Annual report analysis of Kotak Mahindra Bank Limited Financial statements provide an overview of a business' financial condition in both short and long term. They help in understanding the past performance of the company and making future predictions about the company. It thus helps us to look beyond the profit figures. There are 3 basic financial statements. They are:- Income Statement Balance Sheet & Cash Flow Statement Purpose of financial statements "The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions.
Definition: According to John N. Myer “the financial statements provide a summary of the accounts of a business enterprise, the balance sheet reflecting the assets and liabilities and the income statement showing the results of operations during a certain period” 1.1.2 Nature of financial statements Financial statements are prepared with the aim of presenting periodical review or report on the progress by the management and subsume the following: (a) Status of the Investments within the Business. (b) Results achieved throughout the amount beneath review. The Data exhibited in these financial statement... ... middle of paper ... ...ht regarding the figures. Then again, if figures are given in items then it will get troublesome to judge the working of the business. 1.1.6 Importance of financial statements The financial statements are a mirror which reflects the financial position and operating strength or shortcoming of the concern.
The current performance of the firm which are revealed in the financial statements can be compared with some standards set earlier and the aberration could be between quality and actual performance can be used as a hint of efficiency of the management. Question 2 An accountant performs financial functions related to the collection, accuracy, recording, analysis and presentation of a business, organization or company's financial operations. The accountant usually have different roles in a company's operations. In a smaller business, an accountant's role may consist of the main financial data collection, input and report generation. Between, the middle to larger sized companies could use the accountant as a consultant and financial interpreter, who may present the company's financial data to people within and outside of the business.
In research, there are three main form of management accounting to control the cost in an organization effectively and efficiently. They are financial accounting, cost accounting and cost management. Financial accounting is used authoritatively to prepare to account information for parties who are outside the organization, such as stockholders, suppliers and banks. Its’ purpose is to provide enough information to make decisions on business cost control and to analyze the business budgets (Baldvinsdottir et al.2009). This role will consummately help the company to forecast their capital in the future.
The information the statements provide offers benchmarks and feedback that help the company make minor adjustments and also determine its overall direction. Financial statements are useful for making decisions regarding expansion and financing. They also figure into marketing decisions, giving data specifying which aspects of company operations provide the best return on investment. (Gartenstein, 2015) The accounting cycle is a common practice in financial accounting that allows an organization to record and calculate its financial activities. The cycle consists of a number of steps, each of which depends on earlier steps to collect data and organize it in a meaningful way.
Its main fortes is that it can be comprehended and communicated easily. Trend analysis simplifies the complex developments in the financial statement items. It forecasts Key business insights on risks and financial health of the organization by calculating changes in revenue, cash and other financial statement items. It predicts the future prospects of the firm by scrutinizing past trends. It helps the management to formulate future plans Various national economic statistics, such as gross domestic product and the amount spent to replace productive capacity, are derived by combining absolute amounts reported by businesses.
Furthermore, according to the financial analysis of comprehensive income is defined as to evaluate operating events and the sum total of all financial situation which have changed the value of an owner's interest in the business. The statement of financial position is as same as with the balance sheet. The statements are generally used by large and samll companies. The financial positon reflects that the result of financial position and the financial status of enterprise at a specific date. Also, it will reports the difference in their totals and financial entity's assets, liabilities (Averkamp, 2010).
RATIO AND FINANCIAL STATEMENT ANAYLSIS Ratio and Financial Statement Analysis can be seen as a means to an end i.e. Ratio analysis is a financial tool to derive a Financial Statement. Financial Analysis are accounting reports in respect of economic activities prepared periodically to measure the performance of the business. It could also be said to be the analysis established for evaluating the performance of companies. Such criteria are used as parameters in deciding whether the organisation is performing satisfactorily or not.
Also, various balance sheet and earnings & damage accounts ratios are determined which help individual of financial assertions to investigate the performance of the entity. For instance debt equity proportion, Current proportion, Turnover proportion etc. Also, we can compare earlier period accounting data with a current period as well as budgeted results for variance examination. Manage and keep an eye on cash flow The working capital and cash dependence on a venture can be duly used treatment by proper accounting system, as offered by the Low Rate Accountants in London. Helps business to be statutory compliant Proper business accounting ensures well-timed saving our liabilities which must be paid within the approved time line.
ACCOUNTING – UNIT 3 Explain the difference between financial and management accounting, the fundamentals of management accounting. Explain how costs are classified using examples. Accounting is a systematic process or work that identifies, records, reports and analyses financial transactions and information of a business. It allows a company to analyse the financial performance of a business and reveals profit or loss for a certain period of time and the value of assets, liabilities and owners’ equity. Thus, its purpose is to provide information needed for decision making.