Financial Performance Analysis: An Analysis Of Financial Performance Analysis

INTRODUCTION OF THE STUDY
FINANCIAL PERFORMANCE ANALYSIS
It is the process of identifying the financial strength and weakness of a firm from the available data and financial statement. The analysis is done by properly establishing the relationship between the items of balance sheet and profit and loss account. It also helps in short term and long term forecasting and growth can be identified with the help of financial performance analysis. The analysis of financial statement is a process of evaluating the relationship between the components parts of financial statement to obtain a better understanding of the firm’s position and performance. This analysis can be undertaken by management of the firm or by parties outside the namely, owners, creditors and investors.
The analysis of financial statement represents three major steps:
• The first step involves the re-organization of the entire financial data contained in the financial statement. Therefore the financial statement is broke down in to individual components and re-grouped into few principle elements according

Financial analysis and interpretation is an excellent tool in the hands of management of a business unit to identify financial strength and weakness of a business and to assess the efficiency and performance. The process involves critical examining the accounting data pertaining to financial statements. “Analysis of financial statements is a process of evaluating relationship between component parts of financial statements to obtain a better understanding of firm’s position and performance.” The information contained in the financial statements is of great value and relevance, it is through which the analysis and interpretation is made and the recommendations as well as forecasts for the future of a business are provided to the clients or the end users