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TABLE OF CONTENTS

Finanacial Statement

Character of Financial Statement

Type of Financial Statement

Cash Flow Statement
Income Statement
Budgeting Statement

Introduction of financial Statement analysis

Ratio Analysis
Vertical Analysis
Horizontal Analysis

Ratio Analysis
Liquidity Ratio
Profitability Ratio Action
Shareholder ratio
leverage Ratio

Process of Cash Flow

Forecasting

Case Study

Research Paper

Financial Statement
Financial statement means to collection of financial information in which the clear financial information has mention.
It mainly includes income statement, balance sheet and cash flow statement. It is based on standard accounting
principle which generally represents the financial statement of the company. It is a summary of accounting data

which produce the accounting process information to both internal and external environment. It often information
by government agencies, firms and investment purpose etc. It ensures the accurate process of business. Financial
information has statement of assets and liabilities which is given into the data. It helps to explain in business
operation during accounting period. The financial statement helps in profitability of concerned enterprise. It express
the monetary term for the company .Financial statement show through balance sheet and profit and loss statement.

Character of Financial Statement

Recorded Facts: The information of all transaction based on evidences in the book of accounts. For
example cash at bank, cash in hand, debtors, sales , purchase etc .

Conversations: Accounting conversation are followed while preparing financial is made for expected losses
but expected profit are ignore . It show the real financial positions of the business may be better than what
has been shown. The use of accounting convections to make financial statement simple and realistic.

Accounting concepts: Financial statement are prepared by under going concern concept . It shows the
business concept and assumes business works perfect in future. The entire concept is clear by balance sheet.
It is reliable understandable and comparable.

Personal judgments: Personal judgments give importance of financial statement . For example selecting
method for deprecations which lie on the account and selecting inventory values for personal judgment of
the accounts.

Type of financial Statement

1. Income Statement
2. Budgeting Statement
3. Cash Flow Statement

Income Statement

The income statement is the main financial statement which is used for accounting and business purposes. It also
refers to profit and loss statement .Other financial statements which are important for the business purpose is
balance sheet, cash flow. It is the profitability of the business time to time interval .Income statement is a simple
and straightforward report on a business cash generate ability. It show the financial performance of the business
that reflects when sales are made and expenses are incurred. It draws information from the various financial models
such as revenue, expenses, capital and cost of goods. By combining these elements the income statement show how
much the company makes or loses during the year by subtracting cost of goods and expenses from revenue to arrive
at a net result, which is either a profit or a loss. It differs from a cash flow statement because the income statement
doesn't show when revenue is collected or when expenses are paid. It show the projected profitability of the
business over the time frame covered by the plan. For a business the income statement should be generated on a
monthly basis during the first year and quarterly for the second and annually for the third.
Income statement financial projections in the following manner:

Cost of goods - the costs related to the sale of products in inventory.

Gross profit margin - the difference between revenue and cost of goods. Gross profit margin can be
expressed in dollars as a percentage or both. As a percentage the GP margin is always stated as a percentage
of revenue.

Operating expenses : It includes overhead and labor expenses associated with the operations of the
business.

Total expenses the sum of total cost of goods and operating expenses.

Net profit - Difference between gross profit margin and total expenses. The net income depicts the business
debt and capital capabilities.

Depreciation : The decrease in value of capital assets used to generate income. It's also used as the basis
for a tax deduction and an indicator of the flow of money into new capital.

Earnings before interest and taxes : show the capacity of a business to repay its obligations.

Interest includes all interest payable for debts both short-term and long-term.

Taxes : taxes on the business.

Net profit after taxes : shows the company's real bottom line.

Example of Income statement Of Coco Coala (ko): jkkjlkhshfieugeiugh

Period Ending

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Total Revenue

46,854,000

48,017,000

46,542,000

Cost of Revenue

18,421,000

19,053,000

18,215,000

Gross Profit

28,433,000

28,964,000

28,327,000

18,205,000

18,185,000

18,154,000

Operating Expenses
Research Development
Selling General and Administrative
Non Recurring
Others
Total Operating Expenses

Operating Income or Loss

10,228,000

10,779,000

10,173,000

1,110,000

608,000

1,012,000

11,940,000

12,206,000

11,875,000

Income from Continuing Operations

Total Other Income/Expenses Net
Earnings Before Interest And Taxes
Interest Expense
Income Before Tax
Income Tax Expense
Minority Interest
Net Income From Continuing Ops

463,000

397,000

417,000

11,477,000

11,809,000

11,458,000

2,851,000

2,723,000

2,812,000

(42,000)

(67,000)

(62,000)

9,186,000

9,838,000

9,274,000

8,584,000

9,019,000

8,584,000

Nonrecurring Events
Discontinued Operations
Extraordinary Items
Effect Of Accounting Changes
Other Items
Net Income
Preferred Stock And Other Adjustments

