A

PROJECT REPORT
ON
“FINANCIAL STATEMENT”
A Dissertation work submitted in Partial Fulfilment of the
Requirements for the Award of the Degree of
BACHELOR OF BUSINESS ADMINISTRATION
By
SWATHI DACHARAM
(20811868400)
Under the
supervision of
Mr. PREM KUMAR PENTELA
Faculty
DEPARTMENT OF MANAGEMENT
ANISH DEGREE COLLEGE
(Affiliated to Osmania University)
HYDERABAD- 500062 (2018-2021)
 CERTIFICATE

This is to certify that the dissertation work entitled

FINANCIAL STATEMENT submitted by SWATHI
DACHARAM bearing Roll no. 208118684004, towards
partial fulfilment for the award of Bachelor’s Degree in
Business Management from Anish Degree College
(Affiliated to Osmania University) Hyderabad, is a record
of bonafide work done by her under my supervision. The
result embodied in the work, is not submitted to any other
University or Institute for the award of any degree.

Mr. Prem Kumar Pentela

Guide
DECLARATION

I hereby declare that project report on FINANCIAL

STATEMENT is an original bonafide work under taken by
me impartial fulfilment for the award of BACHELOR IN
BUSINESS ADMINISTRATION OU, Hyderabad.

I also declare that this project is the result of my own efforts

and has not been submitted to any other University or

Institution for the award of any Degree / Diploma.

SWATHI DACHARAM

2081-18-684-004
 ACKNOWLEDGEMENT
I express my sincere thanks to all those who have guided me to
complete my project work successfully, as a partial fulfillment for
the award of the Degree of (BACHELOR’S IN BUSINESS
ADMNISTRATION). It is obligatory on my part to undertake a
project in our course discipline and submit my project.

I am thankful to my motivator Mr. M. PREM KUMAR

PENTELA of ANISH DEGREE COLLEGE for his keen
interest in constant evaluation of my project throughout the
period.

Last but not the least, I express heartfelt thanks to college

faculty, staff and friends for their constant support,
encouragement and valuable contribution in the completion
of my project work.

SWATHI DACHARAM
2081-18-684-004

DEPARTMENT OF MANAGEMENT
ANISH DEGREE COLLEGE
(Affiliated to Osmania
University)
HYDERABAD, 500062
PROJECT EVALUATION SHEET

Name of the Candidate : SWATHI

DACHARAM

Roll No : 2081-18-684-004

Course Joined in : Bachelor of

Business Administration Date of External Viva-

Voce Examination :

Signature of External Examiner

Signature of HOD
 CONTENTS

SNO CHAPTER NAME. PAGE NO

1 INTRODUCTION 1-15

2 REVIEW OF LITERATURE. 17-22

3 RESEARCH METHODOLOG. 24-27

4 THEORITICAL FRAM WORK. 28-36

5. COMPANY PROFILE. 38-42

6 DATA ANALYSIS. 44-50

7 RESEARCH FINDINGS AND CONCLUSION 52-53

8 SUGGSTIONS AND RECOMMEN. 55-56

CHAPTER
1
INTRODUCTION
A. INTRODUCTION :
Financial statement analysis is a method of examining
and analyzing a company's accounting statements (financial
statements) to assess the company's past, present, or expected
future performance. This process of reviewing financial
statements enables better economic decisions to be made.

Globally, listed companies are required by law to submit

their financial statements to the appropriate authorities. For
example, publicly traded companies in the United States are
required to file their financial statements with the Securities and
Exchange Commission (SEC). Companies are also required to
provide their financial statements in the annual reports they
share with stakeholders. Since financial statements are prepared
to meet requirements, the second step in the process is to
analyze them effectively so that you can predict future
profitability and cash flows.

Therefore, the main objective of financial statement

analysis is to use information about a company's past
performance to predict its future growth. Another important
goal of financial statement analysis is to identify potential
problems and resolve them.
DEFINITION :

Financial statements are reports prepared by the Board of

Directors of a company to present the financial position and
activities at a particular point in time. A set of general-purpose
financial statements typically includes a balance sheet, income
statement, equity statement, and cash flow statement. These
reports are prepared to provide users outside the business, such
as investors and creditors, with more information about the
financial health of the business. Publicly traded companies are
also required to make these and other statements available to
regulators in a timely manner.
CHARACTERISTICS :
Financial statements are numerical, quantitative statements.
However, the information they provide to users has some
important qualitative characteristics. Let's take a look.

Understandability
One of the most important characteristics of financial
statements is that it is easy for users to understand. We assume
that users have a basic understanding of finance and
accounting. Therefore, the information must be presented in
such a way that he understands and understands it.
But information on materiality or relevance should not be
omitted from the report as it is considered too complex. Even
confusing information should always be included if it is
important.

Relevance
Financial statements must contain relevant information for them
to be useful to users. For these users, any information that helps
them make an investment decision is useful information. This
information will help them evaluate past, present, or even future
events.
Information can be predictive or confirmatory, and
generally both. For example, suppose that information about
dividends paid in the past year is valuable information to a
potential investor. Likewise, information about a company's
asset structure can help users gauge the future of the business.
Reliability
Information communicated to the user is of no value if it is
unreliable and trustworthy. For information to be reliable, it
must be free from error and free from any form of material
anomaly.
Assume that the information is important, but a reliable
estimate cannot be made. In such a case, the information may
be included in the account's notes. So if a lawsuit happens and
the company anticipates that they will have to pay a fine.
However, the amount of the fine is unpredictable. This is
important information that should be disclosed.

Comparability
First, users can compare a company's financial statements over a
period of time (a few years). This will allow them to analyze trends
and gain a better understanding of the company's financial
position. This is very important for their investment decision
Another important qualitative feature is that users need to
know the accounting methods used. They must be informed of
any major change in accounting policies having a significant
effect on these statements. One way to ensure that the accounts
are comparable over time is to strictly follow accounting
standards.
However, the need for comparability should not modulate
the account of the account representing the account in the best
possible way. The qualitative properties of relevance and
reliability must be modified if it is inappropriate to continue the
same policy.
IMPORTANCE
Analysis of financial statements is important for several reasons.
The importance of financial statement analysis can be expressed
as follows:

1. Holding Of Share
The shareholders are the owners of the company. Time and
time again, they may have to decide whether to continue
to own shares in the company or sell them. Analysis of
financial statements is important because it provides useful
information to shareholders in making such decisions.

