anal-ses. 8his stud- focuses on 1ost significant anal-ses to "erfor1 on financial state1ents. 8o acco1"lish this stud-( financial state1ents of two co1"anies( 4nile9er foods and National foods has selected to "erfor1 anal-sis. Results show that 9ertical anal-sis can 3e a sus"icious anal-sis as it total assets and sales fluctuate graduall-. =ori+ontal anal-sis is so1ehow 3etter anal-sis than 9ertical anal-sis as it shows negati9e or "ositi9e trend of 9aria3les. :u!ont anal-sis is a relia3le anal-sis 3ut it ta/en into consideration onl- two -ears. =owe9er( ratio anal-sis is see1s to 3e 3est anal-sis as it gi9es concise and "ara1ount re9iew of fir1>s "erfor1ance. According to these anal-ses( 4nile9er Foods is 3etter cor"orate than National Foods. Further results are discussed in the light of these anal-ses. Keywords: 'ertical anal-sis( =ori+ontal anal-sis( :u!ont anal-sis( Ratio anal-sis 1. ntroduction Food "rocessing or 1anufacture is "art of an integrated industr-. Food Industr- is the 2nd largest in !a/istan. 8here are 27? of its 9alue-added "roduction @ 16? of the total e1"lo-1ent in 1anufacturing sector. Aith an esti1ated 169 1illion consu1ers( !a/istan holds the world>s eighth largest 1ar/et. 0ore than 1))) large scale food "rocessing enter"rises in !a/istan. 7B? of rural-3ased food 1anufacturers are in so-called infor1al sector difficult- in accessing raw 1aterial( finance 1aterial( s/ills( /nowledge @ 1anage1ent#. !a/istanCs food sector is changing drasticall- with an inclined shift in lifest-les and traditional eating ha3its. A9erage consu1er s"ends %2? of one>s inco1e on food. Retail sales of "rocessed foods is growing 3- 1) ? "er annu1 and currentl- are esti1ated at a3out 4SD1.% 3illion( of which i1"orted "roducts account for 4SD*2B 1illion. Su"er1ar/ets are gaining in "o"ularit- as a sho""ing 9enue and now account for a3out 1)? of all retail food sales. In addition( !a/istan now hosts nu1erous western-st-le fast food chains reflecting a rising "o"ularit- with such eating st-le. Anal-+ing financial state1ent is 3it difficult Eo3 for 1ost of the financier. So1eti1es financiers confused whiling choosing a 3est anal-sis( as there are so 1an- anal-ses to ins"ect financial state1ents. 8o achie9e the "ur"ose of this "a"er( two co1"anies fro1 food sector of !a/istan has chosen( i.e. 4nile9er Foods and National Foods. 4nile9er is one of the largest F0<F co1"anies of the world( re"resented in 1B) countries with o9er 2))())) e1"lo-ees. 1B) 1illion ti1es a da-( so1eone so1ewhere chooses a 4nile9er "roduct. 8he- are the nu13er one "roducer of fro+en foods. &n 2%th A"ril( 2))7 Rafhan 7est Foods 6i1ited was rena1ed 4nile9er !a/istan Foods 6i1ited. National Foods 3egin its Eourne- in 197) as a S"ice co1"an-. National Foods "roducts are distri3uted in o9er *B countries in B continents. National foods> initiati9es were( to 1a/e food that is saniti+ed( h-gienic( reduce ti1e s"ent in the /itchen 3- wo1en( "ro1ote health and contri3ute towards "ersonal attracti9eness. !. "iterature #eview :u!ont s-ste1 "erfor1s an anal-sis that uses 3oth inco1e and 3alance sheet infor1ation to 3rea/ the R&A and R&G ratios into co1"onent "ieces. Return on co11on e2uit- R&G# is a 1easure1ent that ca"tures the return earned on the co11on stoc/holders> owners># in9est1ent in a fir1. Return on total assets R&A# is a 1easure1ent 1. 6ahore 7usiness School( 8he 4ni9ersit- of 6ahore :e"art1ent of Finance( 6ahore 7usiness School( 8he 4ni9ersit- of 6ahore *far+an.-ah-a;-ahoo.co1

