IGNOU Solved Assignments-14

I want the assignment of Accountancy and Financial Management of MCA of Indira Gandhi National Open University (IGNOU) so can you provide me?

[Rajkumar Agarwal]

I am providing you the assignment of Accountancy and Financial Management of MCA of Indira Gandhi National Open University (IGNOU).

IGNOU MCA Accountancy and Financial Management Assignment

Qst.1 “Ratio analysis is only a technique for making judgments and not a substitute for judgements.”

Examine.

Ans: The stakeholders of a firm viz., shareholders, creditors, suppliers, managers, employees, tax authorities,

government and others are interested broadly in knowing what the firm is doing and whether the firm is

financially sound or otherwise. The information requirement of each of these stakeholders may be different.

Trade creditors and short term lenders are interested knowing the ability of the firm to meet short term

liabilities, whereas term lending institution and banks are interested in the long term survival of the firm.

Similarly, others stakeholders may have other information requirements. Before introducing you to the concept

of financial analysis let us recaptulate on the various types of financial statements, as all the variables used in

ratio analysis are taken from these statements.

1. Profit & Loss A/C (P&L A/C): The income statement or trading and profit and loss account shows the

various variables regarding expenses and revenue and the aggregate difference between these two as either net

profit or net loss.

2. Balance Sheet: Balance sheet is a statement which shows the financial position of a firm on a particular date,

it summarises the assets owned by the business and the claim of the owners and creditors against these assets in

the form of liabilities as on the date of the statement.

3. Profit & Loss Appropriation A/C: This statement which is also known as profit and loss appropriation

account is a link between P&L A/C and Balance sheet. The net profit shown in the P&L A/C is transferred to

the balance sheet after appropriation though this statement. Retained earnings are the accumulated excess of

earnings over losses and dividends.

4. Fund Flow Statement: This statement shows the sources of funds from which additional funds were derived

and the use (application) of these funds.

5. Cash Flow Statement: This statement depicts the change in cash position from one period to another.

Financial statements are the means of providing general information regarding operational results and the

financial position of a business firm. These statements do not reveal significant information such as efficiency

of management strength and weakness of the firm, potential of further progress etc. In order to extract

meaningful information these statements need to be analysed and interpreted for specific purposes. Ratio

Analysis Analysis of financial statements is the systematic numerical calculation of the relationship between

one fact with the other to measure the profitability, operational efficiency and the growth potential of the

business. The main objectives of financial statement analysis and interpretation are as follows:

Measuring financial soundness

Judging solvency

Measuring profitability

Judging operational efficiency

Indicating trends

Assessing growth potential

Inter firm and intra firm comparison.

A ratio is an arithmetical relation between two figures or variables. Financial ratio analysis is a study of ratios

between various items or group of items in financial statements. Financial ratio analysis is an analytical tool for

measuring the performance of an organisation. Ratio analysis is primarily used to analyse past performance and

based on this make future projections.

Users of Financial Ratios

Financial ratio analysis is the process of establishing relationship between the variables of the balance sheet and

profit and loss account, in order to find out the strength and weakness of the firm. Ratio analysis is undertaken

by the various stock holders in the firm viz. trade creditors, suppliers of long-term debt, investors and the




For complete here is the attachment

Contact-

IGNOU
Maidan Garhi, Chhattarpur, New Delhi, Delhi 110030