Finance and Accounts

Financial Planning and Analysis is carried out to ascertain the financial strength and weakness of an enterprise. The main tools are Ratio Analysis and Cash flow and Funds Flow analysis. Ratio Analysis: Ratio Analysis is the comparison of different numbers from the balance sheet, Income Statement and Cash Flow statement against the figures of previous years, other companies, the industry or even the economy in general for the purpose of financial analysis. Ratio Analysis can be classified into four broad categories Liquidity Ratio: It derives the liquidity or short term solvency means ability of the business to pay its short term liabilities. Leverage Ratio: This is also known as Capital Structure. This may be defined as the ratio which measures the long term stability and structure of the firm. This can be further derived in two parts known as: (I)             Capital Structure Ratios (II)           Coverage Ratios Activity Ratios : It evaluates