Assignment Part of PGDBA

Significance, Fundamentals and Process of Orientation in Accounting,

Financial Accounting, Valuation of Assets and Techniques of Financial
Analysis.

SUBMITTED BY

DIPANJAN MUKHERJEE

COURSE: POST GRADUATE DIPLOMA BUSINESS

ADMINISTRATION

SEMESTER/YEAR: 2020-21

ENROLLMENT NUMBER: 200755156336

SUBMITTED TO
SINGHANIA UNIVERSITY
Submitted By Dipanjan Mukherjee
Enrollment Number 200755156336
Assignment Part of PGDBA

Significance, Fundamentals and Process of Orientation in Accounting, Financial

Accounting, Valuation of Assets and Techniques of Financial Analysis.

Abstract

Finance is a very important part of any business, it is like a tongue for any industry, and
Financial analysis is a term used to describe the process of analyzing the characteristics of any
business or business project. Financial analysis includes deploying financial information to
determine an organization's performance and create strategies about how it can be improved
further. The financial analysis additionally centers around the sources of funds, which an
organization has used for making its resources.

Keywords: Finance, Balance Sheet, Income tax, Asset

Financial statement analysis is a significant business activity because a corporation's financial

statements provide useful information on its economic standing and profit levels. These
statements also help an investor, a regulator or a company's top management understand
operating data, evaluate cash receipts and payments during a period, and appraise owners'
investments in the company.

Financial statement analysis allows a corporation to review operating data and evaluate periodic
business performance. There are also various methods of financial statement analysis where a
company may review financial statements for specific information to assess performance.

For instance, Company A may analyze levels of cash, inventories and accounts receivable to
appraise short-term assets. A corporation also may analyze financial statements to gauge levels
of cash flows and owner investments. Alternatively, a regulator, such as the Securities and
Exchange Commission (SEC), may review a company's retained earnings statement to appraise
corporate shareholders' accounts.

The financial statements (Income Statement and Balance Sheet) of companies. Basically, these
are summarized financial reports which provide the operating results and financial position of
companies, and the detailed information contained therein is useful for assessing the operational
efficiency and financial soundness of a company. This requires proper analysis and interpretation
of such information for which a number of techniques (tools) have been developed by financial
experts

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

The Financial Statements Module Area is eight interconnected Module Areas of a spreadsheet
model as shown in the diagram below. These generic Module Areas can be used to develop a
“whole-of business financial model”.

Fig: Financial Statements Module Area

The Financial Statements Module Area is comprised of three Module Types, representing each
of the three financial statements. Each of these financial statements has the purpose of
summarizing a different component of an entity’s financial position. The three different Module
Types within the

Financial Statements Module Area are:

1. Income Statement;

2. Balance Sheet; and

3. Cash Flow Statement.

It is important to understand the purpose of each of these three Financial Statements Module
Types, and the functionalities that can be included within them to meet the requirements of
model users. It is also important to understand how they can be interlinked with modules from
other Module Areas, to ultimately create the required components of a spreadsheet model.

The three Financial Statements Module Types within the Financial Statements Module Area are
defined as follows:

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Module Type Definition

1. Income Statement  Provides a summary of the revenues,
costs and expenses of an entity during
an accounting period.
 An Income Statement is generally used
to calculate the Net Profit After Tax
(NPAT) of an entity.
 Also referred to as a „Statement of
Financial Performance‟ or a „Profit &
Loss Statement‟.
2. Balance Sheet  Shows the status of an entity’s assets,
liabilities and owner’s equity at a point
in time, usually the close of a month.
 A Balance Sheet provides a snapshot of
the entity’s financial position, including
the cumulative results of the Income
Statement and Cash Flow Statement, at
a point in time.
 Also referred to as ‘Statement of
Financial Position’.
3. Cash Flow Statement  Shows how changes in Income
Statement and Balance Sheet accounts
affect cash and cash equivalents during
an accounting period.
 A Cash Flow Statement breaks the
analysis down according to operating,
investing and financing activities.
 Also referred to as a ‘Statement of Cash
Flows’

These three Financial Statement Modules can be built into a spreadsheet model independently, or
linked together to establish relationships between them – e.g. Income Statement, Balance Sheet
and Cash Flow Statement Modules might link in data from Operational, Working Capital and
Assets Modules and then link to each other such that live, linked financial statements can be
analysed.