2. Decisions And Plans

Company management is responsible for making decisions
and developing plans and policies for the future. Therefore,
they should always evaluate the performance and
effectiveness of their actions to achieve company goals in
the past. To this end, the analysis of financial statements is
important for the management of the business.

3. Extension Of Credit
Creditor is the person who provides debt capital for the
business. As a result, they may have to decide whether to
extend their business loans and charge a higher interest
rate. Analyzing financial statements provides them with
important information for their purposes.
 4. Investment Decision
Potential investors are those with excess capital to invest
in profitable opportunities. As a result, they often have to
decide to invest their capital in the company's stock. The
analysis of financial statements is important to them as
they can obtain information useful for their investment
decision making.

SIGNIFICANCE :
Financial statements are the final results of accounting work
performed during an accounting period. Common financial
statements include transactions, profit and loss account and
balance sheet. It is important that it provides useful information
to shareholders when making such decisions. They are also
important for the leaders of the company because by
publishing financial statements, the management can
communicate with the external interested parties on their
performance in the management of the company.
• Assess the earning capacity or profitability of a
business.
• Analyze the short-term and long-term solvency of the
company.
• Helps to carry out comparative studies between
different companies.
• Help in budget preparation.
• Analyzing financial statements provides them with
important information for their purposes.
• This is very important for them as they can get useful
information for their investment decisions.
 • They’ll are used as a prediction of the future
distribution of company profits to shareholder
members in terms of dividends.
• It is very useful for government agencies in analyzing
the tax payable to the business.

METHODS :
The most common methods of analyzing financial statements
are as follows:

HORIZONTAL ANALYSIS :
In horizontal analysis, analysts compare financial information for
a period with previous years. In this case, we are comparing a
row item with the same row item in a different time period (one
year or one quarter). The goal is to find meaningful changes in
any line item. For example, if the cost of goods sold (COGS)
increased more than the increase in sales or the gross profit
increased but the net profit decreased.

VERTICAL ANALYSIS :
In vertical analysis, each item in the financial statements is
weighted by another important item. Typically, in an income
statement, each item is weighted by sales or sales. On the
balance sheet, each item is represented as a percentage of total
assets. After having calculated the ratios, they can be compared
with previous years to identify any normal changes.
RATIO ANALYSIS :
It is one of the most popular methods of analyzing financial
statements. There are different types of ratios that help
management and analysts extract meaningful information.
There are four types of ratios: profitability ratios, liquidity ratios,
financial leverage ratios and operating ratios. Some of the most
common ratios are current ratio, PE ratio, debt ratio, etc. When
analysts calculate a ratio (or ratios), they can compare it with
the same ratio from previous years. Or, they can also compare it
to the industry average or to competitors. In addition, we can
compare rates with established standards or ideal ratios. For
example, a current ratio of 1 is very good. However,
benchmarks or ideal ratios vary by industry.

BENEFITS :
Financial statement analysis can benefit organizations in several
ways. It offers internal and external stakeholders the opportunity
to make informed decisions about investments. Financial
statement analysis also provides lenders with an objective view
of a company's financial health, helping them make lending
decisions. And because senior executives and other board
members rely on accounting to provide accurate descriptions of
the impact of their decisions, financial statement analysis is also
very helpful. useful. on corporate governance issues.
ADVANTAGES :
EVALUATION OF PAST PERFORMANCE
Financial statement analysis assesses the past performance of the
business such as sales, cash flow, revenue, return on investment,
etc. use different techniques such as trend analysis, vertical
analysis, ratio analysis, etc.

INDICATION OF CURRENT POSITION

The analysis of the financial statements shows the current
financial position of the company in terms of profitability and
operational performance.

PREDICTION OF FUTURE PERFORMANCE

Financial analysis provides data on the past and present financial
condition of a business. This data and information forms the basis
for forecasting future profits and business growth.

PLANNING AND DECISION MAKING

Financial statement analysis evaluates and compares a
company's past and current performance. It supports
management in the planning and decision-making process.

TAX DETERMINATION
The analysis of financial statements shows an exact financial
position and profitability of the company. As a result, it helps to
determine the tax liability of the business.
CREDIT DECISIONS
Financial statement analysis helps bankers make lending
decisions by providing up-to-date information about a
company's profitability, creditworthiness, liquidity and
performance.

B. NEED FOR THE STUDY :

Financial summary review is used to find examples and
relationships between costs incident report. Both inside the
organization and outside the organization (shown as a tester,
tenants, government and evaluators) financial statements must
appear/find productivity, solvency and solvency. The most
widely observed techniques used for species Correlation
clarification assessments are design evaluations, expressing
overall dimensions and scope assessment. These strategies
combine quantification and evaluation of results to record
affiliate, competitor or industry midpoint data to select the
relative quality and performance of search association.
C. OBJECTIVES :
Objective of financial statement analysis are as follows:

1.KNOW THE CURRENT POSITION

Developers/owners want to know if the business is on the right
track or if they are falling behind on the goals they have planned
in the past. Regularly recording financial transactions helps them
understand their financial situation and helps them better
analyze prospects.

2.ELIMINATING DISCREPANCIES IF ANY

Recording daily transactions i.e. sales and purchases, expenses or
income, or other reports helps them understand where they need
to improve and make quick decisions when of divergence.

