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finance project on financial analysis done by Piyush Jain, a student of IIPM Ahmedabad.
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Presented by: Piyush Jain
Financial analysis is the process of identifying the
financial strengths and weaknesses of the firm by
properly establishing relationships between the
items of the balance sheet and the profit & loss A/c.
Financial analysis can be undertaken by
management of the firm, or by parties outside the
firm i.e. owners, creditors, investors and others.
Sales Analysis of TVS motor co ltd.
Capital Structure Analysis
Working Capital Analysis
Shareholding Pattern
Ratio analysis is a powerful tool of financial analysis. It can be used to compare the risk & return relationships of firms of different sizes.
Liquidity ratios attempt to measure a company's ability to pay off its
short-term debt obligations. This is done by comparing a company's
most liquid assets(or, those that can be easily converted to cash), its
short-term liabilities.
In general, the greater the coverage of liquid assets to short-term
liabilities the better as it is a clear signal that a company can pay its
debts that are coming due in the near future and still fund its ongoing
operations. On the other hand, a company with a low coverage rate
should raise a red flag for investors as it may be a sign that the company
will have difficulty meeting running its operations, as well as meeting its
obligations.
Current ratio indicates the availability of current assets in rupees for
every one rupee of current liability. So we can see that over 5 years the
current ratio has increased from unsatisfactory level of 0.94 to
satisfactory level of 1.37
Quick ratio shows the relationship between liquid asset & current
liabilities. It is also measure of short term solvency. So we can see that
the quick ratio of co. is not satisfactory as they are short with their
assets to pay of the liabilities as in all 5 years the quick ratio < 1.
Cash Ratio shows the Companies abilities to meet its short term
obligations out of Cash Balance or assets equivalent to cash
Leverage ratio shows the proportions of debt and equity in
financing the firm’s assets.
These ratios can be used to determine the overall level of
financial risk a company and the firm’s ability of using debt
to shareholder’s advantage.
Efficiency ratio reflect the firm’s efficiency in utilizing its
assets.
These ratios look at how well a company turns its assets
into revenue as well as how efficiently a company converts
its sales into cash. Basically, these ratios look at how
efficiently and effectively a company is using its resources
to generate sales and increase shareholder value. In
general, the better these ratios are, the better it is for
shareholders.
Profitability ratios measure overall
performance and effectiveness of the
firm in generating profit, and are
calculated by establishing relationships
between sales and assets on the other.