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Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1*

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of the o9erall effecti9eness of 1anage1ent in generating returns to co11on stoc/holders with its a9aila3le assets. S1art et al.( 2))7# Saunders 2)))# "ro9ides a 1odel of financial anal-sis for financial institutions 3ased on the :u"ont s-ste1 of financial anal-sis return on e2uit- 1odel. 8he return on e2uit- 1odel disaggregates "erfor1ance into three co1"onentsH net "rofit 1argin( total asset turno9er( and the e2uit- 1ulti"lier. 8he "rofit 1argin allows the financial anal-st to e9aluate the inco1e state1ent and the co1"onents of the inco1e state1ent. 8otal asset turno9er allows the financial anal-st to e9aluate assets. 8he e2uit- 1ulti"lier allows the financial anal-st to lia3ilities and owners e2uit-. Fir1s can 3e co1"ared within an industr- utili+ing the :u!ont anal-sis>s financial ratios through a cross sectional anal-sis or a ti1e series 3asis &u @ !en1an( 19$9I Gise1ann( 1997I A3ar3anell @ 7ushee 1997I Fairfield @ ,ohn( 2))1I 0il3ourn @ =aight( 2))BI Soli1an( 2))$#. Nissi1 and !en1an 2))*# "resents a financial state1ent anal-sis. 8hat 1a/es a distinction 3etween le9erage that arises in o"erations fro1 le9erage that arises in financing acti9ities. Researchers also do financial state1ent anal-sis for use in e2uit- 9aluation Nissi1 @ !en1an( 2))1#. Ratio or financial anal-sis is the "rocess of deter1ining the significant o"erating and financial characteristics of a fir1 fro1 accounting data and financial state1ents =a1"ton( 2))*#. 6i2uidit- ratios 1easure a fir1>s a3ilit- to satisf- its short-ter1 o3ligations as the- co1e due. :e3t ratios 1easure the eJtent to which a fir1 uses 1one- fro1 creditors rather than stoc/holders to finance its o"erations. !rofita3ilit- ratios are a1ong the 1ost closel- watched and widel- 2uoted financial ratios. 0an- fir1s lin/ e1"lo-ee 3onuses to "rofita3ilit- ratios and stoc/ "rices react shar"l- to uneJ"ected changes in these 1easures. 0egginson et al.( 2))7# An anal-sis 3- which the trend of or changes in 9arious di1ensions of an econo1ic unit o9er a nu13er of -ears are eJa1ined is called hori+ontal anal-sis. <o11on-si+e anal-sis is also called 9ertical anal-sis 3ecause these state1ents are "re"ared in u" and down for1( and when one o3ser9es the state1ents( his o3ser9ation 1o9es fro1 u"wards to downwards. Sinha( 2)1)# $. %b&ectives 8he core o3Eecti9e of this stud- was 1. 2. 8o show un"ro3le1atic financial state1ent anal-sis 8o 9erif- the 1ost significant and relia3le anal-sis

'. (et)odology 8o acco1"lish this stud-( two co1"anies had selected fro1 Food sector in !a/istan. Financial state1ent of 3oth co1"anies had chosen fro1 the "ur"ose of anal-ses. 'ertical anal-sis( =ori+ontal anal-sis( :u!ont Anal-sis and Ratio anal-sis had a""lied using 7alance sheet and !rofit @ 6oss state1ent of 3oth co1"anies. Further1ore( Net !resent 'alue has e9aluated for 3oth co1"anies to chec/ the relia3ilit- of co1"an- for in9est1ent. *. Empirical #esults 8o achie9e the o3Eecti9es of this stud- financial state1ents of 3oth co1"anies( 4nile9er Foods and National Foods( are anal-+ed. Results ha9e "resented with 3oth gra"hicall- and financial-3ased anal-ses. 5.1 Graphical Presentation For a concise re9iew( data has "resented gra"hicall- using line charts.

