This document discusses financial statement analysis. It defines financial statements as presenting a periodic view of a company's financial progress and status. Financial statements are used by shareholders, creditors, stock exchanges, bankers, management, investors, and governments. Financial statement analysis studies the relationships between financial factors disclosed in statements and trends over time. It can be done externally by outsiders without company access or internally by management. The objectives are to understand the company, identify strengths and weaknesses, check fund movements, measure efficiency, and assess growth potential for comparison. Limitations include relying on user intentions, ignoring qualitative factors, and only using historical data. Common techniques discussed are comparative statements, common size statements, and trend analysis.

1. Presented by
Bijay kumar shaw

2. MEANING OF FINANCIAL
STATEMENT
Financial statement are prepared for the
purpose of presenting periodical view or
report on progress by management and
deal with the status of the investment in
the business and result achieved during
the period under view.

3. USERS
 Shareholders
 Creditors
 Stock exchange
 Bankers
 Management
 Investors
 Government
 Research Association

4. FINANCIAL STATEMENT ANALYSIS
FSA is largely a study of relationship
among the various financial factor in a
business , as disclosed by a single set of
statements , and a study of trends of
these factors , as shown in a series of
statement.

5. Types
External Analysis: The analysis is done by
outsider who do not have access to the data of the firm
. Like- investors , editors , govt. agency , general public
.
Internal analysis: The analysis is done by
internal person who have easy access to the data of the
firm. Like- management , employee .

6. OBJECTIVES AND NEED
 To obtain a better understanding of the firm
 To identify the financial strength and weakness of the
firm
 To check the movement of fund
 To measure operational efficiency
 To know business solvency position
 To know the growth potential of the firm
 To have inter firm comparison

7. Limitations
 It depends on the intention of its user
 It ignores qualitative aspect of business
 It ignore non monetary factor
 It does not provide a complete accommodation to the
other accounts like management accounting , cost
accounting , human resources
 It contents with the Historical data

8. BASIS COMPARATIVE
STATEMENT
COMMON SIZE
STATEMENT
TREND
ANALYSIS
SCOPE This technique is
popularly applied by
all the financial
organizations .
This technique is not
popularly applied by all
the financial
organizations.
The technique is not as
popular as comparative
statement .
BASE YEAR
/DATA
Generally ,
comparison is made
with the last year.
All data are converted in
% form taking total of
asset/ liability/ sales
etc. of the year
Data may be compared
with any year . The year
chosen for comparison is
taken as base year .
DATA Data of two or more
financial year are used
Data of one financial
year are used
Data of two or more
financial years are used
Direction of
comparison
Data are compared
horizontally
Data are compared
vertically
Data are compared
horizontally as well as
vertically
Presentation
of data
Data are presented in
absolute form
Data are presented in %
form
Data are presented in %
form