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Financial Ratios and Financial Statement Analysis

  • ID: 1719092
  • Book
  • April 2011
  • 228 Pages
  • New Century Publications
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The focus of financial analysis is on key figures in the financial statements and the significant relationship that exists between them. The analysis of financial statement is a process of evaluating the relationship between component parts of financial statements to obtain a better understanding of the position and performance of a firm. The first task of the financial analyst is to select the information relevant to the decision under consideration from the total information contained in the financial statements. The second step is to arrange the information in a way to highlight significant relationships. The final step is interpretation and drawing of inferences and conclusions. In brief, financial analysis is the process of selection, relation and evaluation.

Keeping all this in view, the present book is devoted to an in-depth analysis of financial statements and its use for decision-making by various parties interested in them. The focus of the book is on ratio analysis which is the most widely used technique of financial statement analysis.
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1. Ratio as Aid to Management - Meaning of Ratio Analysis; Significance and Limitations of Quantitative Approach to Management; Usage of Ratios vis-à-vis Other Techniques; Summary.

2. Ratio Pyramid - The Pyramidical Structure; The Primary Ratio; Secondary Ratios; Tertiary Ratios; Subordinate Ratios; Descendant Ratios; The Size of the Pyramid; Partial versus Total View of the Situation; Summary.

3. Financial Management Ratios - Liquidity Ratios; Activity/Turnover Ratios; Solvency/Leverage Ratios; Profitability Ratios; Valuation Ratios; Summary.

4. Economic Value Added (EVA) Based Performance Measurement - Goals of Financial Management; What is EVA?; Defining Shareholder's Value and Wealth Creation; Calculation of EVA; Benefits of EVA for Banks; Limitations of Traditional Methods; EVA a Superior Performance Measure.

5. Performance Evaluation of Select Banks by Camel Model - Introduction; Objectives; Hypothesis for the Research; Scope of the Study and Data Collection; Review of Literature; Capital Adequacy Analysis.

Bibliography; Index
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Jagadish R. Raiyani is presently Assistant Professor of Commerce, Geetanjali College, Saurashtra University, Rajkot, Gujarat. He has published research papers in reputed journals including Professional Banker (ICFAI), Yojana (Planning Commission) and Arthsankalan (Kurukshetra). He has participated in many National and International level conferences. His research interests include accounting and finance, auditing and taxation.

R.B. Bhatasna is presently Associate Professor, Department of Commerce, Smt. M.T. Dhamsania College, Rajkot, Gujarat. His teaching and research interests include accounting and finance and banking. He has participated in many State, National and International level conferences. His research papers have been published in reputed magazines like Yojana and Arthsankalan.
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