FINANCIAL STATEMENTS OF A COMPANY

The way in which the various items of Statement of Profit and Loss and the Balance Sheet
should be presented is given in schedule VI part I of the Companies Act 1956. The modified
formats of both the Statements are given in Schedule VI part I is as under:

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Particulars Figures for the current Figures for the Previous

Reporting Period Reporting Period
i. Revenue from …….. ……..
Operations
ii. Other Income …….. ……..
iii. Total Revenue (I + II) …….. ……..
iv. Expenses …….. ……..……..

 Cost of Materials
Consumed
 Purchases of Stock-in-
Trade
 Change in inventories of
Finished
 Goods, Work-in-Progress
and Stock-in-Trade
 Employees Benefit
Expenses
 Finance Costs
 Depreciation and
Amortisation Expenses
 Other Expenses

Total Expenses

v. Profit before Tax (III - …….. ……..

IV)
vi. Less: Tax …….. ……..
vii. Profit or Loss for the …….. ……..
Period (V - VI)

It will be observed from the prescribed format that a column is prescribed for Note No. It is
prescribed for the purpose of cross reference to the Note number in the Notes to Accounts where
detail of the line item is given.
Statement of Profit and Loss is a financial statement that shows the performance of the company
over a period of time. It shows the net result of the company i.e., profit earned or loss suffered
during the accounting period. It shows revenue from operations, other incomes and expenses
incurred in a summarized form. Statement of Profit and Loss is similarly to the Trading and
Profit & Loss Account prepared by proprietorship and partnership firms. The only difference is
that it is prepared in the form of a statement and not an account.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Balance Sheet as prescribed in schedule VI part I of the Companies Act 1956 is broadly divided
into two parts :

(I) Equity and Liabilities

(II) Assets

I. EQUITY AND LIABILITIES

Equity : It is the liability of the company towards its shareholders and is called as ‘Shareholders’
Funds’. It includes Share Capital, Reserves & Surplus and Money Received Against Share
Warrents.

Liabilities : It means external liabilities of the company or liabilities towards outsiders. In

between Shareholders’ Fund and Liabilities, Application Money Pending Allotment is placed as
per the prescribed form of the Balance Sheet. Liabilities have further been divided into (a) Non-
current Liabilities and (b) Current Liabilities.

Non-current Liabilities have been defined as liabilities which are not current liabilities. Current
liability is that liability which is :

i. expected to be settled in the company’s normal operating cycle; or

ii. due to be settled within 12 months after the reporting date i.e., Balance Sheet date; or
iii. held primarily for the purpose of being traded; or
iv. there is no unconditional right to defer settlement for at least 12 months after the reporting
date.

The various items that are presented under the various heads of liabilities are given below :
(a) Long-term Borrowings
(i) Debentures;
(ii) Bonds;
(iii) Term Loans;
(iv) Public Deposits and
(v) Other loans and advances

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

(b) Current Liabilities :

(i) Short-term borrowings;
(ii) Trade Payables;
(iii) Other Current Liabilities and
(iv) Short-term Provision

ASSETS
Like liabilities, assets are also divided into ‘non-current assets’ and ‘current assets’. Non-current
assets have been defined as assets that are not current. Current assets have been defined in
Schedule VI of the Companies Act, 1956 as follows:
Current Assets are those assets which are:
i. expected to be realized in or intend for sale or consumption in the company’s normal
operating cycle; or
ii. held primarily for the purpose of trading; or
iii. expected to be realized within 12 months from reporting date i.e., Balance Sheet date;
or
iv. Cash and Cash equivalents unless they are restricted from being exchanged or used to
settle a liability for at least 12 months after reporting date i.e., Balance Sheet date.
Non-Current Assets are classified into the following five major heading as given below:
(a) Fixed Assets;
(b) Non-Current Investments;
(c) Deferred Tax Assets;
(d) Long-term Loans and Advances and
(e) Other non-current assets.
The items presented under these sub-heads are as follows :
1. Fixed Assets
(i) Tangible Assets;
(ii) Intangible Assets;
(iii) Capital Work-in-Progress and
(iv) Intangible Assets under Development