3.FUTURE DECISION MAKING

Quarterly readings like book sales, purchases, air conditioner
sales or air conditioner manufacturers help them better execute
their plans. This gives them the opportunity to make future
decisions with reliable information. It's a new practice to prepare
interim settlement accounts, even for small businesses. Analysis
of short-term financial statements helps organizations make
effective decisions.
4.MINIMIZE THE CHANCES OF FRAUD
This is not the primary goal of trading analysis, but it cannot be
ignored. Often, we know that employees have deceived their
bosses, resulting in great loss for the company. The analysis of
reports will ensure that employees will know that management is
aware of everything that is going on in the company and also
that if doubts arise about a financial item, management can
investigate problem and will be able to solve it without incurring
additional losses

E. SCOPE OF THE STUDY :

The degree is to promote the use of the remarkable
hypothetical for actual use. When checking out focuses on
distinguishing the organization's current money capabilities
techniques and management points, we have found that the
best budget investigation strategy in order to improve the
organization's approach to deciding their interests. This test
provides knowledge to deal with the overrated and the
underrated things. This survey also offers reflections on the
modern effort and can be resolved in the direction of
maintaining viable monetary controls.
F. LIMITATIONS OF THE STUDY:
Limitations of financial statement analysis are as follows:

1.NOT A SUBSTITUTE OF JUDGEMENT

Quality selection cannot occur in financial reporting review. This
is just one way to achieve Final score. Finally, it is up to the
examiners or participating individuals to make decisions or make
judgments. Your knowledge and experience.

2.BASED ON HISTORICAL DATA

Past accounting data is combined into financial reports for
analysis. This The future cannot be the same as the past.
Therefore, the study of financial reports cannot provide a
prerequisite for planning, the next caliber, forecasting, and
organization.

3.PROBLEM IN COMPARABILITY
The measurement standard of trade concerns changes with
changes in transaction volume. Therefore, the number Various
budget reports have lost their normality due to similarities.

4.RELIABILITY OF FIGURES
Sometimes, part of the tax summary will be changed through
display. If this is true, the result of the review of the budget
summary is wrong or stupid.
5.DIFFERENT PROCEDURES OF ACCORDING AND
FINANCING
The final piles of raw materials are settled according to the
purchase price. The last pile of finite things is one Market price
dynamics or cost estimates, whichever is less. By the time all is
said, Final shares are considered at market cost or estimate,
whichever is less. He suggested that the end piles of unrefined
material are valued at cost or market value, whichever is less.
Later; a Expert These concentrations should be kept in mind
during inspection and overall lighting The results will be difficult
to understand.

6.CHANGE IN ACCOUNTING METHODS

Unified accounting techniques and frameworks for the number
of years are required. In his case are normal changes, silhouettes
of different periods will be unprecedented and rare. In such case,
the test has no relevance or meaning.

7.CHANGE IN THE VALUE OF MONEY

The impact of money on purchases fades from year to year due
to renewal. This creates problems in the relative examination of
the monetary contours of different years.

8.LIMITATIONS OF THE TOOLS APPLICATION FOR

ANALYSIS
There are many different tools used by investigators to conduct
investigations. Despite the fact that, the use of a particular tool
or process depends on ability and habit examiner. In case an
invalid utility or strategy is connected, the result is erroneous.
9.NO VALUATION OF MANAGERIAL ABILITY
Consequences of tax report investigation should not be
considered as advice Fortunate or unfortunate government.
Subsequently, administrative capacity cannot be Estimated by
exam.

10.CHANGE OF BUSINESS SITUATION

The environment and conditions of one company will never be
the same as those of another company. In addition, the business
Conditions and results in one year can never be compared. After,
difficult It is used to investigate the relevance of one company to
another company.
CHAPTER
2
REVIEW
OF
LITERATURE
A.10-15 LITERATURE REVIEW

KENNEDY AND MULLER (1999): Financial statement analysis

and interpretation is an attempt to determine the significance
and significance of financial statement data so that predictions
can be made about future earnings prospects, ability to pay
interest, and more. , liabilities (both current and long-term) and
profitability and a sound dividend policy.

SUSAN WARD (2008): Financial analysis using ratios between

important values helps investors manage the large number of
digits in a company's financial statements. For example, they can
calculate the percentage of net profit that a company generates
on the funds it has deployed. All things being the same, a
company that achieves a higher percentage of profit than others
is a better investment choice.

BLISS (1923): Ranges and create an absolute model based on

ranges. Goal behind This main test relationship within the
company is represented by the scope and performance
complete model according to range. The reason why the
program doesn't grow but breathes instead life on others to
begin to solve shows that this theory has not yet evolved
instead of being promoted.
GILMAN (1925): Consider the scope. Journal of Investigation of
Species Related Organizations 28.1: 1542. This examination
shows (1) the ranges are time related and change over time. the
past therefore cannot be explained (2) scope is not a
conventional metric for evaluating activity combinations (3)
scope has an appropriate impact on the observer's mind and
rationality unclear location and (4) often fluctuating ranges also
have an unshakable impact on quality

FITZPATRICK (1925): "unmistakable range survey". Activity

Magazine Research Consortium 62.4:608-615. This review reveals
that thirteen unmistakable patterns of examined 120 ranges of
bankrupt companies and found that three out of thirteen
predicted ranges business failure with exact accuracy while
different ranges also have some estimate control.

HITCHINGS (1990): Verified rates are a complex and valuable

tool .Operator’s diary Research Consortium 117. In this study, it
was found that examining the proportions is a credit rating tool
that includes an estimate of a mortgagee's ability to meet its debt
obligations.
JAGANNADHA RAO (1991): "The company's financial
performance is accrual results ". page no 33. This study indicates
that there is a financial underperformance of business is the
cumulative result of adverse factors such as continued decline
using unit capacity, reducing the amount of recovered sugar in
some units, malfunction performance, high sugarcane prices
advised by the state government and paid for by companies, low
rates for sugar prices.

JONAS ELMERRAJI (2003): Let's quickly check the money

related articles with the rates. Page 36, 39. This test characterizes
various direct speculators who want to exit choose fate rather
than trying to manage the terror of money market rates. Truly
the rates are not that scary even if you don't have a business
degree or in cash. Using ratios to deal with informed choices
regarding a speculative sign well, when you realize how to use
them.