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Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1* <hart No. 1H 8otal Assets of National and 4nile9er Foods

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A3o9e line chart shows that National foods> total assets was greater than 4nile9er Foods. 0oreo9er( National foods showed total assets far a3o9e the ground through the half decade. 4nile9er foods illustrated consistent results fro1 2))7 to 2)1) though i1"ro9e1ent had 1ade in further -ear. <hart no. 2H Sales of National and 4nile9er foods

<hart no. 2 show o9erla""ing results in case of 3oth co1"anies till 2))$. =owe9er( National foods eJceed its sales in further -ears. 5.2 Vertical Analysis 'ertical anal-sis has "erfor1ed on two financial state1ents( i.e. 7alance sheet and !rofit @ 6oss Account. Further1ore( co1"anies> co1"arison has shown accordingl-. 8a3le No. 1H <o1"anies> <o1"arison through 'ertical Anal-sis using 7S 2$

Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1* Unilever Non+current assets !ro"ert-( "lant and e2ui"1ent Intangi3le assets ,urrent assets Stoc/ in trade 8rade de3ts &ther recei9a3les <ash and 3an/ 3alances Non+current liabilities 6ong ter1 financing ,urrent liabilities Accrued interest K 1ar/ u" Short ter1 3orrowings ).))$B%%7%B B.*%9)1)*9% ).9))$B2*)1 2B.%99**6)2 B.9%62%$71% **.B6B6$2%9 1).67)*%9% 1.6**B7%171 B.27%6B%1*6 6).6$B*6B1B 1).)79%%*2$ ).)22*%$7$$ ).%9$29*$91 *B.12%1)$1$ %.6196B1*29 27.12B262$B ).*1*79*791 National

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A3o9e ta3le no. 1 shows co1"arison of 4nile9er and National Foods through 9ertical anal-sis. &nl- -ear 2)11 has ta/en for co1"arison "ur"oses as it was latest a9aila3le data for 3oth co1"anies. Further1ore( onl- critical factors has considered for discussions and inter"retation. !ro"ert-( "lant and e2ui"1ent and intangi3le assets are greater in case of 4nile9er foods as co1"ared to National foods. 4nile9er Foods also had greater 8rade de3ts and other recei9a3les. <ash and 3an/ 3alance was also su"erior in 4nile9er foods. =owe9er( Stoc/ in trade was higher in case of National Foods. 6astl-( Accrued interestK 1ar/u" were greater in case of National foods as the- ha9e 3oth t-"es of de3ts in greater "ro"ortion( i.e. 6ong ter1 financing and short ter1 3orrowing. 4nile9er foods had greater "ercentage of assets and lesser "ercentage of lia3ilities as co1"ared to National foods. 8herefore( 4nile9er can 3e considered as su"erior co1"an- according to 'ertical anal-sis. 8a3le no. 2H <o1"anies> <o1"arison through 'ertical Anal-sis using !6S Unilever <ost of sales Fross "rofit &ther o"erating inco1e !rofit fro1 o"erations Finance costs !rofit 3efore taJation 61.)*9%%921 *$.96)BB)79 1.67161B%71 1$.B617)$71 ).1*$92))67 1$.%227$$6% National 71.%$9$$))B 2$.B1)1199B ).21$B)17** $.$29*1*97% 2.2767797* 6.BB2B*%2%*

6i/ewise 'ertical anal-sis of 7alance sheet( "rofit @ loss state1ent has shown in ta3le no. 2. Results show that cost of sales was lower in case of 4nile9er foods as co1"ared to National foods. 4nile9er foods> Fross "rofit was 1)? greater than National foods. !rofit fro1 o"erations and "rofit 3efore taJation was also greater in case of 4nile9er Foods. Additionall-( National Foods had higher finance costs. <onsidering the results of 9ertical anal-sis it is a""arent that 4nile9er showed 3etter "erfor1ance.