2. Balance Statement
A balance sheet is a part of financial statement which is show by company asset and liability as at
the particular date. It is necessarily that the amount and values stated against each asset and
liability are historical . It is not reflected the current value . The assets of the company fixed
current liability, long term liability and short term liability and share holder equity .
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a
specific point in time. These three balance sheet segments give investors an idea as to what the
company owns and owes, as well as the amount invested by the shareholders. A statement of a
company's assets, liabilities, and stockholder equity at a given period of time, such as the end of a
quarter or year. A balance sheet is a record of what a company has and how it has come to have it.
A balance sheet is divided into two main sections, one that records assets and one that records
liabilities and stockholder equity. The assets should generally equal the liabilities and stockholder
equity because the latter two are how the company paid for its assets. The financial statement of a
business or institution that lists the assets debts and owners investment as of a specific date.
Assets are ordered according to how soon they will be converted into cash and debts according to
how soon they must be paid. Balance sheets do not list items at their current monetary value.
They understate the real value of certain corporate assets and liabilities.

ExampleofBalancesheet

Period Ending

All numbers in thousands

Dec 31, 2013

Dec 31, 2012

Dec 31, 2011

Assets
Current Assets
Cash And Cash Equivalents

10,414,000

8,442,000

12,803,000

Short Term Investments

9,854,000

8,109,000

1,232,000

Net Receivables

4,873,000

4,759,000

4,920,000

Inventory

3,277,000

3,264,000

3,092,000

Other Current Assets

2,886,000

5,754,000

3,450,000

Total Current Assets

31,304,000

30,328,000

25,497,000

Long Term Investments

11,512,000

10,448,000

8,374,000

Property Plant and Equipment

14,967,000

14,476,000

14,939,000

Goodwill

12,312,000

12,255,000

12,219,000

Intangible Assets

15,299,000

15,082,000

15,450,000

4,661,000

3,585,000

3,495,000

90,055,000

86,174,000

79,974,000

9,886,000

9,151,000

9,371,000

17,925,000

17,874,000

14,912,000

796,000

Total Current Liabilities

27,811,000

27,821,000

24,283,000

Long Term Debt

19,154,000

14,736,000

13,656,000

Other Liabilities

3,498,000

5,468,000

5,420,000

Deferred Long Term Liability Charges

6,152,000

4,981,000

4,694,000

267,000

378,000

286,000

56,882,000

53,384,000

48,339,000

Accumulated Amortization
Other Assets
Deferred Long Term Asset Charges

Total Assets
Liabilities
Current Liabilities
Accounts Payable
Short/Current Long Term Debt
Other Current Liabilities

Minority Interest
Negative Goodwill

Total Liabilities
Stockholders' Equity

Misc Stocks Options Warrants

Redeemable Preferred Stock

Preferred Stock

Common Stock

1,760,000

1,760,000

1,760,000

Retained Earnings

61,660,000

58,045,000

53,621,000

Treasury Stock

(39,091,000)

(35,009,000)

(31,304,000)

Capital Surplus

12,276,000

11,379,000

10,332,000

Other Stockholder Equity

Total Stockholder Equity

Net Tangible Assets

(3,432,000)

(3,385,000)

(2,774,000)

33,173,000

32,790,000

31,635,000

5,562,000

5,453,000

3,966,000

3.Cash Flow :
Cash flows is part of the financial statements issued by a business, and describes the cash flows
into and out of the business. Its particular focus is on the types of activities that create and use
cash. Though the statement of cash flows is generally considered less critical than the income
statement and balance sheet, it can be used to discern trends in business performance that are not
readily apparent in the rest of the financial statements. There can be significant differences
between the results shown in the income statement and the cash flows in this statement, for the
following reasons.There are timing differences between the recordation of a transaction and when
the related cash is actually expended or received. Management may be using aggressive revenue
recognition to report revenue for which cash receipts are still some time in the future.
The business may be asset intensive, and so requires large capital investments that do not appear
in the income statement, except on a delayed basis as depreciation. Many investors feel that the
statement of cash flows is the most transparent of the financial statements and so they tend to rely
upon it more than the other financial statements to discern the true performance of a business.
Cash flows in the statement are divided into the following three areas:

Operating activities. These constitute the revenue-generating activities of a business.

Examples of operating activities are cash received and disbursed for product sales,
royalties, commissions, fines, lawsuits, supplier and lender invoices, and payroll.

Investing activities. These constitute payments made to acquire long-term assets, as well
as cash received from their sale. Examples of investing activities are the purchase of fixed
assets and the purchase or sale of securities issued by other entities.

Financing activities. These constitute activities that will alter the equity or borrowings of
a business. Examples are the sale of company shares, the repurchase of shares, and
dividend payments.

