This document summarizes a summer internship project on the role of financial statements in investment decision making. It outlines the objectives of understanding how financial statements allow investors to evaluate historical performance, financial risk, and determine a company's value. The key types of financial statements are identified as the balance sheet, income statement, and cash flow statement. The importance of financial statements for investment decision making is that they provide critical historical data to analyze profitability, liquidity, solvency, growth potential, and financial stability.

1. SUMMER INTERNSHIP PROJECT ON
“ROLE OF FINANCIAL STATEMENT IN
INVESTMENT DECISION MAKING.”
RISHABH KUMAR BERMECHA AND ASSOCIATES
BY SUHITA SHIL

2. OBJECTIVES
 Financial statements allow investors to evaluate a company's historical performance and
profitability.
 Financial statements provide insights into a company's financial risk profile.
 Financial statements are instrumental in determining the value of a company.
 Financial statements offer insights into a company's historical financial performance,
which can be used to project its future performance. .

3. What is Financial Statement?
 Financial statements refer to the formal records of a company's financial activities, performance, and
position.
 Financial statements are prepared in accordance with accounting principles and standards, such as
Generally Accepted Accounting Principles (GAAP).
 They are prepared periodically (usually annually, quarterly, or monthly) and provide a snapshot of a
company's financial health and results of operations during a specific period. . .

4. Types of Financial Statement
 Balance Sheet or Statement of Financial Position
 Income Statement or Statement of Profit and Loss
 Cash Flow Statement

5. BALANCE SHEET
 A balance sheet is a financial statement that contains details of a company's assets or liabilities at a specific point in time.
 Balance sheets give a quick overview of a company’s financial standing..
 A balance sheet has two sides: assets on one and liabilities and equity on the other..
 Assets = Liabilities + Equity

6. INCOME STATEMENT
 An income statement is a financial statement that shows you the company's income and expenditures.
 An income statement helps business owners decide whether they can generate profit by increasing
revenues, by decreasing costs, or both.
 It also shows the effectiveness of the strategies that the business set at the beginning of a financial period.

7. CASH FLOW STATEMENT
 A cash flow statement is a financial statement that shows how cash entered and exited a company during an
accounting period.
 A cash flow statement is a regular financial statement telling you how much cash you have on hand for a
specific period.
 Cash coming in and out of a business is referred to as cash flows, and accountants use these statements to
record, track, and report these transactions..

8. IMPORTANCE OF INVESTMENT DECISION
MAKING
 Analyzing financial statements, decision-makers can evaluate the company's
profitability, liquidity, solvency, and overall financial stability.
 Examining a company's financial statements, decision-makers can identify companies
with strong growth potential, attractive valuations, or solid financial performance.
 Decision-makers can assess the company's ability to generate cash, manage working
capital, and fund its operations.

9. OBSERVATION AND FINDINGS
 Financial statements allow investors to assess the financial health of a company.
 Financial statements provide historical data on a company's financial performance, allowing investors to
analyze its past performance trends. .
 The cash flow statement in financial statements provides insights into a company's cash inflows and outflows.
 Financial statements enable investors to compare the financial performance of different companies within an
industry or sector.

10. RECOMMENDATIONS & SUGGESTIONS
 Understand Financial Statements
 Analyse Key Financial Ratios.
 Consider Historical Performance
 Assess Risk Factors

11. THANK YOU
BY SUHITA SHIL