MYSORE PAINTS AND VARNISH.

Ltd

A STUDY ON FINACIAL SATEMENT ANALYSIS MYSORE PAINTS

AND VARNISH, COM. Ltd

INTRODUCTION:
Financial statements or financial reports are formal records of the financial activities and position
of a business, person, or other entity Relevant financial information is presented in a structured
manner and in a form which Is easy to understand. They include four basic financial statement
accompanied by a management discussion and analysis A balance sheet or statement of financial
position, reports on a company's assets, liabilities, and owners’ equity at a given point in time.
An income statement or profit and loss report (P&L report), or statement of comprehensive
income, or statement of revenue and expense-reports on a company's income, expenses, and
profits over a stated period of time. A profit and loss statement provides information on the
operation of the enterprise these include sales and the various expenses incurred during the stated
period Financial Statement Analysis Financial statement analysis is the process of analysing a
company's financial statements for decision making purposes and to understand the overall
health of an organization. Financial statements record financial data, which must be evaluated
through financial statement analysis to become more useful to investors, shareholders, managers,
and other interested parties. Financial statement analysis is an evaluative method of determining
the past, current, and projected performance of a company. Several techniques are commonly
used as part of financial statement analysis including horizontal analysis, which compares two or
more years of financial data in both dollar and percentage form vertical analysis, in which each
category of accounts on the balance sheet is shown as percentage of the total account and ratio
analysis which calculate statistical relationship between data.

Financial Statements
Financial statement analysis allows analysts to identify trends by comparing ratios across
multiple periods and statement types. These statements allow analysts to measure liquidity,
profitability, company-wide efficiency, and cash flow. There are three main types of financial
statements: the balance sheet, income statement and cash flow statement. The balance sheet is a
snapshot of the company' assets, liabilities, and shareholders' equity at a specific period. Analysts
use the balance sheet to analyze trends in assets and debts. The income statement begins with
sales and ends with net income. It also provides analysts with the gross profit, operating profit,
and net profit. Each of these is divided by sales to determine gross profit margin, operating profit
margin, and net profit margin, respectively. The cash flow statement provides an overview of the
company's cash flows from operating activities, investing activities, and financing activities.
Financial statement analysis is the analysis a company financial statement for decision making
purposes and to understand the overall health of an organization. Financial statements record

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financial data, which must be evaluated through financial statement analysis to become more
useful to investors, shareholders, managers, and other interested parties. A statement of changes
in equity or equity statement, or statement of retained earnings, reports on the changes in equity
of the company over a stated period of time. A cash flow statement reports on a company's cash
flow activities, particularly its operating, investing and financing activities over a stated period of
time. In short, analysis of financial statements helps us to take various decisions at various places
of a firm However; we highlight below the purpose or need of the said analysis.

(a) It helps us to know the reasons for relative changes-either in profitability or in the financial
position as a whole

b) It also helps to know both the short-term liquidity position working capital position; as also
the long-term liquidity and solvency position of a firm

(c) It also highlights the operating efficiency and the present profit-earning capacity of the firm
as a whole.

(d) High Courts, Supreme Court, Arbitrators also require financial statements to settle various
disputed matters.

(e) Various financial I journal (viz. R.B.I. Bulletins), newspapers etc. also require financial
statements for analyzing and scrutinizing the financial position of a firm the readers.

REVIEW OF LITERATURE
Mistry Dharmendra S (2012):- Financial Statement Is Understood. A Study To Analyze The
Effect Of Various Determinants On The Profitability Of The Selected Companies. It Concluded
That Debt Equity Ratio, Inventory Ratio, Total Assets Were Important Determinants Which
Effect Positive Or Negative Effect On The Profitability. It Suggested to Improve Solvency As
To Reduce Fixed Financial Burden On The Company Profit & Give The Benefit Of Trading On
Equity To The Shareholders.