There are two ways in which to present the statement of cash flows which are the direct method
and the indirect method. The direct method requires you to present cash flow information that is
directly associated with the items triggering cash flows such as:

Cash collected from customers

Interest and dividends received

Cash paid to employees

Cash paid to suppliers

Interest paid

Cash Flow Statement for Coco Coala (ko):

Period Ending

Dec 31, 2013 Dec 31, 2012 Dec 31, 2011

Net Income

8,584,000

9,019,000

8,584,000

1,977,000

1,982,000

1,954,000

871,000

657,000

767,000

Changes In Accounts Receivables

Changes In Liabilities

Changes In Inventories

Operating Activities, Cash Flows Provided By or Used In

Depreciation
Adjustments To Net Income

Changes In Other Operating Activities

(932,000)

(1,080,000)

(1,893,000)

Total Cash Flow From Operating Activities

10,542,000

10,645,000

9,474,000

Investing Activities, Cash Flows Provided By or Used In

Capital Expenditures

(2,550,000)

(2,780,000)

(2,920,000)

Investments

(1,991,000)

(7,033,000)

1,013,000

327,000

(1,591,000)

(617,000)

(4,214,000)

(11,404,000)

(2,524,000)

Dividends Paid

(4,969,000)

(4,595,000)

(4,300,000)

Sale Purchase of Stock

(3,504,000)

(3,070,000)

(2,944,000)

Net Borrowings

4,711,000

4,218,000

4,965,000

17,000

100,000

45,000

Other Cash flows from Investing Activities

Total Cash Flows From Investing Activities

Financing Activities, Cash Flows Provided By or Used In

Other Cash Flows from Financing Activities

Total Cash Flows From Financing Activities

Effect Of Exchange Rate Changes

Change In Cash and Cash Equivalents

(3,745,000)

(3,347,000)

(2,234,000)

(611,000)

(255,000)

(430,000)

1,972,000

(4,361,000)

4,286,000

Financial Analysis
Financial analysis is the selection, evaluation and interptation of financial data along with other
pertinent information. It assists in investment and financial decision making. Financial analysis is
used for internally to evalualate the issues such as employee performances. The primary source is
the data provide by the company itself in its annual report and required by security laws to
disclose additions information. It show the efficiency of operation and credit policies and external
to evaluate the potencial investment and credit , borrow and other things . The process of
evaluating businesses, projects, budgets and other finance-related entities to determine their
suitability for investment. Financial analysis is used to analyze whether an entity is stable, solvent,
liquid, or profitable enough to be invested in. When looking at a specific company, the financial
analyst will often focus on the income statement, balance sheet and cash flow statement. In
addition one key area of financial analysis involves extrapolating the company's past performance
into an estimate of the company's future performance.

Type of Financial Analysis

1. Ratio Analysis

2. Vertical Ratio
3. Horizontal Ratio

1. Ratio Analysis
Ratio analysis is based on line items in financial statements like the balance sheet, income
statement and cash flow statement. The ratios of one item or a combination of items to another
item or combination are then calculated. Ratio analysis is used to evaluate various aspects of a
company operating and financial performance such as its efficiency, liquidity, profitability and
solvency. The trend of these ratios over time is studied to check whether they are improving or
deteriorating. Ratios are also compared across different companies in the same sector to see how
they stack up and to get an idea of comparative valuations. Ratio analysis is a cornerstone of
fundamental analysis. Ratios are usually only comparable across companies in the same sector,
since an acceptable ratio in one industry may be regarded as too high in another. Ratio analysis
can provide an early warning of a potential improvement or deterioration in a companys financial
situation or performance.

2. Vertical Analysis
Vertical analysis of financial statements is a technique in which the relationship between
items in the same financial statement is identified by expressing all amounts as a
percentage a total amount. This method compares different items to a single item in the
same accounting period. The financial statements prepared by using this technique are
known as common size financial statements. When applying this method on the balance
sheet, all of the three major categories accounts (i.e. assets, liabilities, and equity) are

compared to the total assets. All of the balance sheet items are presented as a proportion
of the total assets. These percentages are shown along with the absolute currency amounts
and when applying this technique to the income statement, each of the expense is
compared to the total sales revenue.
The main advantage of using vertical analysis of financial statements is that income
statements and balance sheets of companies of different sizes can be compared.
Comparison of absolute amounts of companies of different sizes does not provide useful
conclusions about their financial performance and financial position. The vertical analysis
is performed for a single accounting period to see the relative proportions of different
account balances. It is also useful to perform vertical analysis over a number of periods to
identify changes in accounts over time. It can help to identify unusual changes in the
behavior of accounts.
Horizontal Analysis
Horizontal analysis is a financial statement analysis technique in which absolute change
and percentage change in value of each line item of a financial statement is calculated over
one or more accounting periods. Horizontal analysis may be performed on any financial
statement i.e. balance sheet, income statement, cash flow statement and statement of
changes in owners' equity. Horizontal analysis of a financial statement for a given
accounting period is the value of each line item at the end of or for the preceding
accounting period is subtracted from its value at the end of or for the given accounting
period. The figures obtained from this subtraction are presented in absolute change
column. Percentage changes are then calculated by dividing absolute change in value of
each line item by its value at the end for the preceding accounting period.

Type of Ratio
1. Liquidity Ratio
2. Profitability Ratio
3. Activity Ratio
4. Financial Leverage Ratio

5. Shareholder Ratio