Introduction

The financial statement of a business firm, which includes Income Statement and Balance Sheet of companies. Basically, these are summarized financial reports which provide the operating results and financial position of companies, and the detailed information contained therein is useful for assessing the operational efficiency and financial soundness of a company. This requires proper analysis and interpretation of such information for which number of techniques (tools) have been developed by financial experts. Meaning of Analysis of Financial Statements

The process of critical evaluation of the financial information contained in the financial statements in order to understand and make decisions regarding the operations of the firm is called Financial Statement Analysis. It is basically a study of relationship among various financial facts and figures as given in a set of financial statements, and the interpretation thereof to gain an insight into the profitability and operational efficiency of the firm to assess its financial health and future prospects. The term financial analysis includes both analysis and interpretation. The term analysis means simplification of financial data by methodical classification given in the financial statements. Interpretation means explaining the meaning and significance of the data. These two are complimentary to each other. Analysis is useless without interpretation. Financial analysis is an aspect of the overall business finance function that involves examining historical data to gain information about the current and future financial health of a company. Financial analysis can be applied in a wide variety of situations to give business managers the information they need to make critical decisions.

Tools of Financial Analysis

Comparative Statements: These are the statements showing the profitability and financial position of a firm for different periods of time in a comparative form to give an idea about the position of two or more periods. It usually applies to the two important financial statements, namely, Balance Sheet and Income Statement prepared in a comparative form. Common Size Statements:These are the statements, which indicate the relationship of different items of a financial statement with some common item by expressing each item as a percentage of the common item. The percentage thus calculated can be easily compared with the results corresponding percentages of the previous year or of some other firms, as the numbers are brought to common base. Such statements also allow an analyst to compare the operating and financing characteristics of two companies of different sizes in the same industry.

Trend Analysis:It is a technique of studying the operational results and financial position over a series of years. Using the previous years data of a business enterprise, trend analysis can be done to observe the percentage changes over time in the selected data.

Cash Flow Analysis: It refers to the analysis of actual movement of cash into and out of an organization. The flow of cash into the business is called as cash inflow or positive cash flow and the flow of cash out of the firm is called as cash outflow or a negative cash flow. The difference between the inflow and outflow of cash is the net cash flow. Ratio Analysis: Ratio Analysis is one of the powerful tools of financial Analysis. It indicates a quantitative relationship

between the figures and group of figures which are used for evaluation & decision making.

Meaning :
A Ratio is defined The indicated quotient of two mathematical expression & as The relationship between two or more things. In financial analysis a ratio is used as a benchmark for evaluating the financial position and performance of a firm. The absolute accounting figures reported in the financial statements do not provide a meaningful understanding of performance & financial position of a firm. An accounting figure conveys meaning when it is related to some other relevant information. It is simple mathematical expressions a relationship between two related items in quantitative form. In accessing the financial stability of a firm, a management should, apart from profitability, be interested in relative figures rather than in absolute figures, Infant, an analysis of financial statement ratios is imperative. There is growing body of evidence that ratios can be directly helpful as a basis for making predictions. A Ratio is a mathematical relationship between two quantities. It is major for financial analysis. It engages qualitative measurement & precisely how adequate is one key item in relation to another. To evaluate the financial condition of a firm, the financial analyst needs certain yardsticks. Such yardstick frequently need is a ratio. Ratio analysis has been proved efficient technique to analysis the financial statement. Ratio analysis identified the financial strength & weakness of the Balance sheet & profit & loss Account.

COMPANY PROFILE The Company is proprietorship firm, Association of person Mr.Sumit Supplying The Kocharmuta. facility The company is manufacturing & located at Nashik,(Near Khatwadphata was

incorporated on 7th June 2006). company is manufacturers & supplier a Nails Screw to the industry Vijay Steel Industries can Sales Manufacture biging wire for special specification called for by the customer. They are proud a having supplied Nails screw & beging wire for provisions export projects. They are sure to meet customer requirement for all types Nails to full satisfaction. They can affect will have Certified suppliers, whose supplies in convenient sizes of 1 inch, half inch, 0.25 inch. Vijay Steel Industries product quality is assumed. They are equipped with a complete Testing laboratory which has the approval well known certifying & inspection authorities. They have at present dealers all over India. They have a strong marketing team. The company had established distribution network. The future of Vijay Steel Industries looks very encouraging & growing firm. Vijay steel Industries have worldwide brand Image a quality service & reliability will be maintained and endeavors will be to improve further. Produced offered by the organization. 1. 2. 3. 4. 5. 6. 7. 8. 1 Inch screw Inch screw 1 Inch nails Bigging wire Brass nail Round nail Carriage bolts Machine screw