Zafar S.M.Tariq et,al. (2012) :- financial statement is the study explored that ratios are
calculated from financial statements which are prepared as desired policies adopted on
depreciation and stock valuation by the management. Ratio is simple comparison of numerator
and a denominator that cannot produce complete and authentic picture of business. Results are
manipulated and also may not highlight other factors which affect performance of firm by
promoters.

Al-tamimi et,al.(2013) :- financial statement is discussed the problem of changing the value of
monetary unit and its effects on the financial statements, because the accountants preparing these
statements under the monetary unit stability assumption without taking into consideration the

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changing of prices due to the inflation phenomena. Their paper concludes that the continuity of
using the historical cost principle under the changing of prices level will lead to misleading.
Financial statements and then the results of financial analysis will not represents the real position
of the company

Daniel A. Moses Joshunar (2013) :- financial statement is the study has been conducted to
identify the financial strength and weakness of the company . Using past 5 year financial
statements. Trend analysis & ratio analysis used to comment of financial status of company.
Financial performance of company is satisfactory and also suggested to increase the loan levels
of company for the better performance.

Agarwal, Nidhi (2015) : -financial statement is the study focus on the comparative financial
performance of companies. The financial data and information required for the study are drawn
from the various annual reports of companies. The liquidity and leverage analysis of both the
firms are done. To analyze the leverage position four ratios are considered namely, capital
gearing, debt-equity, total debt and proprietary ratio. The result shows that Tata motors ltd has to
increase the portion of proprietor’s fund in business to improve long term solvency position.

Nandhini, M. et,al. (2015) :- financial statement is have studied the impact of both financial
leverage as well as operating language on the profitability of company. The result shows that
company suffers from certain weakness & suggested to control fixed cost as well as variable cost
to gain adequate profits.

Takeh Ata et,al.(2015) :- Author has made conceptual model to outline the impact of capital
structure on the financial performance i.e. capital structure is independent variable that value is
measured by using four ratios namely, financial debt, total debt equity, total asset debt and
interest coverage ratio ware as financial performance is dependent variable that value is
measured by using four ratios as return on assets, return on equity , operating profit margin and
return on capital employed. Researcher has selected 13 major steel industries and applied various
statistical tools like standard deviation, correlation matrix, an nova etc are employed for testing
hypothesis with help

Kumar Rakesh Rasiklalajani et,al.(2015):- financial statement is the proposed research is

intended to examine the trend and pattern of financing the capital structure of Indian companies.
The study is to analyse the determinants of total debt ratios as well as determinants of short term
and long term ratios.

AlpeshGajera (2015) :- financial statement is in his research article an financial performance

evaluation of private and public sector banks found that there in significance difference in the
financial performance of these banks and private sector banks are performed better than public
sector banks in respect of capital adequacy ratio and financial performance.

Dr Richa Jain, Prof. Mitali Amit Shelankaret,al. (2015) :-

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Financial statement is Tools / Techniques of financial statement analysis:- The various tools and
techniques of financial statement analysis are Trend Percentage Analysis: It is also known as
Intra firm comparison in which the financial statements of the same company for few years are
compared for some important series of information.

IMPORTANCE OF ANALYSIS OF FINANCIAL STATEMENTS

1) Significance towards prospective investors:

 What will be the rate of return on their investment.

 Whether the money invested will be safe.
 Whether the concern would be in a position to repay its debts.
 What will be the future prospects of the concern.

2) Significance towards Financial analysis management:

 To ascertain the profitability of the enterprise.

 To ascertain the trend of progress of the concern.
 To know the financial position of the concern.
 To ascertain the adequacy of capital structure of the concern.
 To assess the own performance and operations.

3) Significance towards shareholders:

 The present and future profitability of their concern.

 The earning per share and the dividend per share, which have an impact on the
 Market prices of their shareholdings.
 The Financial position of the concern.
 The stake or risk undertaken by them.

