TITLE OF THE PROJECT

Financial Statement Analysis of “Karnataka Silk Marketing

Board”.

1 FINANCIAL STATEMENTS ANALYSIS:

Financial statements are prepared primarily for decision-making.

They play a dominant role in setting the framework of managerial
decision. However, the information provided in the financial statements is
not any end in itself as no meaningful conclusions can be drawn from
these statements alone. Hence these statements need to be analyzed and
interpreted so that suitable decisions can then be taken on the basis of the
information contained in them. The term ‘financial analysis’ also known
as ‘analysis and interpretation of financial statements’ refers to the process
of determining the financial strengths and weaknesses of a concern by
establishing strategic relationships between the items of the balance sheet,
profit and loss account and other operative data.

In the words of Myers, “financial statement analysis is largely a

study of relationship among the various financial factors in a business as
disclosed by a single set of statements, and a study of the trend of these
factors as shown in a series of statements”.
 In the words of Metcalf and Titard , “analyzing financial statements
is a process of evaluating the relationship between component parts of
financial statement to obtain a better understanding of a firm’s position
and performance”.

The purpose of financial analysis is to diagnose the information

contained in the financial statements so as to judge the profitability and
financial soundness of the concern. It is thus an attempt to determine the
significance and meaning of the data contained in the financial statements
so that a forecast may be made of future earnings, debt servicing ability,
repayment of debt upon maturity and profitability of a sound dividend
policy.
2 NEED AND IMPORTANCE OF THE STUDY

● The purpose of financial analysis is to diagnose the information

contained in the financial statements so as to judge the profitability and
financial soundness of Karnataka Silk Marketing Board.

● The analysis attempts to determine the significance and meaning of the

data contained in the financial statements so that a forecast may be
made of future earnings, debt servicing ability, repayment of debt upon
maturity and profitability of a sound dividend policy of Karnataka Silk
Marketing Board.

● The analysis will help determine the financial strengths and weaknesses
of Karnataka Silk Marketing Board by establishing strategic
relationships between the items of the balance sheet, profit and loss
account and other operative data.

● The analysis will help the process of evaluating the relationship

between component parts of financial statement to obtain a better
understanding of a firm’s position and performance”.

3 OBJECTIVES OF THE RESEARCH

● To study all the financial statements for the past four years and to
identify the changes in the various items present in them.

● To examine the impact of the changes in the financial statements

on the financial position and profitability of the board.

● Preparation of comparative statements to know the changes in the

absolute figures as well as the percentages.

● Preparation of trend analysis statement to know the trend for the

past four years.

● Preparation of common size statements to understand the

Composition of the various assets and liabilities in the balance
Sheet, the composition of the various expenses and the proportion
of the profits (gross, operating and net) to sales in the income
statements.

● Calculation of liquidity ratios, solvency ratios, general

profitability ratios, turnover ratios and overall profitability ratios
in order to ascertain financial significance of the figures contained
in the financial statements by establishing relationships between
them.
 ● To analyses the financial risk the company is exposed to and
examine the short-term liquidity and long-term solvency position
of the company.

● To examine the increase in the various cost items in relation to

the sales and the past years figures and analyses whether the
increase is giving justifiable returns or not.

4 LITERATURE REVIEW

4.1 CONCEPT OF FINANCIAL STATEMENTS

4.2 POSITION STATEMENT OR BALANCE SHEET

4.3 TYPES OF FINANCIAL ANALYSIS
4.4 STEPS INVOLVED IN ANALYSIS OF FINANCIAL
STATEMENT
4.5TECHNIQUES OR METHODS OF FINANCIAL ANALYSIS
4.6 RATIO ANALYSIS
4.7INTERPRETATION OF RATIOS
5 METHODOLOGY

6 CONCLUSIONS FROM THE ANALYSIS

7 FINDINGS

8 RECOMMENDATION

9 Bibliography