Working Capital Management in Textile Industries

In: Business and Management

Submitted By 2gopalv
Words 13940
Pages 56
1. INTRODUCTION

* The project focuses on the importance of financial analysis for the company as financial Statements are useful as they provide information that allows investors and creditors to make better decisions. However, because of selective reporting of economic events as well as non-comparable accounting methods and estimates, financial statements are only an approximation of reality. In addition, because of the tendency to delay accounting recognition, financial statements also tend to lag reality.

* A primary objective of financial analysis is to determine comparable risk and return of companies and their securities. Financial statements include the * Balance Sheet * Income Statement * Cash Flow Statement * The financial statements are interrelated and are used and analysed together. Methods of financial statement analysis are divided into two general categories, internal analysis and comparative or external analysis. * Internal analysis uses figures from the financial statements of any one date or period to gain an understanding of the customer. Comparative analysis is used to determine trends when two or more successive sets of figures are reviewed, or is used to evaluate the company's financial statement against industry standards. * These methods are used separately or in combination. They are part of the tools that enable experienced credit professionals to reach a credit decision. Financial statements are spread and analyzed, with appropriate ratios and flows calculated as an aid in the customer evaluation. As an important first step in internal analysis, the financial statements are examined for validity and general correctness. After the statement has been accepted as valid and reasonably accurate, ratios are calculated and the figures analyzed. Internal analysis calls for an…...

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