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
http://c/Users/HP-SPORTZ/Documents/Comparative%20Balance%20Sheet.docxhttp://c/Users/HP-SPORTZ/Documents/Common%20Size%20Profit%20and%20Loss%20Statement2.docxhttp://c/Users/HP-SPORTZ/Documents/Common%20Size%20Profit%20and%20Loss%20Statement2.docxhttp://c/Users/HP-SPORTZ/Documents/Comparative%20Balance%20Sheet.docx -
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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