OBJECTIVES OF FINANCIAL ANALYSIS

FINANCIAL ANALYSIS OF SBI

The objective of financial analysis is the pinpointing of strength and weakness of

a business undertaking by regrouping and analyzing of figures obtained from
financial statements and balance sheet by the tools and techniques of management
accounting. Financial analysis is the final step of accounting that results in the
presentation of final and the exact data that helps the business managers, creditors
and investors. Based on this reasoning, this project is an attempt to analyze the
financial performance of "STATE BANK OF INDIA".

MEANING OF FINANCIAL RATIOS

In the financial analysis, a ratio is used as an index for evaluating the financial
position and performance of the firm. The absolute accounting figures reported in
the financial statement do not provide a meaningful understanding of the
performance and the financial position of a firm. But the accounting figures
convey the meaning when it is related to some other relation information. For
example Rs.5 crores net profit may look

impressive, but the firm's performance can be said good or bad only when net
profit figures is related to the firm's investment. Accounting ratios are
relationships expressed in the mathematical terms between figures that are
connected with each other in the same manner. The information contained in the
balance sheet, profit or loss account or the
FINANCIAL ANALYSIS OF SB!
income statements are others to form judgment about the operating performance
and the financial strengths & weaknesses of the firm if we properly analyze the
information reported in the statement.

Financial analysis is the analysis of financial statements of company to

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statement analysis' involves a study of the financial statements of a company to

ascertain its prevailing state of affairs and the reasons there of. Such a study would
enable the public and the investors to ascertain whether one company can project
itself more than any other company and also to state the causes and factors that are
probably responsible.

FINANCIAL STATEMENT
An organization communicates its financial information to the users through
financial statements and reports. Financial statements contain summarized
information of the organization financial affairs, organized systematically. These
statements comprise the increase the income statement or profit/loss account and
the position statement or balance sheet. To give a full view if the financial officers
of the undertaking it is also necessary to include a statement of retained earnings, a
statement of changes in the financial position and a few schedules such as
schedule of fixed assets and schedule of debtors.
—» Income statement: the profit/loss account sets out income as well as
expenses of the same period and after matching the two, the difference being
the net profit or net loss, is shown as one difference between the two sides of
the account. Thus, the earning capacity and the potential of an organization are
reflected by its profit/loss account.
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FINANCIAL ANALYSIS OF SBI

-» Position statement: other wise known as the balance sheet displays the total
resource of a business and the owners and creditors equity in these resources.
It indicates a statement of affaire of a business at a particular moment of time
and thus it is static in nature.

—» Statement of retained earnings: also known as the profit/loss

appropriation account, is generally of the business for the accounting period is
appropriated towards reserve and dividend and also how much of the same is
carried forward as retained earnings.

—» Statement of changes in financial position: also known as fund flow

statement, summarizing changes in assets, liabilities and the owner's equity
between two balance sheet dates. Thus, it is a statement of flows i.e. it
measures the changes that have been taken place in the financial position of a
firm between two balance sheet dates. It summarizes the sources and uses the
funds obtained

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