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Non-Current Investments :
(i) Investment in Property;
(ii) Investment in Equity Investments;
(iii) Investments in preference shares;
(iv) Investment in Govt. or Trust Securities;
(v) Investments in Debentures or Bonds;
(vi) Investments in Mutual Funds;
(vii) Investments in Partnership Firms and
(viii) Other Non-Current Investments.
Long-Term Loans and Advances
(i) Capital Advances;
(ii) Security Deposits;
(iii) Other Loans and Advances
2. Current Assets : These are shown under the following six heads :
(i) Current Investments;
(ii) Inventories
(iii) Trade Receivables;
(iv) Cash and Cash Equivalents;
(v) Short term loans and advances and
(vi) Other Current Assets

Financial Statements Module Location

The Financial Statements Module Area is an integral area in the spreadsheet modeling process,
bringing together many other Module Areas to analyse the financial position of an entity – e.g.
an Income Statement Module shows the profit/loss of an entity, sourcing information from
Revenue, Cost of Goods Sold, Operating Expenditure, Book Assets, Book Intangibles, Ordinary
Equity, Debt and Taxation Modules. Additionally, information from each Financial Statement
Module Type can then be used by other Modules – e.g. Net Profit After Tax (NPAT) can be used
in an Ordinary Equity Module as a basis for determining dividends declared in each period.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

The diagram below shows each of the Module Types that can exist in a “whole of business
financial model”, organised into their respective Module Areas which are identifiable by colour
coding. It highlights the Financial Statements Module Area and the potential links between the
Financial Statements Modules and other modules from other module areas.

Fig: Shows different module types

Financial Statements Modelling Overview

The modelling of the financial statements components of an entity is a unique area of

spreadsheet modelling, because it involves the systematic linking in of information from almost
all of the other spreadsheet modelling areas. This section is designed to provide:
 An overview of the concepts that are required to be understood in order to undertake
financial statements modelling;
 An explanation of the links between the three financial statements that ensure that the
relationships between them are maintained at all times; and
 A general understanding of the different ways in which information is correctly and
logically linked into each of the financial statements.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

If undertaken according to the principles enunciated in this documentation, with the correct
use of error checks, the modelling of the financial statements component of an entity should
be the easiest part of the spreadsheet model development process.

Fundamentals of Financial Analysis And Control

A financial statement is a collection of data organized according to logical and consistent

accounting procedures. Its purpose is to convey an understanding of some financial aspects of a
business firm. Thus, the term ‗financial statements‘ generally refers to the statements:
i. The position statement or the balance sheet
ii. The income statement or the profit and loss account. These statements are
used to convey to management and other interested outsiders the profitability
and financial position of a firm.
Nature of Financial Statements
The financial statements are prepared on the basis of recorded facts. The recorded facts are those
which can be expressed in monetary terms. The statements are prepared for a particular period,
generally one year. The transactions are recorded in a chronological order, as and when the
events happen. The accounting records and financial statements prepared from these records are
based on historical costs. They reflect a combination of recorded facts, accounting principles and
personal judgements. According to John N.Myer, "The financial statements are composed of data
which are the
result of a combinations of
a) Recorded facts concerning the business transactions,
b) Conventions adopted to facilitate the accounting technique,
c) Postulates, or assumptions made to and
d) Personal judgements used in the application of the conventions and postulates‖.

