06-03-2013, 04:46 PM
ANALYSIS OF FINANCIAL PERFORMANCE AT KARNATAKA POWER CORPORATION LIMITED
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EXECUTIVE SUMMARY:
The project was intended to have an exposure of working environment and to conduct evaluation of financial performance and to know the financial health of the company.
The project was taken over for a period of 8 weeks. It covered the area starting from the company profile until analysis, findings, suggestions and conclusion about the problem of the study.
The chief objective in this study was to understand the financial performance of the company. To study the financial ability, growth and profitability of KPCL. In this study secondary data was collected. The relevant information was taken from annual reports, journals and internet.
The data collected from secondary sources were tabulated and analyzed. I used the tool ratios &Trend analysis to analyze the financial performance of the company.
INTRODUCTION
The figures given in financial statements do not speak anything themselves, hence financial tools and techniques are applied for easy interpretations and for quick decision. The financial analysis is to classify the data in simple form given in financial statements and to compare with each other to find out the strengths and weaknesses of the business and to take the decision for future. For instance, if all items relating to current assets are placed in one group while all items relating to current liabilities are placed in another group, the comparison between two groups will provide useful information.
IN THE WORDS OF FINNEY AND MILLER:
“Financial analysis consist in separating facts according to some definite plan,
Arranging them in groups according to certain circumstances and then presenting them in a convenient and easily read and understandable form.”
IN THE WORD OF JOHN.N.MYRES:
“Financial statement analysis is largely a study of relationships among the various financial factors in a business, as disclosed by a single set of statements and a study of the trends of these factors as shown in a series of statements.”
Financial statement analysis involves analyzing the forms financial statement to extract the information that can facilitate decision making. For ex:- an analysis of the financial statement can reveal whether the form will be able to meet its long term debt commitment, weather the firm is financially distressed, whether the company is using its physical assets efficiently, whether the firm as an optimal financing mix, whether the firm is generating adequate return for its shareholders, whether the firm can sustain its competitive advantage etc; while the information used is historical, the instant is clearly to arrive at recommendations and forecast for the feature rather than provide a “picture of the past”. Financial analysis is performed by both internal management and external groups. Firms would perform such an analysis in order to evaluate their overall current performance, identify problem/opportunity areas, develop budgets and implement strategies for the future. External group (such as investors, regulators, lenders, suppliers, customers) also perform financial analysis in deciding whether to invest in a particular firm, whether to extend credit etc. There are several rating agencies (such as Moody’s, Standard & Poor) that routinely perform financial analysis of firms in order to arrive at a composite rating.
ANALYSIS AND INTERPRETATION OF DATA
The analysis of data includes analysis of financial statements of firm using ratios and trend analysis as a tools and techniques. The financial analysis is to classify the data in simple form given in financial statements and to compare with each other to find out the strengths and weaknesses of the business and to take the decision by the finance managers. This chapter includes various ratios which analyses the firm’s profitability, solvencies etc and trend analysis of financial statements of .KPCL to analyze change in profits, turnover, assets, liabilities and comparing them with one another using base year data. The trend of KPCL is calculated using financial elements of Balance Sheets & Profit & Loss accounts and having 2006-07data as a base year.