KRISHNA PRADESH UPADHYAY (2004): "Types of budget

ratios". In this check that it used dissipation rate, liquidity ratio,
efficiency ratio, yield ratio and valuation ratio. Various estimates
such as quantifiable return, return on value, return on resources,
earned per share, profit per offer, and resource utilization ratios
are used to assess the benefits of organizations. It its
investigation shows that the indissoluble position of the two the
institutions are not rational and the credit creation limits are
generally very wide in the two institutions.
I.M.PANDEY (2007): "Management of the funds and profits of
the company". Sixth edition, P. no 1.58. The purpose of this check,
the factors related to money are given in the budget file seriously
who will suggest activities that a person may need to initiate to
improve the functioning of the association monetary conditions.

JAGHYASU GAUR (2010): Journal "influence has a negative

association with capital structure" of Activity Research, 244 (2),
540554. The investigation supports the hypothesis that the
influence of a company negatively affects performance. The
other variable is working capital weighting, is again a required
metric because it is about the liquidity with which the company
trades with its operational point of view. Companies are making
a credible effort to reduce their processing time borrowers and
reserves receivable as much as can reasonably be expected.

PRATHEEPKANTH (2011): "Impacts on the capital structure and

operations of the organization or execution". Journal of Global
Financial Research 6.1: 13. Examination subject to Optional
information is found in the company-printed budget report. He
used various practical tools such as rate, connection, ANOVA
recurrence test. It upon review it was decided that professional
organizations are primarily based on bond capital. That way, they
have to pay an extra distribution fee.
RACHCHI MINAXI (2012): "Execution, he pointed out and
instructed that the tax report The review includes subdividing the
budget summary to remove information can help grassroots
leaders. "Page 388. This survey describes how to evaluate the
connection between sections of the budget statement to
understand location and implementation of the element.

B. BIBLIOGRAPHY
• Analysis of Financial Statements and Forecast of Stock
Returns, Journal of Accounting and Economics.
Amsterdam: North Holland.
• Robinson, T. R. and. AL (2004) Analysis of the financial
statements: global perspective. Top Saddle River, New
Jersey: Pearson Education.
• Soffer, L. and Soffer, R. J. J. (No date) Analysis of the
financial statements: evaluation approach.
• Penman, Stephen H. (2010) Analysis of Financial
Statements and Valuation of Securities. 4th edition,
London: McGraw Hill.
• Rees, Bill (1995) Financial Analysis. 2nd Edition. Hemel
Hempstead: Prentice Hall.
• Subranyam, K. R. and Wild, John J. (2009) Analysis of the
financial statements. 10th ed. Boston, Mass: McGraw- Hill
lrwin.
• Elliott ,Barry, Elliott, Jamie. Report financial accounting.
15th edition. Harlow: Financial Times Prentice Hall; 2012
• Ohlson, James A. Financial ratios and bankruptcy
stochastic forecasts. Accounting research journal.
Baltimore: University of Chicago, Graduate School of
Business, Professional Accounting Institute.
• Thomas AL. Assignment: fallacy and theorists. Accounting
Studies. 3rd Edition London: Association of Chartered
Accountants of England and Wales. 1977 year.

• www.slideshare.net
• www.bartleby.com
• https://em.m.wikipedia.org
• www.investopedio.com
• www.accountingtools.com
• www.yourarticlelibrary.com
• www.cfainstitute.org
• www.cleverism.com
• www.analyticssteps.com
• www.ipl.org
• https://penpoin.com
• https://accountantnextdoor.com
• www.cliffsnotes.com
• https://accountlearing.com
• https://www.wallstreetmojo.com
• https://onlinemaster.ohio.edu
• https://www.toppr.com
• https://study.com
• https://www.readyratio.com
CHAPTER
3
RESEARCH
METHODOLOGY
SOURCES OF DATA:
SECONDARY DATA:
• Sources of data is secondary data because of covid-19
• From the annual reports maintained by the
organization\companies such as profit statements and
balance sheet loss.
• Books and magazines on the subject.
• Data is collected from the company's website
( Navabharat Co-operative Urban Bank Ltd )

TOOLS AND TECHNIQUES FINANCIAL

STATEMENT ANALYSIS
There are many ways to review your budget statement. These
strategies allow you to delegate tasks.

ACCOUNTING TECHNIQUES
There are many accounting methods and tools that can be used
for financial analysis, such as Comparative report analysis, ratio
analysis, trend analysis, value-added analysis, Common size
declaration analysis and other customers obtain the most
luxurious technology most suitable for them. The accounting
program you intend to use for the financial exam Report.
1.RATIO ANALYSIS
Currency-related researchers need indicators of currency
conditions and company performance. Use proportions or lists
from time to time to be safe under this rustic cone, The two items
in the budget information are settled with each other. Proportion,
like a device Currency management can be expressed as (a) rate,
(b) part, and (c) a rate Correlation between numbers.
According to batty, the term "accounting ratio" is used to denote
imperative relationships Occurs between undisclosed figures,
profits and misfortunes in the currency register Accounts, in
budget controllers, frameworks, or some other accounting
chronicles association.
Financial ratios can be in things Used for scale. Four categories
are usually used in financial proportions.
1. Liquidity ratio
2. Activity rate
3. leverage
3. Earnings ratio
2.COMMONN SIZE STATEMENT
The basic size joint is called a segment rate or piece rate
statement. Vertical advertisement or explanation. In this
approach, total resources or liabilities And the number or net
transaction is equal to one hundred, and in individual cases the
rate The matter is decided by Lindsay. In the regular scale salary
expression, the net transaction depends on 100% and is different
Things are expressed at transaction prices. In the same way in
basic size coin registers. Estimate resources as absolute liability
as 100% and different resources. Liabilities are expressed as the
proportion of this total.
Formula = (amount of analysis \ total base amount of asset) x
100%

3.COMPARATIVE STATEMENT ANALYSIS

Checking the budget summary for at least two years is another
way Breaking down the information. Similar tax summaries are
explanations related to currency Provide time perspectives
according to the planned position in the company or the position
in the company Consider the different components of the budget
framework, take this type of statement as an example For this
reason, the profit and loss and profit and loss of asset reports
and currency records And completed the description of
misfortune in the nearby structure, which can be appear.
Complete data (rupee or currency value) The percentage of
absolute data increases or decreases Increase or decrease in
absolute value data expressed in monetary value.
4.TREND ANALYSIS
Trend analysis is an attempt to analysis market trends or
analysis future trends of the company by comparing its financial
statements and making the best decision based on past
performance results. The analysis is complete.
Trend analysis involves collecting information from various
periods and plotting the collected information on a horizontal
line. The purpose is to find an operable pattern from the
information provided. In finance, trend analysis is used for
technical analysis and accounting analysis of stocks.