Objectives of Financial Statements

The following objectives of financial statements:
1. To provide financial information that assists in estimating the earning potentials of business.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

2. To provide other needed information about changes in such economic resources and
obligations.
3. To provide reliable financial information about economic resources and obligations of a
business firm.
4. To provide reliable information about changes in net resources (resources less obligations)
arising out of business activities.
5. To disclose, to the extent possible, other information related to the financial statements that is
relevant to the needs of the users of these statements.

Types of Financial Statements

i. A balance sheet,
ii. An income statement,
iii. A statement of changes in owners accounts, and
iv. A statement of changes in financial position.
Balance Sheet: The American Institute of Certified Public Accountants defines Balance Sheet as,
―A tabular statement of summary of balances (debits and credits) carried forward after an actual
and constructive closing of books of account and kept according to principles of accounting.
Income Statement (or Profit and Loss Account): Income statement is prepared to determine the
operational position of the concern. It is a statement of revenues earned and the expenses
incurred for earning that revenue. If there is excess of revenues over expenditures it will show a
profit and if the expenditures are more than the income then there will be a loss. The income
statement is prepared for a particular period.

Statement of Changes in Owners Equity (or Retained Earnings): statement of retained

earnings is also known as Profit and Loss Appropriation Account. On the debit side,
appropriations like interim dividend paid, proposed dividend on preference and equity share
capital, amounts transferred to debenture redemption fund, capital redemption funds, general
reserve, etc. are shown. The balance in this account will show the amount of profit retained in
hand and carried forward. The appropriations cannot be more than the profits so this account will
not have a debit balance. There cannot be appropriations without profits.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Statement of Changes in Financial Position: The basic financial statements, i.e., the balance
sheet and the profit and loss account or income statement of a business reveal the net effect of
the various transactions on the operational and financial position of the company. The statement
of changes in financial position may take any of the following two forms:
a) Funds Flow Statement: The funds flow statement is designed to analyse the changes in the
financial condition of a business enterprise between two periods. The word 'Fund' is used to
denote working capital. This statement will show the sources from which the funds are received
and the uses to which these have been put. This statement helps the management in policy
formulation and performance appraisal.
b) Cash Flow Statement: A statement of changes in the financial position of a firm on cash basis
is called Cash Flow Statement. It summarises the causes of changes in cash position of a
business enterprise between dates of two balances sheets.

Characteristics of Financial Statements

I. Depict True Financial Position: The information contained in the financial statements should
be such that a true and correct idea is taken about the financial position of the concern.
II. Effective Presentation: The financial statements should be presented in a simple and lucid
way so as to make them easily understandable.
III. Relevance: Financial statements should be relevant to the objectives of the enterprise.
IV. Attractive: The financial statements should be prepared in such a way thatimportant
information is underlined so that it attracts the eye of the reader.
V. Easiness: Financial statements should be easily prepared.
VI. Comparability: The results of financial analysis should be in a way that can be compared to
the previous year‘s statements. The statement can also be compared with the figures of other
concerns of the same nature. Sometimes budgeted*figures are given along with the present
figures. The comparable figures will make the statements more useful.
VII. Analytical Representation: The information should be analysed in such a way that similar
data is presented at the same place.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

VIII. Brief: If possible, the financial statements should be presented in brief.

IX. Promptness: The financial statements should be prepared and presented at the earliest
possible. Immediately at the close of the financial year, statements should be ready.

Importance of Financial Statements

The following major uses of financial statements'

The utility of financial statements to different parties is discussed in detail as follows:
Management: The financial statements are useful for assessing the efficiency for different cost
centre‘s. The management is able to exercise cost control through these statements.
Creditors: The trade creditors are to be paid in a short period. This liability is met out of current
assets. Tm creditors will be interested in current solvency of the concern. The calculation of
current ratio and liquid ratio will enable the creditors to assess the current financial position of
the concern in relation to their debts.
Bankers: The banker is interested to see that the loan amount is secure and the customer is also
able to pay the interest regularly. The banker will analyse the balance sheet to determine
financial strength of the concern and profit and loss account will also be studied to find out the
earning position.
Investors: They are interested in the security of the principal amount of loan and regular interest
payments by the concern. The investors will study the long-term solvency of the concern with
the help of financial statements. Government: The financial statements are used to assess tax
liability of business enterprises. The government studies economic situation of the country from
these statements. These statements enable the government to find out whether business is
following various rules and regulations or not.
Trade Associations: These associations provide service and protection to the members. They
may analyse the financial statements for the purpose of providing facilities to these members.
They may develop standard ratios and design uniform system of accounts.
Stock Exchange: The stock exchanges deal in purchase and sale of securities of different
companies. The financial statements enable the stock brokers to judge the financial position of
different concerns. The fixation of prices for securities, etc., is also based on these statements.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Limitations of Financial Statements

