The word Finance is the science that describes the management creation and study of money, banking, credit, investments, assets and liabilities. Finance consists of financial systems, which include all the public, private and government spaces, and the study of finance and financial instruments, which can relate to countless assets and liabilities. Some prefer to divide finance into three distinct categories: Public Finance, corporate finance and personal finance. All three of which would contain many sub-categories.
Financial Performance Analysis
Financial performance is the process of identifying the financial strength and weakness of a firm from the available accounting data and financial statement. The analysis is done by properly establishing the relationship between the items of Balance sheet and Profit and loss account the first task of financial analysis is to determine the Information relevant to the decision under consideration from the total Information contain in the financial statement. The second step is to arrange information in the way to highlight significant relationship. The final step is interpretation and drawing of analysis and conclusion of financial analysis is the process of selection relating evaluation of accounting data information.
Published financial statements are the only source of information about the activities and affairs of a business entity available to the public, shareholders, investors and creditors, and the governments. These various groups are interested in the progress, position and prospects of such entity in various ways. But these statements howsoever, correctly and objectively prepared, by themselves do not reveal the significance, meaning and relationship of the information contained therein. For this purpose, financial statements have to be carefully studied, dispassionately analyzed and intelligently interpreted.