5.VALUE-ADDED ANALYSIS
It is the process of realising the benefits and basic attributes of a
product or service. Those attributes or benefits that are most
attractive to customers are preserved and enhanced, while others
are eliminated or reduced. The main objective of value added
analysis is to obtain a value greater than its cost of production
for the final product. Production costs include all the resources
needed to produce a product or service, such as labour, raw
materials, transportation, warehousing, and overhead.
For value-added analysis of a specific process, all activities
involved in the process must be carefully checked. The increase
value of any activity to the entire process must be a positive
value, and the calculation formula is: Value added = (product
value after the event) (product value before the event)
CHAPTER
4
THEORITICAL
FRAME WORK
A. BACK GROUND OF FINANCIAL STATEMENT
ANALYSIS:
Financial statement analysis (or financial analysis) is the
process of examining and analyzing a company's financial
statements in order to make better economic decisions in
order to generate future profits.
The main reason for the evolution of financial
statement analysis dates back to the last stage of the
promotion of industrial maturity by the United States in the
second half of the 19th century. As business management in
various industrial sectors shifted from entrepreneurial
capitalists to professional directors, and as the financial
sector became the dominant force in the economy, the
demand for financial statements increased accordingly.
These two changes are the main reasons for the analysis of
the financial statements.
But this is not the starting point for everything. If we
go back to the history book, we can evaluate from clay
tablets to clouds, accounting and finance have seen
tremendous changes in tools, methods, and methods from
the very beginning. Start. But in the face of the ever-
changing business environment, they are still evolving.
The development of the type and amount of data available to
financial professionals, as well as powerful new tools for
analyzing data, have created a role for financial analysis. The
evolution from the passive to the predictive has turned finance
into a compass for strategic business decisions; Senior leaders
are beginning to expect timely information, which puts
pressure on the team.
This blog post tracks the major historical
developments that have made the latest financial analytics
capabilities. Accounting dates back thousands of years and
has been used and investigated in many parts of the world.
Given the importance of the trade in goods to human
civilization, it is not surprising that it dates back to the
beginning of human history, where bookkeeping and
accounting were recorded. Elementary accounting
documents have been found in the remains of Babylon,
Mesopotamia, and other ancient civilizations that date back
thousands of years. Early descriptions of this language date
back to Mesopotamian civilization. These people kept the
fastest records of merchandise received for trading. It was
also concerned with the early record keeping of the ancient
Egyptians and Babylonians. They used more primitive
accounting methods to record transactions involving
animals, livestock, and crops. In India, "Arthashasthra" was
written "Arthashasthra" in the Mauryan dynasty around the
2nd century BC by the philosopher and economist Kautilya.
This book contained advice and details on how to maintain
accounting records.
 Accounting likely emerged when society was not yet a
cash and commercial economy, but rather a system of barter
and trade (before 2000 BC). The ledger in these times reads
like a story, including the dates and descriptions of the
transactions made or the terms of the services provided. All
transactions were stored on a separate ledger, providing
evidence in case the matter was brought to the magistrate in
the event of a dispute. Although complex, this system,
detailing all contracts, was ideal because transactions could
take a long time to complete.
With the availability of telephone calls, merchants and
merchants have begun to accumulate material wealth and
bookkeeping has evolved. Even after that, business sense and
numerical ability were not always discovered from one person
as it is now, so merchants who are not good at math are
borrowing and keeping records of borrowing by adopting
bookkeeping. .. Until the late 1400s, this information was
arranged in a one-column descriptive manner, regardless of
whether the amount was paid or borrowed. This is called
single item bookkeeping and is similar to what many people
do to keep track of their checkbooks. The treasurer was
reading the description of each item to decide whether to
deduct or add to a simple calculation such as monthly P & L.
This was a very time consuming and inefficient way to
aggregate things.
 Luca Bartolomeo de Pacioli, an investigator of the
Franciscan Italian mathematician known as the "father of
accounting and bookkeeping," described the doubles
accounting system in his 1494 book Summa de Arithmetica,
Geometria. Proportioni and Proportionalita. This system
contains most of the accounting cycles we know today and
describes hostility and the use of directors whose descriptive
categories are still used on the balance sheet and income
statement. Luca Pacioli improved the structure of general
bookkeeping and laid the foundation for modern accounting.
Pacioli showed in his book the advantages of a doubles input
system for bookkeeping. The idea was to list corporate
resources separately from other entities claiming those
resources. In its simplest form, this meant creating a balance
sheet with individual debits and credits. This innovation makes
bookkeeping more efficient, giving you a clearer picture of the
company's overall strengths. However, this picture is only for
the owner who hires a bookkeeper. Ordinary people can't see
these records - at least not yet.
Later, accounting moved to the United States with the
colonization of Europe. Although it is sometimes referred to
as bookkeeping, bookkeepers are still entering basic data and
performing calculations for business owners.
 The business in question is small enough that the owner is
personally involved and understands the health of the
business. They don't need accountants to create complex
financial statements or cost-benefit analysis.
The emergence of American companies and the
establishment of railroads were catalysts for turning
bookkeeping into accounting practice. Of these two factors,
the influence of railways is much greater. To deliver goods and
people to a destination, you need a distribution network,
shipping schedules, charging rates, competitive rates, and
some way to assess whether all of this is done as efficiently as
possible. Use cost estimates, financial statements, operating
ratios, production reports, and many other indicators for
accounting processing to provide companies with the data
they need to make informed decisions.
The railway has also shrunk the country. Commercial
transactions can be completed in days instead of months, and
information can be transferred from one city to another at a
faster rate. Even before the railway was built, time across the
country did not flow evenly. In the past, each municipality
used general consensus to determine the start and end of the
day. This has been changed to a unified system because
goods need to be delivered and unloaded at certain sites at
predictable times.
 The shrinking of the country and the introduction of
