A

SYNOPSIS REPORT

ON

A STUDY ON FINANCIAL STATEMENT ANALYSIS

AT

HERITAGE FOODS LIMITED

Submitted

By

A.SANDHYA
H.T.NO: 1304-20-672-093

PROJECT SUBMITTED IN PARTIAL FULFILLMENT FOR THE AWARD OF DEGREE OF

MASTER OF BUSINESS ADMINISTRATION

Department of Business Administration

AURORA’S PG COLLEGE
PEERZADIGUDA, UPPAL
(Affiliated to Osmania University)
2020-2022
 Aurora’s PG College ,Peerzadiguda, Uppal
Department of Management

SYNOPSIS

Title of the Project : A STUDY ON FINANCIAL

STATEMENT ANALYSIS

Student Name : A.SANDHYA

Hall Ticket Number : 1304-20-672-093

Signature of the Student :

Signature of the Guide :

 INDEX
S. No. CONTENTS Page No

1 INTRODUCTION

2 NEED FOR THE STUDY

3 OBJECTIVES OF THE STUDY

4 SCOPE OF THE STUDY

5 RESEARCH METHODOLOGY

6 LIMITATIONS OF THE STUDY

 Introduction to Financial Statement Analysis
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 different advantages of financial statement analysis are listed below:

 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.
Financial statements are prepared primarily for decision making. They play a dominant role in setting
the framework of managerial decisions. But the information provided in the financial statements is not
an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the
information provided in the financial statements is of immense use in making decisions through
analysis and interpretation of financial statements. Financial analysis ‘the process of identifying the
financial strengths and weaknesses 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
analyzing financial statements financial statements are an important source of information for
evaluating the performance and prospects of firm, if properly analyzed and interpreted these
statements can provide valuable insights into firm’s performance. Analysis of financial statements is
if interest to lenders, investors, security analyst, manager and others.
Financial statements analysis may be done for a variety of purposes, which may range
from simple analysis of short term liquidity position of the form to a comprehensive
assessment of the strengths and weakness of the firm in various areas, it is helpful in assessing
corporate excellence , judging credit worthiness forecasting bond rating, evaluating intrinsic value of
equity shares predicting bankruptcy and assessing market risk.
Financial statements:
Managers, shareholders, creditors and other interested groups seek answer to the following
question about firm:
 What is the financial position of the firm at a given point of time?
 How has the firm performed financially over a given period of time?
 What have been the sources and uses of cash over a given period?
To answer these questions, accountant prepares two principle statements, the
Balance sheet and the profit and loss account, ancillary statement, the Cash Flow statement.
Analysis of financial statement
Analysis refers to the process of critical examination of the financial information
contained in the financial statement in order to understand and make decisions regarding the
operations of the firm. The analysis is basically study of the relationship among various financial
facts and figure as given in a set of financial statements. Complex figures as given in
this statements are dissected\broken up into simple and variable elements and significant
relationship are established between the elements of the same statements are different financial
statements.
This process of dissection, establishing and identifying the financial weaknesses and
strengths of the firm. It is indicative of two aspects of a firm i.e. The profitability and the financial
position and it are what are known as the objectives of the analysis.

Types of Financial Analysis

On the basis of material used on the basis of modus operandi

I.On the basis of material used:-According to material used,

Financial analysis can be of two types:
1. External analysis:-

This analysis is done by outsiders who do not have access to the detailed internal accounting records
of the business firm. These outsiders include investors, potential investors, creditors, potential
creditors, government agencies, credit agencies and the general public.
2. Internal Analysis:-
The analysis conducted by persons who have access to the internal accounting records of a business
firm is known as internal analysis. Such an analysis can, therefore, be performed by executives and
employees of the organization as well as government agencies which have statutory powers vested in
them.
II. On the basis of modus operandi:-
According to the method of operation followed in the analysis, financial analysis can also be of
1. Horizontal analysis:-
Horizontal analysis refers to the comparison of financial data of a company for several years. The
figures for this types of analysis are presented horizontally over a number of columns. The
figures of the various year are compared with standard or base year. This type of analysis is also
‘Dynamic analysis’ as it is based on the data from year to year rather than on

