You are on page 1of 4



Analysis of Financial Statements of Central Bank of India, Assagao Branch


Financial statements are a collection of reports about an organization's financial results, financial
condition, and cash flows. They are useful for the following reasons:
 To determine the ability of a business to generate cash, and the sources and uses of that
 To determine whether a business has the capability to pay back its debts.
 To derive financial ratios from the statements that can indicate the condition of the business.

The standard contents of a set of financial statements are:

 Balance sheet: Shows the entity's assets, liabilities, and stockholders' equity as of the report
date. It does not show information that covers a span of time.
 Income statement: Shows the results of the entity's operations and financial activities for
the reporting period. It includes revenues, expenses, gains, and losses.
 Statement of cash flows: Shows changes in the entity's cash flows during the reporting

 Objectives
1) To analyses the profitability of the business
2) To analyses the asset management of the firm.
3) To analyses the short term and long term financial position of the firm.
4) To make recommendation based on the analysis of financial statements.
5) To understanding the meaning and need of Balance Sheet and profit and loss account.


Problem Statement
Financial Statements are prepared primarily for decision-making. They play a dominant role in
setting the framework of managerial decisions. But the information in the financial statement is not
an end in itself as no meaningful can be drawn from these statements alone. The information
provided in the financial statement is of immense use in making decisions through analysis and
interpretation of financial statements. The financial analysis is the process of identifying the
financial strength and weakness of the firm by properly establishing relationship between the items
of the balance sheet and P&L A/C.
There are various methods or techniques used in analyzing financial statement such as comparative
statement, trend analysis, common size statement, schedule of changes in working capital, fund
flow and cash flow analysis, cost volume profit analysis and “RATIO ANALYSIS”.
Ratio analysis is one of the most powerful tools of financial analysis. It is a process of establishing
and interpreting various ratios that the financial statements can be analysed more clearly and
decisions made from such analysis.
Just like a DOCTOR examines his patient by recording his body temperature, blood pressure etc
before making his conclusion regarding the illness and before giving his treatment, a financial
analyst analysis the financial statement with various tools of analysis before commenting upon the
financial health or weaknesses of an enterprise.

Literature Review
A data envelopment analysis approaches "Ratio analysis is a commonly used analytical tool for
verifying the performance of a firm. While ratios are easy to compute, which in part explains their
wide appeal, their interpretation is problematic, especially when two or more ratios provide
conflicting signals. Indeed, ratio analysis is often criticized on the grounds of subjectivity that is the
analyst must pick and choose ratios in order to assess the overall performance of a firm.

In this paper we demonstrate that Data Envelopment Analysis (DEA) can augment the traditional
ratio analysis. DEA can provide a consistent and reliable measure of managerial or operational
efficiency of a firm. We test the null hypothesis that there is no relationship between DEA and
traditional accounting ratios as measures of performance of a firm. Our results reject the null
hypothesis indicating that DEA can provide information to analysts that is additional to that
provided by traditional ratio analysis. We also apply DEA to the oil and gas industry to
demonstrate how financial analysts can employ DEA as a complement to ratio analysis

Ratio analysis is one of the techniques of financial analysis to evaluate the financial condition and
performance of a business concern. Simply, ratio means the comparison of one figure to other
relevant figure or figures. According to Myers , “Ratio analysis of financial statements is a study of
relationship among various financial factors in a business as disclosed by a single set of statements
and a study of trend of these factors as shown in a series of statements."

The performance evaluation of an enterprise may be conducted by making a comparative study of
its own records and an attractive approach would here to analyses the firm's objectives and
performance against absolute standard of efficiency. The study will be conducted on the basis of
financial data from published records and other books with both primary and secondary data. The
data have been collected from Central Bank of India, Assagao, Branch, Closing financial
statements of last 3 years, personal interview with office staff and other relevant books and
accounts of the Bank.

1. DATA COLLECTION: The study will be carried with the cooperation of the management who
permitted to carry on the study and provided the requisite data collection from the following
 PRIMARY DATA: In the study it is mainly through conversation with concerned officers
or staff members either individually or collectively.
 SECONDARY DATA: Study will be taken from secondary sources i.e. published annual
reports of the company editing, classifying and tabulation of the financial data. For this
purpose performance data for the years 2013-2014 to 2015-2016 will be used.
2. RESEARCH DESIGN: A research designs is the arrangement of conditions for collection and
analysis data in a manner that aims to combine relevance to the research purpose with economy in
procedure. Research Design is the conceptual structure with in which research in conducted. It
constitutes the blueprint for the collection measurement and analysis of data. Research Design
includes an outline of what the researcher will do form writing the hypothesis and it operational
implication to the final analysis of data. A research design is a framework for the study and is used
as guide in collection and analyzing the data. It also includes the time and cost budget since most
studies are done under these two cost budget since most studies are done under theses tow

3. SAMPLING DESIGN: Sampling is necessary because it is almost impossible to examine the

entire parent population (i.e. the entire universe) various factors such as time available cost,
purpose of study etc. make it necessary for the researchers to choose a sample. It should neither be
too small nor too big. It should be manageable. The sample size of past 3 years is taken for present
study due to time limitation.

4. TOOLS AND TECHNIQUES: The financial and operating performance of the Central Bank of
India, Assagao can be made with the following techniques:
 The study makes use of techniques like:-
 Comparative Balance Sheet & Income Statement
 Profitability Ratio
 Liquidity Ratio

 Simple Mathematical Tools like

 Averages
 Percentages
 Accounting Tools like
 Ratios
 Trend Analysis & Statistical Tools were made also used for this analysis

• The Sample Size will be very small. Only 3 years data will be analyzed. So there is a possibility
of occurrence of some sampling errors. If the sample will be large and representative, the
observation would have become more credible.
• It considers only monetary factors, non monetary factors are not considered.
• The time allowed for the study may be less.
• It will be conducted by using secondary data


Books Referred
1) R.K Sharma and Sasi K. Guptha "MANAGEMENT ACCOUNTING" Kallyani Publishers,
New Delhi 1991
2) Maheshwari, S.N.; Financial Management, Principles and Practice, Sultan Chand & sons,
9th Edition.
3) Financial Management –I M Pandey.
4) Accounting for Managers-Jelsy Joseph Kuppapally.
5) Financial statement analysis - Gokul Sinha.
6) Maheshwari, S.N.; Elements of Financial Management, Sultan Chand & Sons, 7th Edition.
7) Pandey, I.M.; Financial Management, Vikas Publishing House, 8th Edition.
8) Evertt. E. Adam Production and operation management prentice hall

 Economic times
 Times of India
 The Hindu

 Business world
 Business today

Websites References