Chapter One Gowri

CHAPTER -1
1.1 INTRODUCTION OF FINANCIAL PERFORMANCE:

Financial performance is the process of measuring the results of a firm's policies and operations
in monetary terms. Financial performance is a subjective measure of how well a firm can use
assets from its primary mode of business and generate revenues. The term is also used as a
general measure of a firm's overall financial health over a given period. It is a complete
evaluation of a company's overall standing in categories such as assets, liabilities, expenses,
revenue, and overall profitability.
A company's financial performance tells investors about its general well-being. It's a snapshot of
its economic health and the job its management is doing—providing insight into the future.
Financial performance describes the methods that those examining the affairs of a business use to
evaluate and assess its financial activity.
Financial performance refers to the overall financial health of the business. All businesses
take financial assets, which come in many forms, and use them to support business activity,
which generates revenue and ultimately, profits. A financial performance analysis is an
evaluation of one or more aspects of the business’s finances.
Financial performance is a process of analyzing and evaluating a company's financial

position. It focuses on reviewing, assessing and comparing financial statements - a collection of
data and figures organized according to recognized accounting principles. It helps to determine
whether a company is making a profit or loss. It shows how the company is spending, investing
and earning money. Knowing how the company is performing, we are able to make better
economic decisions and assess its potential.
Financial performances are prepared primary for decisions making .They play a dominant
role in setting the framework of managerial decisions. But the information provided in the
financial performances is not an end in itself as no meaningful conclusions can be drawn from
these statement alone. However, the information provided in the financial performance is of the
immense use in making decisions through analysis and interpretation of financial performances.
Financial analysis is the process of identifying the strength and weakness of the firm by properly
establishing relationships between the items of the balance sheet and the profit and loss account.
There are various method or techniques used in analyzing the financial performance such as
comparative statements, trend analysis, and profitability ratios through ratio analysis.
It is the process of measuring the results of a firm’s policies and operations in monetary
terms. The performances of the company can be analyzed by using various technique like ratio
analysis for measuring financial performances. Financial analysis involves the use of financial
statements , which means the collection of data that is organized according to logical and
consistent accounting procedures. The term financial statements generally refers to the balance
sheet and the income statement, which highlights the profitability and financial soundness of the
firm.
1.2 MEANING OF FINANCIAL PERFORMANCE:

Financial performance management refers to the ways that a company manages and
monitors financial results across an organization. The primary purpose of financial performance
management is to compare actual results to budgets and forecasts and make adjustments
accordingly. Financial performance can refer to the effectiveness in which the business generates
profits, but it also refers to much more. It is a reflection of all the elements that contribute to
profitability, separately as line items, and holistically as a collective dynamic.
1.3 MEANING OF FINANCIAL STATEMENT:

Financial statements are written records that convey the business activities and the financial
performance of a company. Financial statements are often audited by government agencies,
accountants, firms, etc. To ensure accuracy and for tax, financing, or investing purposes.
Financial statements analysis is largely a study of relationships among the various financial
factors in a business as disclosed by single set of statements and a study of the trend of these
factors as shown in a series of statements. A financial statement is a report that shows the
financial activities and performance of a business. It is used by lenders and investors to check a
business’s financial health and earnings potential.
Financial statements include:
 Balance sheet
 Income statements
1.4 OBJECTIVES OF THE STUDY:
 To study on financial performance of Variety Hall.

 To analyze the liquidity position of Variety Hall using ratio analysis.
 To study the solvency position of Variety Hall.
 To analyze the profitability position of the Variety Hall.
 To find out the financial stability and soundness of Variety Hall.
1.5 NATURE OF THE STUDY:
Recorded facts: To first record the facts in monetary form to create the statements to ascertain
account for figures of accounts like fixed assets, cash, bills receivables, etc.
Accounting conventions: Accounting Standards prescribe certain conventions applicable in the
process of accounting and to apply these conventions while preparing these statements.
Postulates: postulates play a big role in the preparation of these statements. Postulates are
basically presumptions of accounting. Hence, we have to treat assets on a historical cost basis.
1.6 SCOPE OF THE STUDY:
The study is based on the financial position of the firm by using Ratio analysis, Trend
analysis and comparative statements.
● Financial performance help the management to analyze profit, solvency, liquidity and
efficiency etc., this analysis will give the exact picture of the company.
● These studies will also help the management to take managerial decisions. These studies
help the management to understand the new possibilities.
● The study helps us to conduct researches in financial areas and it also helps us for taking
financial Decision.
● The financial authorities can use this for evaluating their performance in future, and it can
be forecasting to evaluate the overall company in future.
1.7 RESEARCH METHODOLOGY:
As the nature of the study mainly focusing the financial performance of the company main
part used was secondary data .it includes balance sheet etc. Financial performance is a complete
evaluation of a company’s overall standing in categories such as assets, liabilities, equity,
expenses, revenue, and overall profitability. The research methodology consists of design, data
collections and tools for analyzing the past and future performance of the company. The various
tools used for a ratio analysis, comparative balance sheet, common side balance sheet and Trend
analysis.
1.8 STATEMENT OF THE PROBLEM:
Analyzing financial performance is the process of evaluating the common parts of financial
statements to obtain a better understanding of firm’s position and performance. To evaluate past
and current performance and financial position, and to predict future performance. Financial
statement is used to judge the profitability and financial soundness of a firm. Hence, this study
made an attempt to analyze the financial performance of Variety Hall Coonoor.
1.9 TECHNIQUES TO BE USED IN THIS STUDY:

It consists of so many different kinds of ratios like,
Solvency ratio
Proprietary ratio
Profitability ratio
Comparative balance sheet
A comparative balance sheet is a statement that shows the financial position of an
organization over different periods for which comparison is made or required. The financial
position is compared with 2 or more periods to depict the trend, directions of change, analyze
and take suitable actions
1.10 LIMITATIONS OF THE STUDY:
 It is not proposed to be an experts study as it done by the partial fulfillment of the course
of B.com.
 Limited time is available for completing this project.
 The various ratio is used for this study suffers from difference of options in the concepts
used for computations.
 Findings and suggestion were drawn with the help of secondary data. Consequently, the
results may not be fully accurate.
 Financial performance is just evaluation and interpretation of the financial reports of the
company. It does not consider any other factors which might affect the performance of
the company
 The accuracy of financial performance data is not possible in light of the fact that the
statements deal with matters which can’t be stated.
1.11 CHAPTER SCHEME:

Chapter I: Introduction of the Financial Performance.
Chapter II: Review of literature.
Chapter III: Profile of the company.
Chapter IV: Data analysis and interpretation.
Chapter V: Findings, Suggestions and Conclusion.

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CHAPTER -1

1.1 INTRODUCTION OF FINANCIAL PERFORMANCE:

Financial performance is a process of analyzing and evaluating a company's financial

1.2 MEANING OF FINANCIAL PERFORMANCE:

1.3 MEANING OF FINANCIAL STATEMENT:

1.4 OBJECTIVES OF THE STUDY:

 To study on financial performance of Variety Hall.

1.5 NATURE OF THE STUDY:

1.6 SCOPE OF THE STUDY:

1.7 RESEARCH METHODOLOGY:

1.8 STATEMENT OF THE PROBLEM:

1.9 TECHNIQUES TO BE USED IN THIS STUDY:

1.11 CHAPTER SCHEME:

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