Question

This pandemic situations has drawn the attention of a lot of individuals to actively watch and participant in the Indian financial market. As a life-long learner, you also decide to understand the fundamentals of certain companies listed on the stock exchanges in India. One of your friends advised you to look in to the various techniques of financial analysis, as one of the way of evaluating the financials of business entities. You are done with getting an understanding about various techniques of financial analysis. Elaborate any five of the said techniques for financial analysis. 10marks​

Answer 1

Answer:

vffgfjgdfgh

Explanation:

fgjgvcchvc

Answer 2

Answer:

Answer described below

Explanation:

Financial analysis is the analysis of the financial accounts, statements and reports published by any business. In the documents to be published, the statement of position, profit and loss account, report of the directors, speech of the chairman and the report of the audit should be kept in the same form in which they were prepared, then no conclusion will be drawn from them. By analyzing and selecting these articles and reports, important conclusions can be drawn and this is called financial analysis.

• To obtain information as to the extent to which the capital and debt are secured, whether the company is in a position to repay its debts to the creditors
• To get information about whether the company is financially sound, whether the organization will take the help of internal finance to strengthen the financial position, whether the company has any future expansion plans and will resort to financial management for this.
• To get information about whether the profit and sales of the business have a tendency to go down or go up.

The methods used to study the horizontal or vertical analysis of the items of its financial statements in order to get the knowledge of the financial position and profit making power of a business enterprise are called techniques of financial analysis. But the ones that are used the most are-a. Comparative Financial Statements- Comparative of Income statement and Balance sheet

It is a major technique of analysis of financial statements sheets. These statements show the data for two or more years and show the changes between them. In the Companies Act 2013 also, every company should display the information of the current year as well as the previous year in its published financial statements

b. Common size Financial Statements

Comparative financial statements do not reflect changes in total assets, certain liabilities, equity of total owners and total sales of various items, so that they cannot be compared with other companies or with the industry as a whole. To overcome this shortcoming, the financial statements are constructed by analogy. If the data in the position statement and the income statement are shown as analytical percentages, i.e. in the ratio of total assets, total liabilities, ownership equity and total net sales, a common basis for comparison is created. The statements so prepared are known as equivalent financial statements.

c. Trend Analysis

Trend refers to the trend of business activities, which is calculated on the basis of any period data from the available financial data. Usually the first year is considered as the base year. To make the items comparable, the same items of other years are converted into percentages or ratios, assuming the base year amount to be 100.

d. Ratio Analysis

Ratio analysis is of great importance in the analysis of financial statements. In this, various types of financial ratios are calculated, through which important conclusions are drawn. Through this analysis, the liquidity position of the institution, functioning and efficiency, profitability and capital structure etc. is examined.

e. Fund-flow Analysis

Analysis The statement prepared for the chapter on changes in the funds of the organization between two position statements of an organization is called fund flow statement. Through this, we get information about where the resources have been received in the institute and in what works they have been used.

f. Cash-flow Analysis

g. Break even Analysis

#SPJ3