The financial statements suffer from the following limitations:
1. Only Interim Reports: These statements do not give a final picture of the concern. The data
given in these statements is only approximate. The actual position can only be determined when
the business is sold or liquidated. So financial statements do not give the final picture and they
are at the most interim reports.
2. Do not give Exact Position: The financial statements are expressed in monetary values, so they
appear to give final and accurate position. The value of fixed assets in the balance sheet neither
represents the value for which fixed assets can be sold nor the amount which will be required to
replace these assets. The balance sheet is prepared on the presumption of a going concern. There
are certain assets in the
balance sheet such as preliminary expenses, goodwill, discount on issue of shares which will
realise nothing at the time of liquidation though they are shown in the balance sheet.
3. Historical Costs: The financial statements are prepared on the basis of historical costs or
original costs. The value of assets decreases with the passage of time current price changes are
not taken into account The statements are not prepared keeping in view the present economic
conditions. The conclusions drawn from financial statements may not give a fair picture of the
concern.
4. Impact of Non-monetary Factors Ignored: There are certain factors which have a bearing on
the financial position and operating results of the business^ but they do not become a part of
these statements because they cannot be measured in monetary terms.
5. No Precision: The precision of financial statement data is not possible because the statements
deal with matters which cannot be precisely stated.

Valuation of Asset

Definitions of asset management commonly relate decision making for physical assets and the
use of business principles commonly used in the private sector. New financial reporting
requirements, issued by the Government Accounting Standards Bureau (GASB), have more

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

closely linked these concepts for state Departments of Transportation, as they will soon be
required to report the value of infrastructure assets in financial reports. Methods for assessing
this value rely heavily on principles of asset management and supporting data. During the time
frame that the GASB requirements have been under discussion, interest in asset management has
also generated considerable activity in professional organizations—such as the American
Association of State Highway and Transportation Officials and the American Public Works
Association— agencies, and supporting organizations. This paper develops the relationships
among the existing work on asset management, ongoing efforts on asset valuation, and the
GASB requirements. The GASB requirements and presents a rationale for their acceptance in
terms of improved decision making and accountability and improved awareness of the need to
preserve the existing investment. It then describes existing activities relating to asset
management and asset valuation drawing on the following resources:1) a survey of AASHTO
member states and 2) an ongoing study for Transport Association of Canada focusing on
measuring and reporting highway asset value, condition, and performance. The question “how
well can the GASB requirements be met using asset management systems?” is then addressed. In
conclusion, the paper presents a synthesis of the research related to asset management and asset
valuation and makes recommendations regarding strategies for addressing the GASB
requirements.
There are many different definitions of asset management. The definitions have common
elements related to decision making for physical assets and the use of business principles
commonly used in the private sector. Asset management has received broad acceptance in the
private sector (1) and is practiced in transportation agencies in Australia and New Zealand (2). In
North America, most state departments of transportation are still struggling to determine what
asset management means to them and are tentative as to whether this is an approach they want to
adopt. However, external forces are influencing these decisions. Budget and legislative demands
for better performance, public participation in the decision-making process, and regulatory
requirements all point to the role asset management can play in the decision-making process.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Asset Valuation – Valuing Tangible Assets

Tangible assets refer to a company’s assets that have a physical form, which have been
purchased by an organization to produce its products or goods or to provide the services that it
offers. Tangible assets can be categorized as either fixed asset, such as structures, land, and
machinery, or as a current asset, such as cash.
Other examples of assets are company vehicles, IT equipment, investments, payments, and on-
hand stocks.
To compute the net tangible assets of a company:

 The company needs to look at its balance sheet and identify tangible and intangible
assets.
 From the total assets, deduct the total value of the intangible assets.
 From what is left, deduct the total value of the liabilities. What is left are the net tangible
assets or net asset value.