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Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1*

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5.3 Horizontal Analysis Following is the hori+ontal anal-sis of 4nile9er food and National foods. 8here are actuall- two 1ethods to "erfor1 hori+ontal anal-sis( 3ase 1ethod and chain 1ethod. =owe9er( 3ase 1ethod is no 1ore a""lica3le. 8herefore chain 1ethod had used to "erfor1 anal-sis. 8a3le no. %H <o1"anies co1"arison through =ori+ontal anal-sis using !6S Unilever <ost of sales Fross "rofit &ther o"erating inco1e !rofit fro1 o"erations Finance costs !rofit 3efore taJation ).2)**11 ).2B%))* 2.B)2799 ).*929B7 -).%%$71 ).%)91$1 National ).2%772% ).1$6*%6 -).%$)*6 ).$$B*%7 ).26B))B 1.272B77

Now there is hori+ontal anal-sis of 3oth co1"anies> "rofit and loss state1ent. In 2)11( 4nile9er foods> cost of sales increased with lesser "ace and gross "rofit with greater "ace as co1"ared to National Foods. &ther o"erating inco1e showed negati9e trend in case of National foods and "ositi9e in 4nile9er. Finance cost showed in9erse case. =owe9er( &"erating !rofits and "rofit 3efore taJation increased with 1uch su"erior te1"o in case of National Foods. 5.4 DuPont Analysis Actuall- :u!ont anal-sis deals with three core concerns( asset utili+ation( financial le9erage and o"erating le9erage. <hart no. *H 4nile9er food>s :u!ont Anal-sis

4nile9er food>s return on e2uit- increased with res"ect to "re9ious -ear as the- are using their shareholders> e2uit1ore efficientl- to generate their earnings. 0oreo9er( their financial le9erage was also stronger as e2uit- 1ulti"lier showed "ositi9e 9alue. =owe9er( asset utili+ation showed fee3le situation as return on e2uit- decreased. Further1ore( as "er standard rules( o"erating le9erage increase with the increase in acti9it- le9el !roduction#. 8hus( re9enue de1onstrated "ositi9e 9alue so it can inter"reted that o"erating le9erage was strong.

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Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1* <hart no. %H National Food>s :u!ont Anal-sis

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R&G also increased in case of National foods. =owe9er( financial le9erage and asset utili+ation showed contradictorresults as co1"ared to 4nile9er foods. 0oreo9er( o"erating le9erage also increased. 5.5 Ratio and Sector Analysis Ratio anal-sis includes four su3 anal-sis( !rofita3ilit- anal-sis( <a"ital 1anage1ent ratio( Short-ter1 anal-sis and long-ter1 anal-sis. 0oreo9er( three 1ore co1"anies ha9e o"ted to co1"lete sector anal-sis( Nestle( 0itchell>s and Gngro Foods. 8a3le No. BH Ratio and Sector Anal-sis S)ort term Analysis National <urrent Ratio <ash Ratio 1.2*16%$ ).))$%76 Unilever ).$$%9)* ).)79B9* Nestle ).797$71 ).)B2%)9 (itc)ell-s 1.*291BB* ).)*1%1$B Engro 1.7*%%*7 ).)*%1B1 Average 1.19B6)* ).)%121

.rofitability Analysis Fross !rofit 0argin Ratio &"erating !rofit 0argin Ratio Net !rofit 0argin Ratio ).2$B1)1 ).)$$29* ).)%1769 ).*$96)6 ).1$B617 ).12%$*1 ).2B$)1 ).1*)%7% ).)72)1B ).2196BB6 ).)$16B*B ).)%)922B ).22**B* ).)$129 ).)2*2$9 ).27B1%B ).11*%66 ).)6)B6B

