EXECUTIVE SUMMARY

In any organization, the two important financial

statements are the Balance sheet & Profit and
loss account of
the business . Balance sheet is a statement of the
financial position of an enterprise at a particular point of
time. Profit and loss account shows the net profit or net loss of
a company for a specified period of time. When these
statements of the last few year of any organization
are
studied and analyzed, significant conclusions may be
arrived regarding the changes in the financial position,
the important policies followed and trends in profit and
loss etc. Analysis and interpretation of the financial
statement has now become an important technique of credit
appraisal. The investors, financial experts, management
executives and the bankers all analyze these statements.
Though the basic technique of appraisal remains the
same in all the cases
butt h e a p p r o a c h a n d t h e e m p h a s i s i n a n a l y s i s
v a r y. A b a n k e r i n t e r p r e t s t h e financial statement
so as to evaluate the financial soundness and stability,
the liquidity position and the profitability or the
earning capacity of borrowing
c o n c e r n . A n a l y s i s o f fi n a n c i a l s t a t e m e n t i s n e
c e s s a r y b e c a u s e i t h e l p i n depicting the fi nanci
al position on the basis of past and current recor
ds.A n a l y s i s o f fi n a n c i a l s t a t e m e n t h e l p s i n m a
k i n g t h e f u t u r e d e c i s i o n a n d strategies. Therefore,
it is very necessary for every organization whether it is a
financial or manufacturing etc. to make financial statement
and to analyze it.