A Study On Financial Performance Using Ratio Analysis

This paper is to enlighten the financial performance of the public sector undertaking that is, BHEL (Bharat Heavy Electricals Limited). Accounting ratios helpful in a great manner to analyze the financial position of a company. Financial analysis helps to assess the profitability and financial position of a concern. This analysis can be done by comparing the ratios for the same over a period of years, or for one concern against the industry as a whole, or for the concern against as the predetermined standards, or for just one department of the concern against the other departments of the same concern. Accounting ratios are calculated for a number of years which shows the trend for the change of position. To take certain important decisions for their business various users like managements of the companies, bankers, investors and creditors etc uses the accounting ratios for analyzing the financial position. In order to analyze the financial performance of BHEL also the accounting ratios are used. The secondary data is used for the entire study. The financial information of BHEL has been collected from the annual reports of the company which is printed. The final result of the paper in accordance to the financial performance of BHEL is not similar during the period of the study. In the present globalized era, the manufacturing of power plant equipment is an important commodity. The financial soundness of the company will automatically affected by the increasing capacity of production. In a business for each and every activity finance is the base. So, to analyze the financial position of the company it is very essential. Keywords—Accounting Ratios, Annual Reports, BHEL, Financial Performance, Power Plant Industry. INTRODUCTION The management decision making, policy is the greatest important factor for the financial management in modern thinking. Today, the role of financial manager is not only passive such as score keeper for the information of accounts and fund arrangements but also, he must involve in the role of solving complex management problems. And also, he is not only responsible for shaping the enterprise fortunes but also, he must involve in the most vital role of management decision of allocating resources. For financial analysis, Ratio analysis is the widely-used tool. Quantitative or numerical relationship between two variables is the reference of the term “Ratio”. The Ratio analysis is a systematic use of ratio which is used to determine current financial condition, its historical performance, strength and weakness of the firm and also to interpret the financial statements. It helps to conclude in the aspects of financial health, operating efficiency and profitability of the firm. It also helps in inter-firm comparison through necessary data. The inter-firm comparison provides the relative position and also provides relevant data for comparing the performance of different departments. If there are any variations the reasons for those variations should be identified if the results are negative. This identification helps to bring them in line immediately. Ratio analysis is one of the techniques of financial analysis where it is used as a yardstick for evaluating the financial conditions and performance of a firm. Ratio analysis is a powerful tool of financial analysis. It is used as a device to analyze and interpret the financial health of a firm. Analysis of financial statements with the aid of ratios helps the management in decision making and control. Ratio analysis is the widely-used tool for appraisal of efficiency and profitability of the business, financial condition. Therefore, the ratio analysis is useful from the objects following; ISSN: 2455-7188 (Online) www.ijirms.com IJIRMS — Volume 2, Issue 3, April 2017 32 • Short term planning and long term planning • Measurement of financial performance and evaluation of those financial performance • Study based on the financial trends • Decision making for operations and investments • Financial ills must be diagnosed • Providing the valuable insight into firms picture or firms financial position