"ong term Analysis Return on Asset Return on G2uit8otal Asset turno9er Ratio FiJed Asset turno9er Ratio <urrent Asset turno9er Ratio &"erating Ratio Asset turno9er *.1**9** 6.112676 *1 12.6%$*$ 2.92197B* 2.%%$*22 B.%B*)B7 ).)$)777 ).2%9$$B 2.66)*6* $.)9$669 *.9617$6 ).*%$97% 1.2B%6*1 %.26*B12 1).*6B7$ 7.2%2**2 ).1*27 ).61*2B6 1.$%26B6 1.7$9929 B.961%26 ).)96)B72 ).2)%2%B% 2.*%72929 B.B62B$22 %.626*B6* ).)%1B27 ).)9B%79 1.7$*)9% *.12%*7* B.$7)9%9 ).1%)))7 ).%$*%99 2.B79*$% B.7$$267 B.B*2B7

Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1* ,apital (anagement #atio :e3t to G2uit:e3t to <a"ital 1.)2*26$ ).B)B7B ).192*)$ ).16129 2.2296$B ).69)*72 ).%*)B$9 ).*))9$72 ).$7B)1% ).%66671

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).9B)17* ).%2B)1%

<urrent Ratio shows that National foods had 1ore ca"a3ilit- to co9er its current lia3ilities 3- its current assets and 4nile9er>s current ratio was 3elow the a9erage sector ratio. =owe9er( 4nile9er>s cash ratio was highest a1ong food sector though National foods had too low cash ratio. 4nile9er food>s "rofita3ilit- was also highest as the- are using their o"erations and "roduction "rocess 1ore efficientl-. 6ong ter1 anal-sis was also fa9oring 4nile9er Food>s. =owe9er( <a"ital 1anage1ent ratio showed lower ratio in case of 4nile9er foods as the- are not aggressi9e a3out growing their 3usiness through de3ts since the- get good return on e2uit-. 5. Discussion Anal-+ing financial state1ents is 3it difficult Eo3 for 1ost of the financiers as there are 9ast and co1"licated anal-ses. 8herefore( choosing an authentic and unco1"licated anal-sis for eJa1ining financial "erfor1ance of a fir1 is so1eti1es frustrated situation for 1anagers and financiers. For that reason( this stud- showed different effortless anal-ses to "erfor1 on financial state1ents of a fir1. 8o acco1"lish this stud- 3alance sheet and !rofit @ 6oss state1ent of two co1"anies( 4nile9er Foods and National Foods had selected. Fra"hical "resentation showed that 3oth sales and total assets of National Foods were greater than 4nile9er foods. According to 9ertical anal-sis( !ro"ert-( "lant and e2ui"1ent and intangi3le assets are greater in case of 4nile9er foods as co1"ared to National foods. 4nile9er Foods also had greater 8rade de3ts and other recei9a3les. <ash and 3an/ 3alance was also higher in 4nile9er foods. Ne9ertheless( Stoc/ in trade was higher in case of National Foods. Accrued interestK 1ar/u" were greater in case of National foods as the- ha9e 3oth t-"es of de3ts in greater "ro"ortion( i.e. 6ong ter1 financing and short ter1 3orrowing. 