2. Vertical Analysis:-
Vertical analysis refers to the study of relationship of the various items in the financial statements of
one accounting period. In the types of analysis is the figures from financial statement of a year are
compared with a base selected from the same year’s statement. It is also known as ‘Static analyses.
Procedure of Financial Statements Analysis
Broadly speaking there are three steps involved in the analysis of financial statements. There are:
i)Selection,
ii)Classification,
iii)Interpretation.
The first step involves selection of information (data). The second step involved is the methodical
classification of the data and the third step includes drawing of internees and conclusions.
The following procedure is adopted for the analysis and
Interpretation of financial statements:
1) The analyst should acquaint himself with the principles and postulates of accounting.
2) The extent of analysis should be determined so that the sphere of work may be decided.
3) The financial data given in the statements should be re-organized and re-arranged.
4) A relationship is established among financial statements with the help of tools and techniques of
analysis such as ratios, trends, common size, funds flow etc.,
5) The information is interpreted in a simple and understandable way. The significance and utility of
financial data is explained for helping decision-taking.
6) The conclusions drawn from interpretation are presented to the management in the form of reports.
OBJECTIVES OF FINANCIAL STATEMENTS
Broadly the objective of the Analysis of Financial statement is to understand the
information contained in the financial statement with a view to the weakness and strengths
of the firm and to make forecast about the future prospects of the firm and their by enabling
the financial analyst to take different decision regarding the operation of the firm. The
objectives of the analysis can be identified as:

a. To assess the present profitability and operating efficiency of the firm as a whole as well as for
its different departments
b. To find out the relative importance of different components of the financial position of the firm.
c. To identify the reasons for change in the profitability\financial position of the firm.
d. To assess the short-term as well as the long-term liquidity position of the firm.
e. To examine the solvency of the firm.
f. To find out the ability of the firm to meet its current obligations.
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
HERITAGE FOODS INDIA LTD
 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 history of HERITAGE FOODS INDIA LTD
 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 viz, comparative and ratio analysis for this purpose of analysis. It has been
utilized the secondary data of the company HERITAGE FOODS INDIA LTD i.e., annual reports
from 2017-2018 to 2020-2021 this will help in evaluating the company’s liquidity conditions
profitability long term solving and operational efficiency.

The following are main objectives of the study.

 To determine the financial statements and weakness of the firm.

 To determine the short –term solving of the firm

 To diagnose the information contained to financial statements so as to judge the profitability

and fondness of the firm.

 To establish relationship between various figures or the income statement and balance sheet.
SCOPE OF THE STUDY

Analysis of financial statement can be undertaken by different persons and for

different purposes, therefore, the scope of the AFS may be varying from one situation to
another.
However, the following are some the techniques of the AFS:

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 AFS. 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
RESEARCH DESIGN

This is a systematic way to solve the research problem and it is important component for the
study without which researches may not be able to obtain the format. A research design is the
arrangement of conditions for collection and analysis of data in a manager that aims to combine for
collection and analysis of data relevance to the research purpose with economy in procedure.

MEANING OF RESEARCH DESIGN

The formidable problem that follows the task of defining the research problem is the
preparation of design of the research project, popularly known as the research design, decision
regarding what, where, when, how much, by what means concerning an inquiry of a research study
constitute a research design. A research design is the arrangement of conditions for collection and
analysis of data in a manager that aims to combine for collection and analysis of data relevance to the
research purpose with economy in procedure.

SOURCES OF DATA
Data we collected based on two sources.
 Primary data.
 Secondary data.
Primary data
The Primary data are those information’s, which are collected afresh and for the first time,
and thus happen to be original in character.

Secondary Data:
The Secondary data are those which have already been collected by some other agency and
which have already been processed. The sources of Secondary data are Annual Reports, browsing
Internet, through magazines.

1. It includes data gathered from the annual reports of HERITAGE FOODS INDIA LTD
2. Articles are collected from official website of HERITAGE FOODS INDIA LTD
LIMITATIONS OF FINANCIAL STATEMENTS
 It is only a study of interim reports.
 Financial analysis is based upon only monetary information and non monetary factors are
ignored.
 Different people may interpret the same analysis in different ways.
 It does not consider the changes in prices level.
 Changes in accounting procedure by firm may often make financial analysis misleading.
 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, 2095.
3. Ramesh, S and A Gupta, Venture Capital and the Indian Financial
Sector, Oxford university press, New Delhi, 2095.

www.googlefinance.com

www.heritagefoods.in

www.workingcapitalmanagement.com

www.icicibank.com

www.autoindia.com