unification have encouraged investment, which in turn has
paid more attention to accounting. Until the 19th century,
investment was a game of knowledge or luck. People buy
stocks in companies they know well, or they know the industry
or the owners, or they invest blindly where their family and
friends encourage them. There is no financial data to verify
whether you want to invest in a company or company that you
know nothing about. The risk of this investment makes it an
activity for the rich, a movement of the rich with gambling
stains. This image has never completely faded.
Obviously, there have been many developments since
then, but let's fast forward to the 20th century. Three major
milestones laid the foundation for today's modern
accounting and financial functions.
In 1913, the United States approved the 16th Amendment
to the Constitution, establishing a federal income tax. The
amendment forces individuals and businesses to improve
record keeping, but there is considerable confusion as to how
to do so.
Therefore, in the Federal Reserve announcement in
April 1917, the Federal Reserve issued "Unified Accounting"
Although the advertisement is intended to promote
accounting uniformity, it leaves most accounting options to
professional judgment.
 Finally, after the stock market crash of 1929, the US
Congress passed the Privacy Act of 1933 and the Confidential
Exchange Act of 1934. These practices prohibit fraud,
transgression, misrepresentation and other fraud in the sale
of securities. He also created the Securities and Exchange
Commission (SEC), giving it broad powers to oversee and
regulate the securities industry. The Exchange Act also
empowers the SEC to require periodic disclosure of
information about companies whose securities are publicly
traded.
Eager to attract more funds to expand its business, the
company began publishing financial statements in the form of
balance sheets, income statements, and cash flow statements.
Investment capital from sources outside the company
becomes more important than the capital provided by the
individual owner who started the business. Although the
introduction of this private equity has increased the reach and
profits of most companies, it has also increased the pressure
on management to please the new boss, the shareholder. As
far as shareholders are concerned, they cannot fully trust
management, so the need for an independent financial review
of the company's operations becomes obvious.
 Accountants are already indispensable to attract
investors and quickly become necessary to maintain investor
confidence. The accounting profession was recognized in
1896, and the law stipulated that the title of Certified Public
Accountant (CPA) could only be awarded to individuals who
passed the national exam and had three years of experience
in the field. The birth of professional accountants coincided
with the moment. Less than 20 years later, when the US
government is in dire need of funds and begins to collect
income taxes, the demand for certified public accountants will
skyrocket.
Technology has changed the way we view accounting
today. We no longer need to worry about detailed records of
cash on hand or commodity transactions. Since the first
records were kept in the United States, accountants have used
many different tools to help their careers. The addition
machine of 1890 helped early accountants calculate receipts
faster, and they were able to quickly check the books of
accounts. When IBM released the first computer in 1952,
accountants were one of the first to use it. Recent
technological advancements have brought accounting into
the field of computer programs like Quickbooks. These new
advancements are more intuitive and can help accountants
complete their work faster and easier.
 These few points in history show the basis of the common
practice of accounting and the driving force of modern
accounting and financial functions. But how is the practice of
modern financial analysis achieved?
There are two types of financial analysis: technical
analysis and fundamental analysis. Technical analysis
examines quantitative charts, such as moving averages (MA),
while fundamental analysis uses ratios, such as a company's
earnings per share (EPS). company. For example, technical
analysis was performed on the GBP\USD exchange rate after
the Brexit vote in June 2016. Looking at the chart of the
exchange rate, it can be determined that the rate has fallen.
significantly after the June 23, 2016 vote, after which it
recovered over a 48-hour period by 375 basis points (bps).
And as an example of fundamental analysis, Discover Financial
Services released its first quarter 2016 results on July 19, 2016.
The company had EPS of $1.40, up from $1.33 for same
quarter of 2015, this is a good sign.
 CHAPTER
5
COMPANY PROFILE
NAVABHARAT CO-OPERATIVE URBAN BANK LTD
Bank was inaugurated with total computerization on
27.12.1999 with a share capital of Rs.30,00,000 contributed by
2000 members in a small premises of 650 sft. with a meagre
investment of Rs.300000 on furniture and fixtures. Earned profit
in its first 3 months of existence and declared dividend of 10%
for the year ended 31.03.2000. Bank established Quality
Management Systems (QMS) of international standards and
received Quality System Certification License from Bureau of
Indian Standards (BIS) on 30.03.2004 and has been securing ISO
QMS License renewals since then. Our bank is the only bank
that secured QSC License from BIS. Bank has been awarded
Grade 'A' in Statutory Audits since inception.
Bank trained several raw graduates as banking
professionals who are now in various large banks. Bank assisted
several small entrepreneurs who turned very successful in their
endeavors and created employment to hundreds of
unemployed youth..
Bank has been contributing its mite for nation building
since its inception; supported large number of weaker sections,
mostly small and micro entrepreneurs and self employed..
 Bank took over Netha Cooperative Urban Bank Limited, West
Maredpalli and shifted it to a slum in Balajinagar, Jawahar Nagar
Gram Panchayat to support weaker sections who were forced to
avail gold loans with exorbitant rates of interest ranging from
36%pa to 60%pa. Shifting a bank branch from a metropolitan
city to a gram panchayat slum is a history in Indian banking.
Bank was headed by a banking professional Sri
B.Ramabrahmmam a retired GM of Andhra Bank from
31.08.2003 to 20.04.2015.
He resumed change as Chairman again since 12-11-16 Mr.
Veerapaneni Venkat Rathnam and Mrs. Y. Tripuramba are
retired Senior Manager of Andhra Bank and Mr. B. Leela
Krishnaiah a retired Manager of Canara Bank are the
professional directors..
Bank's past Directors include Sri M. Gopala Krishnaiah,
Retired GM, Sri RVV Satyanarayana Murthy, Retd. AGM, Sri J S.
Sastry, Retd. AGM, Sri J Pullaiah, Retd. Dy GM, of Andhra Bank
and Sri M. Sudarsana Babu, Retd. MD of Coastal Local Area
Bank, Vijayawada..
Mr. P. Panduranga Rao, a highly qualified professional
banker having varied managerial experience of 25 years in
Andhra Bank is bank's MD since 21.03.2001. He had research
experience at National Institute of Bank Management, Pune and
authored a book on Excellence in Bank Branch Management
based on his intensive research findings.
A.VISION
•A premier Co-operative Urban Bank with International
Standards of quality, efficiency and professionalism with core
institutional values.
• An Institution with a culture of mutual care, concern and
commitment.
•A Satisfying and exciting work environment and continuous
learning opportunities.

