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A

PROJECT REPORT
ON
FINANCIAL STATEMENT ANALYSIS
AT
HERO MOTOCORP LIMITED
Submitted
By
KATTA KOUSALYA
H.T.NO: 1302-18-672-095
PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration


AURORA’S PG COLLEGE (MCA)
RAMANTHAPUR
(Affiliated to Osmania University)
2018-2020
INTRODUCTION

Financial statement analysis can be referred as a process of understanding the risk and
profitability of a company by analyzing reported financial info, especially annual and
quarterly reports. Putting another way, financial statement analysis is a study about
accounting ratios among various items included in the balance sheet. These ratios include
asset utilization ratios, profitability ratios, leverage ratios, liquidity ratios, and valuation
ratios. Moreover, financial statement analysis is a quantifying method for determining the
past, current, and prospective performance of a company.

Advantages of financial statement analysis:-

 The most important benefit if financial statement analysis is that it provides an idea to
the investors about deciding on investing their funds in a particular company.
 Another advantage of financial statement analysis is that regulatory authorities like
IASB can ensure the company following the required accounting standards.
 Financial statement analysis is helpful to the government agencies in analyzing the
taxation owed to the firm.
 Above all, the company is able to analyze its own performance over a specific time
period.
NEED FOR STUDY

Need of financial statement analysis study to diagnose the information contain in financial

statement. So as to judge the profitability and financial position of the firm HERO

MOTOCORP LIMITED

 Financial analyst analyses the financial statements with various tools of analysis
before commanding upon the financial health of the firm.

 Essential to bring out the Financial history of HERO MOTOCORP LIMITED

 Significance and meaning of the financial statements.


OBJECTIVES OF THE STUDY

The main objective of the project is to analyze the financial statements of the company

using the financial statements via, comparative and ratio analysis for this purpose of analysis.

It will utilize the secondary data of the company “HERO MOTOCORP LIMITED” i.e.,

annual reports from 2014-2015 to 2018-2019 this will help in evaluating the company’s

liquidity conditions profitability long term solving and operational efficiency.

 To assess the earning capacity or profitability of the firm.

 To assess the short term as well as long term solvency of the firm.

 To help in decision making and control.

 To assess the progress of the firm over a period of time.


SCOPE OF THE STUDY

Analysis of financial statement can be undertaken by different persons and for different
purposes, therefore, the scope of “financial statement Analysis” may be varying from
one situation to another.

However, the following are some the techniques of the financial statement Analysis:-

a) Comparative financial statements.


b) Common-size financial statements.
c) Trend percentage analysis.
d) Statement of changes in financial position.
e) Cost-volume-profit relations, and
f) Ratio analysis and others.

The last technique i.e. The ratio analysis is the most common, comprehensive and
powerful tool of the Financial statement Analysis. The importance of ratio analysis
lies in the fact that it presents facts on a comparative basis. As such, this study
focuses only on this (ratio) analysis.
RESEARCH METHODOLOGY

SOURCES OF DATA

Data we collected based on two sources.

 Primary data.
 Secondary data.

Primary data:

Direct interaction with the finance department of the company.

Secondary Data:

The sources of Secondary data are Annual Reports, browsing Internet, through
magazines.

1. It includes data gathered from the annual reports of Dr. Reddy’s


Laboratories

2. Articles are collected from official website of HERO MOTOCORP LIMITED.


LITTERATURE REVIEW
The term ‘financial analysis also known as analysis and interpretation of financial statements’ ,
refers to the process of determining financial strength and weaknesses of the firm by establishing
strategic relationship between the items of the balance sheet , profit and loss account and other
operative data.
“Analyzing financial statements” by Metcalf and Titard
“Financial analysis is a process of evaluating the relationship between component parts of a
financial statement to obtain a better understanding of a firms position and performance” by Myers
The purpose of financial analysis is to diagnose the information contained in financial statements
so as to Jude the profitability and financial soundness of the firm. Just like a doctor examines his
patient by recording his body temperature, blood pressure , ect. Before making his conclusion
regarding the illness and before giving his treatment, a financial analyst analysis the financial
statements with various tools of analysis before commenting upon the financial health or
weaknesses of an enterprise .
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 financial statement data so that forecast may be made of the future
earnings, ability to pay interest and debt maturities (both current and long term) and profitability of
a sound divided policy.