1.1

Selection of the topic for the study

The main purpose of assigning this task of summer project is to keep getting new practical knowledge, establishing relations with different person in the organization to obtain the factual information. The Firm chosen here is Vijay Steel Industries. It is company registered under ISO 9001-2000 which is the advanced manufacturers of solvent based industrial pains, primers and thinners with supply of the best quality prompt service and at most competitive price to meet the requirement of all types of paints and full satisfaction of the customers. The balance sheet mirrors the financial position on a particular date and the profit and loss account shows the results of operations during the year. Thus, the financial statements provide a summarized view of the financial position and operations of a firm. So the study of financial statements is the object of the study. The analysis of financial statements of the firm is, thus an important aid to the study financial statements. The focus of financial analysis is on key figures in the financial statements and the significant relationship that exists between them. The study covers common-size financial statements of Vijay Steel Industries for the period of last four years. Financial analysis is the process of selection, relation and evaluation. Ratio analysis as the technique used for financial statements analysis. It will be a great pleasure in studying the analysis of financial statements with the help of ratio analysis (For 2007-08 to 2009-10) of Vijay Steel Industries this topic has not only helped to know the

practical financial concept of ratio but also the efficient financial operations and management.

Objective of the study 1) To learn the theoretical concept of financial statement and financial statement analysis 2) To understand the theoretical concept of Ratio Analysis 3) To study the financial statements of last four years of Vijay Steel Industries (from financial year 2007-08 to 2009-10). 4) To analyse the financial statements with the help of ratio analysis.

Research Methodology :
Types of data collection : 1) Primary data The primary data are those which are collected afresh and the first time and thus happen to be original in character. By Unstructured interview The interview method of collecting data involves presentation of oral verbal stimuli and reply in oral-verbal stimuli responses. The approach requires. interview to technique used for this project is an

unstructured interview which is

characterized

by a flexibility of situation so

questioning ,which gives much freedom to the

interviewer to ask, supplementary questions if the

2)

Secondary data : Secondary data is the data which are already available i.e.

refer the data which have already been collected and analyzed by someone. a) By financial statements The ratio were calculated with the help of financial statements of last four year of financial Vijay Steel Industries.Balance sheet (from year 2007-08 to 2009-10)Trading and profit and loss

accounts (from financial year 2007-08 to 2009-10) B) By books and periodicals For the analysis some important books regarding the financial management have been referred. The books were available in the college library which acted as a helping hand in completion of the project report.

1.4 SCOPE OF THE PROJECT STUDY In every business organization its financial transactions are recorded in the systematic term, which called Financial Statement such as Profit and Loss Account and Balance Sheet. Financial Statements shows the financial strength and weakness of the firm, hence, the Financial Statements are prepared for the decisionmaking. Management becomes able to this purpose such financial statement are necessary to be analyzed. The ratio analysis is one of the most powerful tools of financial analysis. It is used as a device to analysis and interprets the financial health of enterprise. Just like a doctor examine his patient by recording his body temperature, blood pressure, etc. before making his conclusion regarding the illness and before giving his treatment, a financial analyst analyses the financial statement with various tools of analysis before commenting upon the financial health of weakness of an enterprise. A ratio is knows as a symptoms like blood pressure, the pulse rate or the temperature of an individual. It is with help of ratio that the financial statement can be analyzed more clearly and decision made from such analysis. This project is useful to understand the Ratio Analysis of Financial Statement undertaken for Vijay Steel Ltd. and others Companies. This is useful in understanding all theoretical concepts how they are practically implemented. Also I studied the various types of ratios which are used by the Vijay Steel Ltd. for analyzing its financial statements. Beside this I also find out the working capital company. So this project provided details of Ratio analysis of financial statements, this project gives me the practical knowledge of the concept. It gives me the information regarding the working of the companies. This project is also useful for Vijay Steel Ltd. for the effectively implementation of the Ratio analysis. This was lifetime experience for me which will be a kind of guideline for me in coming future.

Also my findings highlight positive and negative aspects of Vijay Steel Ltd. Negative findings are shown the pitfalls in financial statements of the company. Some of them are known and unknown, I high lightened them being in the notice of concern authority on which I given suggestion also that can be helpful to organization in course of life.

1.4

Limitation of the study The ratio analysis is widely used technique to evaluate the

financial position and performance of the business. But there are certain problems in using ratios. 1. 2. 3. 4. 5. Standards for comparison company differences Price level change Different definition of variables Historical data

Chapterization: 1. 2. 3. 4. 5. 6. 7. Introduction of Topic Organization profile Research Methodology Ratio Analysis Data collection and Analysis Finding & suggestion Conclusion

Bibliography

Bibliography Financial Management I.M.Pandey Financial Management P.V.Kulkarni Financial Management Jain and Khan

Signature. (Gaurav. P.Chhajed)

Signature. (Prof. Dipali Chandak)

DR.MOONJE INSTITUTE OF MANAGEMENT & COMPUTER STUDIES, NASHIK-5 (2010-2011)

A SYNOPSIS ON

A ANALYTICAL STUDY OF FINANCIAL STATEMENT WITH THE HELP OF RATIO ANALYSIS UNDER GUIDENCE OF PROF.DIPALI CHANDAK
FROM YEAR 2007-08 TO 2010-11 WITH REFERENCE TO

VIJAY STEEL INDUSTRIES

NASHIK.

SUBMITTED BY

GAURAV PRADIP CHHAJED

M.B.A.FINANCE