Financial analysis for decision-making

Financial analysis establishes relationships between various elements of the financial statements to identify the firm’s financial strengths and weaknesses, which is necessary for various stakeholders to make meaningful decisions based on the analysis of financial statements. Financial analysts frequently consider profitability, liquidity, solvency, efficiency and market performance when evaluating a particular company. It also entails projecting the business’s performance going forward in order to make investment decisions. This chapter discusses several techniques for analysing financial statements using the manufacturing sector’s Maruti Suzuki and Tata Motors as case studies. For the purpose of comparison, other corporate examples from the Indian telecom sector, such as those from the banking and service sectors, which have specific financial ratios, are also being assessed.