FINANCIAL MANAGEMENT

Ratio analysis is the process of determining and interpreting numerical relationships based on financial statements. A ratio is a statistical yardstick that provides a measure of the relationship between two variables or figures. This relationship can be expressed as a percent or as a quotient. Ratios are simple to calculate and easy to understand. The persons interested in the analysis of financial statements can be grouped under three heads, i) owners or investors ii) creditors and iii) financial executives. Although all these three groups are interested in the financial conditions and operating results, of an enterprise, the primary information that each seeks to obtain from these statements differs materially, reflecting the purpose that the statement is to serve. Investors desire primarily a basis for estimating earning capacity. Creditors are concerned primarily with liquidity and ability to pay interest and redeem loan within a specified period. Management is interested

Inventory Management: Concept, Motives and Objectives of Inventory Management!   Concept of Inventory: What is inventory? Inventory refers to those goods which are held for eventual sale by the business enterprise. In other words, inventories are stocks of the product a firm is manufacturing for sale and components that make up the product. Thus, inventories form a link between the production and sale of the product. The forms of inventories existing in a manufacturing enterprise can be classified into three categories: (i) Raw Materials: These are those goods which have been purchased and stored for future productions. These are the goods which have not yet been committed to production at all. (ii) Work-in-Progress: These are the goods which have been committed to production but the finished goods have not yet been produced. In other words, work-in-progress inventories refer to ‘semi-manufactured products.’ (iii) Finished Goods: These are the