B.MISSION
• To Secure a premier position among the Indian Co-operative
Urban Banks with international standards , committed to
excellence in customer, shareholder and employee satisfaction.

C.POLICIES
Navabharat Bank’s quality policy is to strive for securing
customer satisfaction by providing banking services of excellent
quality while ensuring total security It shall be attained through
effective implementation of innovative banking practices
through professional management by continuously improving
it’s processes with total involvement of employees at all levels.
D.RECOGNITIONS
The bank has established an international standard quality
management system (QMS) and obtained a quality system
certification license from the Bureau of Indian Standards (BIS) on
March 3, 2004. Since then, it has been obtaining ISO QMS license
renewal. Our bank is the only bank that has obtained a QSC license
from BIS.

E.ACHIEVEMENTS
Since its creation, the bank has obtained an "A" level in statutory
audits. The bank has trained several college graduates to become
banking professionals and they now work in major banks. The bank
helped several successful small business owners and created job
opportunities for hundreds of unemployed youth. Since its
constitution, the bank has always contributed its own strength to the
construction of the country, it has supported a large number of
disadvantaged groups, mainly small and micro-entrepreneurs and the
self-employed.

F.SERVICES
• Excellent services from Navabharat co-operative urban
bank for all the needy people.
• Custodial services for safe keeping valuable documents.
• The services include monthly blood test for 1 year.
• Standardized services, Assured quality!
Lowest services charges!
G.ORGANISATION STRUCTURE
• BOARD OF DIRECTORS
1. INTERNAL AUDIT
2. CEO
3. GENERAL COUNSEL BOARD & SECRETARY

• CEO
1. GOVERNMENT RELATIONS GROUP
2. HUMAN RESOURCES GROUP
3. WHOLESALE BANKING GROUP
4. CONSUMER BANKING GROUP
5. OPERATIONS & IT GROUP
6. GROUP TREASURER
7. CHIEF FINANCIAL OFFICER
8. CHIEF RISK OFFICER

• OPERATIONS & IT GROUP

1. CHIEF OPERATIONS OFFICER

• CHIEF OPERATIONS OFFICER

1. ACCOUNTS
2. CLIENTS SERVICES
3. MONITORING AND REPORTING
4. OPERATIONS CONTROL
5. TRADE PROCESSING AND SUPPORT
6. INFORMATION TECHNOLOGY
7. SALES & TRADING (FRONT OFFICE)
8. CORPORATE FINANCE
9. WEALTH MANAGEMENT .
CHAPTER
6
DATA ANALYSIS
COMPARATIVE FINANCIAL STATEMENT
The comparative budget summary shows the budget situation in
different periods. The substance of currency-related positions appears
in a similar structure to reflect The currency position is at least 2
periods. Two budget reports (accounting report and salary Expression)
for the purpose of examinations related to money or for Correlation.
These advertisements allow internal and external investigations of
money-related positions. Results of work. The comparison statement
can display: 1. The full figure (amount in rupees). 2. The adjustment of
the total, that is, the increase or decrease of the total picture. 3. The
total information is used as the rate. 4. Interest rates go up or down.
Similarly, nearby numbers will show the pattern and direction of
positions related to the coin, and Results of the work.

A.CAMPARATIVE INCOME STATEMENT

Compare financial statement verifications to provide data to
investigate methods of change. Deal. A budget summary is a display
date for a specific date in a specific time range. This The budget
summary balance sheet determines the monetary position at the end
of a project Accounting period and financial summary. The salary
report shows work and not The results of a period of work. However,
cash-related supervisors and senior managers also Passionate about
whether the business is developing in a good environment or in an
unfavorable direction. exists The analysis that follows these routes in
the vicinity of the budget report is carefully planned. The analysis of
relative financial statements is also considered a horizontal inspection.
This As with any increase, comparative financial statements provide at
least data on multi-year figures. Or start to decline from the previous
year's numbers and the level of increase or decrease. This type of
Inspection helps to understand the actual quality and deficiencies.
Payment requirements represent the net profit or total deficit under
the activity. The relative salary description will show the highest
figures for at least two periods. The ultimate change begins Use one
point, then use the next, as long as you want. Rate adjustment. As,
There are two additional periods of numbers; users can quickly
determine whether Bid increases or decreases, regardless of whether
the cost of the bid increases or decreases and many more.

B.COMPARATIVE BALANCE SHEET

Comparative accounting reports of at least two unique dates can be
used for correlation Pros and cons, and discover any expansion or
reduction of these things. Here Therefore, in a separate currency
register, the emphasis is on the current position. Is changing or Make
adjustments in the Near Currency Register. Such currency is recorded
in Check the pattern and development at once. There are two main
types of benefits: must have access to current resources and non-
current resources Spending or converting into money in a business
cycle is usually regarded as one year. Three The huge current
resources found in the currency register usually attract speculators To
organizations that have a lot of money in accounting reports. All things
considered, money Provide insurance for difficult situations and, in
addition, provide more options for the organization Future
improvements. Money creation regularly maintains reliable
performance indicators for the organization. Of course It shows that
money is accumulating so fast that the government does not have
enough money Energy to understand how to use it.
A large amount of money drops may be Indicates inconvenience.
Taking all factors into account, if a large amount of money is used,
more The organization's currency register. Financial experts must
wonder why the cash has not been Put into use. Given the lack of
government funds, there may be funds The risk of speculation may be
too short; It lies in identifying how to manage the funds. A promise
that the company must pay within a year, for example, fees that can
be inferred from the supplier. Then, non-current liabilities clarify the
amount owed by the association for a year or more. you In most cases,
you need to see a measure of management obligations. When The
level of obligation is decreasing, which is a decent sign.
COMPARATIVE BALANCE SHEET AS ON 31.03.18, 31.03.19 &
31.03.20

