comparative statement analysis

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Comparative Statement

Analysis

RahulRathoreB.E Comp-Sc

PGDM- IB +Finance


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Financial Analysis

Assessment of the firms past,present and future financialconditions

Done to find firms financialstrengths and weaknesses

Primary Tools:

Comparative Financial Statements

Trend Analysis

Inter Firm Analysis


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followingpurposes:

1. Measuring the profitability : Ascertainingwhetheradequate profits are being earned on thecapital invested in the business or not.

2. Indicating the trend of Achievements : Thetrendregarding various expenses, purchases, sales,

gross profits and net profit etc. can beascertained.

3. Comparative position in relation to otherfirms : Help the management to make a


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4. Assess overall financial strength :Whether funds required for the purchase ofnew machines and equipments are providedfrom internal sources of the business or not if

yes, how much?

5. Assess solvency of the firm :Thedifferent tools of an analysis tell us whetherthe firm has sufficient

funds to meet its short term and long term

liabilities or not.


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Fundamental OfComparing

In Balance sheet and P & Laccount Changes can be

- increase

-decrease

which can be shown in twoways:

(1) Aggregate changes

(2) Proportional changes


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Aggregate changes can beindicated by special columns foraggregate amount or percentage

or both of increase or dec.

Proportional changes are shown

by recording percentagecalculated in relation to acommon base. Such a financial

statement are called as Common
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Trend Analysis


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Trend Anlysis


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INTER FIRM ANALYSIS

The analysis of the financialperformance of all firms in an

industry and their comparision ata given point of time is refferedto the cross section analysis or

the inter firm analysis.


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Common size financialstatements can be used tocompare multiple companies at

the same point in time.

To ascertain the relative financial

standing ,the financial ratios arecompared with its immediatecompetitors.


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Market Share


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TURNOVER RATIO


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MARGIN RATIO


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Return on CapitalEmployed


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LEVERAGE


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ROE


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Conclusion.

So, the top three performer are as follows:

1) Market Share: (a) Jaiprakash(44%)

(b)HindConst(11%)(c)ATV Project(9%)

2) ROCE : (a) ATV Project(14.6%)(b) Dorroliver (11.9%)

(c) Jaiprakash(9.8%)


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Duo Pont System

Method to breakdown ROE into: ROA and Equity Multiplier

ROA is further broken down as:

Profit Margin and Asset Turnover

Helps to identify sources of

strength and weakness in currentperformance

Helps to focus attention on value

drivers


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The DuPont System

EquityCommon

AssetsTotal

AssetsTotal

Sales

Sales

IncomeNetMultiplierEquityTurnoverAssetTotalMarginProfitROE

=

=


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Duo Pont Analysis