4nile9er foods had greater "ercentage of assets and lesser "ercentage of lia3ilities as co1"ared to National foods. <ost of sales was lower in case of 4nile9er foods as co1"ared to National foods. 4nile9er foods> Fross "rofit was 1)? greater than National foods. !rofit fro1 o"erations and "rofit 3efore taJation was also greater in case of 4nile9er Foods. Additionall-( National Foods had higher finance costs. <onsidering the results of 9ertical anal-sis it is a""arent that 4nile9er showed 3etter "erfor1ance. 8herefore( 4nile9er can 3e considered as su"erior co1"anaccording to 'ertical anal-sis. =owe9er( as 9ertical anal-sis deals with "ercent to sales and "ercent to total assets so the results can 3e sus"icious as sales and total assets fluctuate graduall-. According to hori+ontal anal-sis( !ro"ert-( "lant and e2ui"1ent shows increasing trend in case of 4nile9er though decreasing in National Foods. Intangi3le assets re1ain unaffected in 4nile9er although decreased in National Foods. Stoc/ in trade and trade de3ts 1o9ed with su"erior ra"idit- in 4nile9er. &ther recei9a3les decreased in National Foods in -ear 2)11. <ash and 3an/ 3alances aug1ented in 3oth co1"anies 3ut "ri9ileged in case of 4nile9er. 8here was no long ter1 financing 3- 4nile9er foods 3ut in National Foods it a1"lified. Accrued interest and short ter1 3orrowing decreased in 3oth co1"anies. 4nile9er foods> cost of sales enlarged with slighter te1"o and gross "rofit with greater "ace as co1"ared to National Foods. &ther o"erating inco1e showed negati9e trend in case of National foods and "ositi9e in 4nile9er. Finance cost showed in9erse case. Ne9ertheless( o"erating !rofits and "rofit 3efore taJation increased with 1uch su"erior "ace in case of National Foods. =ori+ontal anal-sis is 3it 3etter anal-sis than 9ertical anal-sis as it tells negati9e and "ositi9e trend of 9aria3les. :u!ont anal-sis designated actuall- three significant essentials( Asset 4tili+ation( Financial and &"erating le9erage. 4nile9er food>s return on e2uit- increased regarding "re9ious -ear as the- are using their shareholders> e2uit- 1ore efficientl- to generate their earnings. 0oreo9er( their financial le9erage was also stronger as e2uit- 1ulti"lier showed "ositi9e 9alue. =owe9er( asset utili+ation showed delicate situation as return on e2uit- decreased. Additionall-( as "er defined rules of accounting and finance( o"erating le9erage increase with the increase in acti9itle9el !roduction#. 8hus( re9enue de1onstrated "ositi9e 9alue so it can 3e inter"reted that o"erating le9erage was strong. *2

Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1*

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Return on e2uit- also increased in case of National foods as the- are using their shareholders> e2uit- 1ore efficientl-. Nonetheless( financial le9erage was wea/er and asset utili+ation was stronger as co1"ared to 4nile9er foods. 0oreo9er( o"erating le9erage also increased. :u!ont anal-sis is also a relia3le anal-sis though it ta/en into consideration onl- two -ears. Ratio anal-sis includes four su3 anal-sis( !rofita3ilit- anal-sis( <a"ital 1anage1ent ratio( Short-ter1 anal-sis and long-ter1 anal-sis. 0oreo9er( three 1ore co1"anies ha9e o"ted to co1"lete sector anal-sis( Nestle( 0itchell>s and Gngro Foods. <urrent Ratio shows that National foods had 1ore ca"a3ilit- to co9er its current lia3ilities 3- its current assets and 4nile9er>s current ratio was 3elow the a9erage sector ratio. Ne9ertheless( 4nile9er>s cash ratio was highest a1ong food sector though National foods had too low cash ratio. 4nile9er food>s "rofita3ilit- was also highest as the- are using their o"erations and "roduction "rocess 1ore efficientl-. 6ong ter1 anal-sis was also fa9oring 4nile9er Food>s. =owe9er( <a"ital 1anage1ent ratio showed lower ratio in case of 4nile9er foods as theare not aggressi9e a3out growing their 3usiness through de3ts since the- get good return on e2uit-. It can 3e said that ratio anal-sis is the 3est anal-sis a1ong all financial anal-sis as it shows enhanced and concise re9iew of fir1>s financial "erfor1ance. /. ,onclusion Anal-+ing financial state1ents is 3it difficult Eo3 for 1ost of the financiers as there are 9ast and co1"licated anal-ses. 8herefore( choosing an authentic and unco1"licated anal-sis for eJa1ining financial "erfor1ance of a fir1 is so1eti1es frustrated situation for 1anagers and financiers. For that reason( this stud- showed different effortless anal-ses to "erfor1 on financial state1ents of a fir1. 4nile9er foods and National foods had chosen for these anal-ses. 'ertical anal-sis declared 4nile9er foods as 3etter co1"an- as co1"ared to National Foods( sa1e case in hori+ontal anal-sis. :u!ont anal-sis showed that Asset utili+ation was efficient in case of National foods though wea/ financial le9erage. =owe9er( there were in9erse results in case of 4nile9er foods. !rofita3ilit- anal-sis( long ter1 anal-sis and short ter1 anal-sis fa9or 4nile9er foods. =owe9er( ca"ital 1anage1ent ratio was higher in National foods as the- are aggressi9e a3out growing their 3usiness through de3ts. 'ertical anal-sis is so1ehow a sus"icious anal-sis as total assets and sales fluctuate graduall-. =ori+ontal anal-sis is 3it 3etter anal-sis than 9ertical anal-sis as it shows increasing and decreasing trend of 9aria3les. :u!ont is also a relia3le anal-sis 3ut it ta/en into consideration onl- two -ears. Ratio anal-sis is see1s to 3e 3est anal-sis as it gi9es concise and "ara1ount re9iew of fir1>s "erfor1ance. #eferences A3ar3anell( J.( @ 7ushee( 7. 1997#. Funda1ental anal-sis( future earnings and stoc/ "rices. !ournal o" Accountin# Research$ *B 1#( 1-2%. Gise1ann( !. 1997#. Return on e2uit- and s-ste1atic ratio anal-sis. %o&&ercial 'endin# Re(ie)$ 12 *#( B1-B7. Fairfield( !.( @ ,ohn( 8. 2))1#. 4sing asset turno9er and "rofit 1argin to forecast changes in "rofita3ilit-. Re(ie) o" Accountin# Studies$ 6( *71-*$B. =a1"ton( J. J. 2))*#. *inancial Decision +a,in#. New :elhiH !=I 6earning 0il3ourn( F.( @ =aight( 8. 2))B#. !ro9iding students with an o9er9iew of financial state1ents using the :u"ont anal-sis a""roach( !ournal o" A&erican Acade&y o" -usiness$ 6 1#( %6-B). Nissi1( :. @ !en1an( S. =. 2))*#. Financial State1ent Anal-sis of 6e9erage and =ow It Infor1s A3out !rofita3ilit- and !rice-to-7oo/ Ratios. Re(ie) o" Accountin# Studies( $( B*1-B6). Nissi1( :. @ !en1an( S. =. 2))1#. Ratio Anal-sis and G2uit- 'aluationH Fro1 Research to !ractice. Re(ie) o" Accountin# Studies( 6( 1)9L1B%. &tt( S.( Riddiough( 8.( @ ,i( =. 2))B#. Finance( in9est1ent and in9est1ent "erfor1anceH G9idence fro1 the RGI8 sector. Real .state .cono&ics$ ** 1#( 2)*-2*B. Saunders( A. 2)))#. +ana#e&ent o" *inancial /nstitutions. *rd ed.#. 0cFraw =ill. **

Research Journal of Finance and Accounting ISSN 2222-1697 !a"er# ISSN 2222-2$%7 &nline# 'ol.%( No.1( 2)1* Sinha( F. 2)1)#. *inancial State&ent Analysis. New :elhiH !=I 6earning

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Soli1an( 0. 2))$#. 8he use of :u"ont anal-sis 3- 1ar/et "artici"ants. 0he Accountin# Re(ie)$ $* *#( $2*-$B*. S1art( S.( 0egginson( A.( @ Fit1an( 6. 2))7#. %orporate *inance. 0ason( &=H 8ho1son South-Aestern.

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