31.03.18 31.03.19 31.03.20

Capital & Liabilities

Capital 9958920 10088860 10050860

Reserves and surplus 19063893 20537891 22516937

Deposits 332064661 358580231 327253689

Borrowing 0 0 0

Other liabilities & providion 16167757 9172488 12572293

TOTAL 377255231 398379470 372393779

Assets

Cash,money at call & short notice 20544166 21783390 15749707

Balances with bank 26656094 63383847 83259407

Investments 86433750 101343750 64485250

Advances 226732134 193214178 196888402

Fixed assets 3566826 3086685 3501806

Other assets 13322261 15557620 8509207

TOTAL 377255231 398379470 372393779

Contingent liabilities 0 0 0
INTERPRETATION:
According to comparative balance sheet in the year 31.03.18
capital and liabilities are less in amount compared to the year
31.03.19 capital and liabilities. And in the year 31.03.19 capital
and liabilities are high in amount compared to the year 31.03.20.
If capital and liabilities are low it means that there is going to be
higher rate of returns and if it is high it may cause debts as on
In the year 31.03.18 assets are lesser then 30.03.19 same as
30.03.19 assets are higher then the 30.03.20 if assets are less or
high it does not cause any problem. If you purchased the assets
and the bank is not using that may cause problem to the bank.
COMPARATIVE INCOME STATEMENT AS ON 30.03.18,
30.03.19 & 30.03.20

31.03.18 31.03.19 31.03.20

INCOME

Interest earned 41495807 47536339 47025638

Other income 3088836 15889285 9994816

TOTAL 44584643 63425624 57020499

EXPENDITURE

Interest expended 22706258 24813001 24557415

Operating expenses 12833025 12587611 16546834

Provision & contingencies 73501179 24503982 14360359

TOTAL 42889462 61465832 55464609

Profit after IT 1695181 1521030 1555890

Profit b/f 3235009 4903

TOTAL 4930190 1525933 1555890

APPROPRIATIONS

Transfer to statutory reserve 428164 380258 388994

Transfer to education fund 16952 150000 150000

Transfer to bad and doubtful debts

reserve 85633 76051 77799
Transfer to administrative &
contingency fund 2500000

Proposed divident 1170000 600000

Balance carried over 729442 319624 764617

TOTAL 4930190 1525933 1555890

INTERPRETATION:
According to comparative income statement in the year 30.03.18
income is less then the year 31.03.19 income if income is less it
may effect the bank. And the income of 30.03.19 is high then the
year 30.03.20 income if income is high then it is showing that
there are more profits.
Same as the year 30.03.18 expenditure is less then the year
30.03.19 expenditure when expenditure is less then the spending
money for the bank will be less and the year 30.03.19 expenditure
is high then the 30.03.20. expenditure when expenditure is high
then the bank spending expenditure will be high.
The year of 30.03.18 appropriations is high then the year 30.03.19
same as 30.03.19 appropriation is high then the 30.03.20 it mean
high rate of appropriations will make the bank goodwill high.
CHAPTER
7
RESEARCH
FINDINGS
AND
CONCLUSION
FINDINGS :
• Comparative studies, general size analysis and trend
analysis studies are very good. Bank profitability is not bad.

• The balance sheet shows that the year of 2018 is less then
the year of 2019 it has fall down. And the year of 2019 high
then the 2020.

• The balance sheet showing that the values are decreasing

year to year

• The income statement shows same as balance sheet that

the values are decreasing.

• The income statement also shows that the profits are less
when compared with the years 2019-20.

• Also the expenditure is high when compared with the years

2018-19

• And the appropriations are high in the years 2018-19 and

2019-2020 which in increasing the good will of the bank.

• The assets, investment, advances are increasing at the year

of 2018-19 and decreasing at the year of 2019-2020.

• The deposits also increasing at the year 2018-19 which help

bank to grow the profit rate and at the year of 2019-20 it is
decreasing which reduce the profit rate of bank.
CONCLUSION :
By this I understand that the bank is increasing at the year of
2018-19 capital & liabilities, assets, incomes, expenditures,
profits and appropriations etc., And decreasing at the year of
2019-2020 same capital & liabilities, assets, profits incomes and
expenditures and the contingent liabilities are zero in every year.
Decreasing the balance sheet amounts does not show any
differences but decreasing on the income statements that is
profit and losses will effect the bank goodwill.
CHAPTER
8
SUGGESTIONS
AND
RECOMMENDATIONS
SUGGESTIONS:
• Lower profitability of the banking system due to the
increase in deposits and loans and reduce loans and
advances

• The bad performance of the company will affect the profit

of the bank

• The bank reduced the percentage in 2019-20 compared to

the last 4 years.

• It may show that the company is no longer able to pay

dividends.

• Banks must redouble their efforts to increase their profits

growth and development.

• Bank deposits in 2019-20 are expected to remain the same

as each year.

• Banks must take the necessary steps to improve the return

on assets.
BIBLIOGRAPHY:
• Penman, Stephen H. (2010) Analysis of Financial
Statements and Valuation of Securities. 4th edition,
London: McGraw Hill.
• Rees, Bill (1995) Financial Analysis. 2nd Edition. Hemel
Hempstead: Prentice Hall.
• Subranyam, K. R. and Wild, John J. (2009) Analysis of the
financial statements. 10th ed. Boston, Mass: McGraw- Hill
lrwin.
• Elliott ,Barry, Elliott, Jamie. Report financial accounting.
15th edition. Harlow: Financial Times Prentice Hall; 2012.
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