Consider the following simple example:

 Balance sheet total assets: $5 million

 Total intangible assets: $1.5 million
 Total liabilities: $1 million
 Total tangible assets: $2.5 million

In the example above, the total assets of Company ABC equal $5 million. When the total
intangible assets of $1.5 million are deducted, that leaves $3.5 million. After the total liabilities
are deducted, which is another $1 million, only $2.5 million is left, which is the value of the net
tangible assets.

Asset Valuation – Valuing Intangible Assets

Intangible assets are assets that take no physical form, but still provide a future benefit to the
company. They may include patents, logos, franchises, and trademarks.
Submitted By Dipanjan Mukherjee
Enrollment Number 200755156336
Assignment Part of PGDBA

Say, for example, a multinational company with assets of $15 billion goes bankrupt one day, and
none of its tangible assets are left. It can still have value because of its intangible assets, such as
its logo and patents, that many investors and other companies may be interested in acquiring.

Methods of Asset Valuation

Valuing fixed assets can be done using various methods, which include the following:

1. Cost Method
The cost method is the easiest way of asset valuation. It is done by basing the value on the
historical price for which the asset was bought.

2. Market Value Method

The market value method bases the value of the asset on its market price or its projected price
when sold in the open market. In the absence of similar assets in the open market, the
replacement value method or the net realizable value method is used.

3. Base Stock Method

The base stock method requires a company to keep a certain level of stocks whose value is
assessed based on the value of a base stock.

4. Standard Cost Method

The standard cost method uses expected costs instead of actual costs, often based on the
company’s past experience. The costs are obtained by recording differences between expected
and actual costs.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

Fig: Standard Cost Method analysis

Importance of Asset Valuation

Asset valuation is one of the most important things that need to be done by companies and
organizations. There are many reasons for valuing assets, including the following:

1. Right Price
Asset valuation helps identify the right price for an asset, especially when it is offered to be
bought or sold. It is beneficial to both the buyer and the seller because the former won’t
mistakenly overpay for the asset, nor will the latter erroneously accept a discounted price to sell
the asset.

2. Company Merger
In the event that two companies are merging, or if a company is to be taken over, asset valuation
is important because it helps both parties determine the true value of the business.

3. Loan Application
When a company applies for a loan, the bank or financial institution may require collateral as
protection against possible debt default. Asset valuation is needed for the lender to determine
whether the loan amount is covered by the assets as collateral.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

4. Audit
All public companies are regulated, which means they need to present audited financial
statements for transparency. Part of the audit process involves verifying the value of assets.

Techniques of Financial Analysis

Financial analysis is the procedure of assessing organizations, projects, financial plans, and other
account-related exchanges to decide their performance and appropriateness. Commonly,
financial analysis is used to break down whether an element is steady, fluid, or productive
enough to warrant a financial investment.

Whenever conducted internally, financial analysis can assist administrators with settling on
future business choices or review historical trends for past triumphs. If directed externally,
financial analysis can assist investors in picking the best possible investment opportunities.

Financial analysis is a fundamental piece of all business tasks as it encourages litigable insights
into the health and limit of the association later on. Thus, there are several familiar means to
analyze financial data such as measuring ratios from financial statements and correlating these
ratios to historical data of companies or other opponent corporations.

In simple words, financial analysis helps company owners in understanding their business
performance, financial status, and growth rate.

Examples of Financial analysis

To act as an illustration of fundamental analysis, Discover Financial Services announced its

March 2021 earnings per share or EPS at $5.04 (quarterly report), and it was $2.59 in December
2020.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

A financial analyst, using fundamental analysis, would accept this as a positive indication of
expanding the characteristic estimation of the security. Accordingly, future EPS projections are
likewise assessed higher.