METHODS / TECHNIUQES OF FINANCIAL ANALYSIS:-


The following methods of analysis are generally used:-
1. Comparative Statements.
2. Trend Analysis.
3. Common-Size Statements.
4. Ratio Analysis
5. Statement Of Changes In Working Capital

COMPARATIVE STATEMENTS
COMMON SIZE STATEMENT:-
The common-size statements, balance sheet and income statement are show in analytical
percentages. The figures are shown as percentages of total assets, total liabilities and total sales. The
total assets are taken as 100 and different assets are expressed as a percentage of the total similarly,
various liabilities are taken as a part of total liabilities.
COMMON SIZE BALANCE SHEET:-
A statement in which balance sheet items are expressed as the ratio of each asset to total
assets and the ratio of each liability is expressed as a ratio of total liabilities is called common
size balance. The common size balance sheet can be used to compare companies of differing
size. The comparison of figures in different periods is not useful because total figures may be
affected by a number of factors. It is not possible to establish standard norms for various
assets. The trends of figures from year to year may not be studied and even they may not give
proper results.

Articles

1.TITLE : Financial statement analysis and beta and size effect

Author : Lianzan xu

ABSTRACT

This study examines the ability of fundamental summary measure Pr to predict earnings

change for the subsequent year, the association of Pr and stock returns, and the relationship

between Pr and risk factors beta and size. Pr is a probability index generated by logistic

model and financial statement data. Beta effect is minimized by grouping firms into beta

portfolios while size is controlled through incorporating size as an independent variable in

the regression models. Evidence from the study indicates that Pr has a strong ability to

predict future earnings change and has a positive and significant association with adjusted

market returns, after controlling for beta. Pr's association with adjusted market returns is

mitigated when beta and size are controlled simultaneously.


2.TITLE : A Study on Financial Statement Analysis

Author: Sassikala

ABSTRACT

This project report entitled as “A Study on Financial Statement Analysis. In Tamil Nadu

Newsprint and Papers Limited, Kagithapuram” , is done as a part of MBA curriculum. The

objective of the study is to analysis the financial statement of Tamil Nadu Newsprint and

Papers Limited, Kagithapuram. The study is carried for a period of five years from 2012-2013 to

2016-2017 . Data were collected from the secondary sources. To identify the financial

statements of the company and also understand the liquidity position. The tools used for

analysis, Comparative Balance Sheet, Common Size Balance Sheet, Ratio Analysis.
3.TITLE: Dog Concierges, LLC: Transaction Analysis and Statement of Cash Flows

Preparation

Author: Mark E. Haskins

ABSTRACT

This case is appropriate in a MBA module for the accounting process and is also an excellent exam

case. It provides a diagram of the three basic financial statements (balance sheet, income statement,

and statement of cash flows) used to capture, codify, and communicate the effects of a series of

typical business events. The case also gives students the opportunity to prepare a simple statement of

cash flows using two sequential balance sheets and to work backward from a balance sheet and

statement of cash flows to craft the beginning of the year's balance sheet.
BIBLIOGRAPHY

1. Khan, M Y and P K Jain, Financial Management, Tata McGraw-Hill


Publishing Co., New Delhi, 2007.
2. I M Pandey, Essentials of Financial Management, Vikas Publishing House Pvt Ltd,
New Delhi, 1995.
3. Ramesh, S and A Gupta, Venture Capital and the Indian Financial Sector, Oxford
university press, New Delhi, 1995.

www.googlefinance.com

www.heromotors.com
www.moneycontrol.com

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