Financial Performance Analysis
FINANCIAL PERFORMANCE ANALYSIS
Financial performance analysis is the process of identifying the financial strengths and weaknesses of the firm by properly establishing the relationship between the items of balance sheet and profit and loss account. It also helps in short-term and long term forecasting and growth can be identified with the help of financial performance analysis.The dictionary meaning of ‘analysis’ is to resolve or separate a thing in to its element or components parts for tracing their relation to the things as whole and to each other.The analysis of financial statement is a process of evaluating the relationship between the component parts of financial statement to obtain a better understanding of the firm’s position and performace.This analysis can be undertaken by management of the firm or by parties outside the namely, owners,creditors,investors.
The analysis of financial statement represents three major steps:
- The first step involves the re-organization of the entire financial data contained the financial statements. Therefore the financial statements are broke down into individual components and re-grouped into few principle elements according to their resemblances and affinities. Thus the balance sheet and profit and loss accounts are completely re-casted and presented in the condensed form entirely different from their original shapeThe second step is the establishment of significant relationships between the individual components of balance sheet and profit and loss account. This is done through the application tools of financial analysis like Ratio analysis, Trend analysis, Common size balance sheet and comparative Balance sheet.
- Finally, the result obtained by means of application of financial tools is evaluated.
- In brief financial analysis is the process of selection, relation and evaluation of financial statements. The tools of analysis are used for determining the investment value of the business, credit rating and for testing efficiency of operation.
Thus financial analysis helps to highlight the facts and relationships concerning managerial performance, corporate efficiency, financial strength and weakness and credit worthiness of the company.
- To study the financial performance analysis of “THE CHENNAI PORT TRUST”.
- To analyze the financial changes over a period of five years.
- To analyze the financial statements of the company by using financial tools.
- To evaluate the financial position of the company in terms of solvency, profitability, activity and earning ratios.
- To suggest effective measures in the existing system of the company.
RESEARCH METHODOLOGY : Research means “know about new things”. Sometimes, it may refer to scientific and systematic search pertinent information on specific topic. In fact research is an art of scientific investigation.
According to Clifford Woody research comprises of. “define and redefining problem, formulating hypothesis or suggested solution, collecting, organizing and evaluating data; making deduction and reaching conclusion; and at last carefully testing the conclusion to determine whether they fit the formulating hypothesis”. Redman and Moray define research as a “systematic effort to gain new knowledge”. Research can be defined as the search of knowledge or any systematic investigation to establish fact. The primary purpose for applied research (as opposed to basic research) is discovering, interpreting, and the development of methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. Research can use the scientific method, but need not do so.Research can also be said as a process that is followed by a person to answer either his/her own queries or somebody else queries about a particular object, person, subject etc.Data collection: The data collections classified into two types are
- Primary data
- Secondary data
The secondary data are data are collected from information which is used by other. It is not direct information. This informa