Types of Financial Analysis

Two major types of financial analysis are fundamental analysis and technical analysis.

 Fundamental Analysis

The fundamental analysis gives you the point of view of an organization's characteristic
incentive by analyzing related economic and monetary components. Normally, analysts use this
procedure to assess the main considerations that impact security's worth.

Thus, fundamental analysis is a strategy that gives you a superior conviction to recognize
organizations for long haul speculation and create wealth.

Analysts lean toward this procedure to discover stocks that are presently exchanging at
underestimated or exaggerated and afterwards choose an honest assessment of those stocks to
help the investors in their investment choices. In this type, evidence gleaned from the financial
statement is utilized to assume the company's worth.

 Technical Analysis

On the other hand, in technical analysis analysts assess the investment openings by examining
past measurable things, for example, volume and cost. Technical analysts accept that the costs of
the stock are bound to follow the previous pattern instead of move abnormally.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

In the stock market, everything is identified with market psychology, technical analysis uses past
information outlines to dissect these feelings and market changes to all the more likely
comprehend patterns identified with stock.

Technical analysts accept the way that history will rehash itself and we can better comprehend
the occasions to contribute if we comprehend the previous examples or patterns.
Technical analysis endeavours to comprehend the market emotion behind price trends by
glancing for patterns and trends instead of evaluating a security’s fundamental aspects.

References
1. 21st Century Asset Management, Executive Summary. Prepared by the Center for
Infrastructure and Transportation Studies at Rensselaer Polytechnic Institute, Troy, New
York, October, 1997.
2. AASHTO Asset Management Task Force, Strategic Plan 1998.
3. Asset Management, Advancing the State of the Art Into the 21 st Century Through Public-
Private Dialogue, FHWA-RD-97-046, Washington D.C., September 1996.
4. Blueprint for Developing and Implementing an Asset Management System. Asset
Management Task Force, New York State Department of Transportation, February 1998.
5. Brigham, E.F., and J.F. Houston. 2012. Fundamentals of Financial Management,
Concise. 7th ed. Mason, OH: Harcourt College Publisher.
6. Collier, H.W., T. Grai, S. Haslitt, and C.B. McGowan, Jr. July/August 2010. “Using
Actual Financial Accounting Information to Conduct Financial Ratio Analysis: The Case
of Motorola,” Journal of Business Case Studies 6, no. 4, pp. 23–32.
7. Damodaran, A. 2006. Applied Corporate Finance 2nd ed. New York, NY: John Wiley &
Sons, Inc.
8. Danylo, N.H. and A. Lemer. APWA Task Force on Asset Management reveals
preliminary findings to members, APWA Reporter, December 1998/January 1999.
9. Deloitte and Touche 2001. Twelve White Papers on Issues in Education Finance.
Unpublished manuscript.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336
Assignment Part of PGDBA

10. Gauthier, Stephen J. 2001. Governmental Accounting, Authority and Financial

Reporting. Government Finance Officers Association, ISBN 0-89125-219-3.
11. McNeil, S., M.L. Tischer, and A. DeBlasio. Asset Management: What is the Fuss?
Presented at the 2000 Transportation Research Board Annual Meeting, Washington DC,
January 2000.
12. N.H. Danylo and A. Lemer. Asset Management for the Public Works Manager. Findings
of the APWA Task Force on Asset Management, August 1998.
13. Norwell, G. and G. Youdale. Managing the Road Asset. PIARC Special Report on
Concessions, 1997.
14. Primer on Asset Management. Transportation Association of Canada, 1999.
15. Renzulli, J.S. and Reis, S.M. 1997. The Schoolwide Enrichment Model (2nd ed.).
Mansfield Center, CT: Creative Learning Press.
16. Videoconference on Asset Management Offers Tools to Protect Public Infrastructure.
APWA Reporter, December 1998/January 1999.

Submitted By Dipanjan Mukherjee

Enrollment Number 200755156336