4) Significance towards Financial institutions:

 Whether the concern has liquidity or short-term solvency to pay interest on

advances, and to repay the short-term advances.
 Whether the concern has long-term solvency to repay the long-term debts on
maturity.
 Whether the concern has sufficient assets to offer as security for advances.

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 How is the amount advanced by them is utilized by the concern.

 What is the risk undertaken by them as against the owners of the enterprise.

5) Significance towards suppliers of goods:

 Whether the production and sales of the concern are increasing or decreasing.
 Whether the concern has liquidity, i.e., whether the concern will be able to pay
its short-term obligations in time.
 Whether the profitability of the concern is good to ensure payment of debts.

6) Significance towards debenture holders:

 Whether the capital structure of the company is satisfactory.

 Whether the company has adequate assets to offer as security.
 What is the risk undertaken by them.
 Whether the short-term solvency of the company is good to pay the interest on
debentures in time.

SIGNIFICANCE :-

Financial statement analysis helps firms operate effectively. Financial statement

Analysis is a significant business activity because a corporation's financial statements

Provide useful information on its economic standing and profit levels. These

Statements also help an investor, a regulator or a company's top management

Understand operating data, evaluate cash receipts and payments during a period and

Appraise owners' investments in the company.

SCOPE OF THE STUDY

The scope study is confined only to cash flow statement, balance sheet, ratio analysis

Of Mysore paints and varnish company limited .

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OBJECTIVE OF FINANCIAL STATEMENT:

1. To understand the theoretical framework of financial statement analysis

2. To compare the balance sheet of the company.

3. To compare the cash flow statement.

4. To analysis of the application of various ratios

5. To give some financial suggestion

Research methodology:
The study is based on financial statement of analysis at Mysore paints and varnish,
company. The study is based on secondary data analysis of fast 4 years. It intended to
study financial statement of analysis by using secondary data which is in been collected
through annual reports.

The Tools used for the Analysis:

 Ratio Analysis :- Ratio analysis is the analysis of the interrelationship between two
financial figures.

 Cash Flow Analysis:- Cash flow analysis is the analysis of the change in the
cash position during a period.

 Comparative Financial Statements:- Comparative financial statement is a

analysis of financial state

CHAPTERIZATION
(1) INTRODUCTION.
(2) REVIEW OF LITERATURE.
(3) CONCEPTUAL FRAMEWORK.
(4) DATA ANALYZING AND INTERPRETATION.
(5) FINDING, SUGGESSIONS AND CONCLUSION

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BIBILOGRAPHY

 Agrawal, N.K. (2003) Management of Working Capital, Sterling Publishers Pvt, Ltd,
New Delhi. Pg no 155-170

 Anil Kumar (2000): Working Capital Management of Munjal Shows Ltd; in M.Com
Dissertation submitted to University of Rajasthan Jaipur Anthony,

 Robert N (1984): Management accounting, Text and Cases, p no 165-180,

 Brigham, Eugene F. and Risks, R Bruce (1998): Readings in Essentials of

Management, Finance, Holt, Rinehart and Winston. U.S.A. pg no 188-

 Chadda, R.S. (2001): Inventory Management in Irid.a, Bombay. Chapin, Albert F.

(1947) Credit and Collection pg no 15-23

 Cumen, Ward S. (2007): Principles of Financial Management, New York. Dauten Carl
A. (1991): Business Finance- The fundamentals of 271 Financial Management
Englewood Cliffs, New Jersey pg no 55-60

 Ernest, W. Walker (2006)Ernest: Essentials of Financing Management, Prentice Hall,

New Delhi. Pg no 88-106

 Foster, Louis O. (2012): Introduction to Accounting Richard Irwin, Chicago. Foulka,

Roy A. (2009): How to Control Accounts Receivable for Greater Profits, New York. Pg
no 33-65. B

 Nandini M & Sivasalthi V(2015). Vol.no.67.3-4(fall/winnter2015)pp.42-56

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