The financial statements are prepared on the basis of recorded facts. The recorded facts are those which can be expressed in monetary terms. The statements are prepared for the particular period generally one year. The following of the nature of the financial statements are discussed below:-
Recorded Facts:-   The data which is taken out from the accounting records is known as recorded facts. Actual cost data are the source of maintaining the accounting records.

Accounting Conventions:-  Various accounting conventions such as historical cost convention , Monetary measurement, Separate Entity, Materiality, Realization,  etc  are adopted to prepare external  and internal Financial accounts. The accounting conventions help to make financial statements realistic, comparable and simple.

Personal judgments:-  For preparing financial statements, standard accounting conventions is very important instead of this One important things plays a very important role in making financial statements i.e. Personal Judgments. For example, in applying the cost or market value whichever is less to inventory valuation the accountant will have to use his judgment in computing the cost in particular case? There are a number of methods of valuing stock, i.e. First in First out, last in first out, average cost method, etc. The accountant will use one of these methods for valuing materials.

Postulates:-   It is very important for an accountant to makes certain assumptions at the time of preparing accounting records. These postulates are derived from accounting environment so it does not require any proof. It is assumed that everyone can understand an accounting postulate so that it is recorded in financial statements.

The main purpose of preparing the financial statements is to depict financial position of the business concern. Therefore, the financial statements should be prepared in such a way that they are able to give a clear and orderly picture of concern. The ideal financial statements should have the following characteristics:-

True Financial Position:-  All the information mentioned in the financial statement must be true and correct so that it is easy to know the financial position of the business. At the time of preparing these statements, No information should be withheld. 

Effective Presentation:- Presentation plays very important role to make the financial statement clear to everyone. It is very necessary to present the financial statements in a clear, simple and logical form so that it can be easily understandable.   It is better to avoid using difficult accounting terminology so a man with less knowledge of accounting can also understand it.

Brief:-   the financial statements should be prepared in brief so that it is easy for the user to understand the facts and figures correctly.

Attractive:- It is good to underline and bold the important information in the financial statements to easily attractable to the user.

Comparability:-  The financial statement should be prepared in such a way that the result can be compared to the previous years statements. It is also in such a way so that it is easy to compare figures with the other business of same nature.

Analytical Representation:- Analytical representation of financial statements is very helpful in analysis and interpretation of data. 


The present response which comes out from the training system for making rapid changes in structure is known as training methodology. This response helps in designing new training program by modifying the existing training system. Employees are trained by adopting this new training program.
Basically there are two types of Training Methods are adopted by an organization: -

This method is applied in the workplace, while employees are actually working. Following are the methods on the job training: -
The oldest method of on the job training is Experience. Learning by experience cannot and should not be eliminated as a method of development.
The techniques involves direct usually with extensive demonstration and continuous critical evaluation and correction. In this approach the supervisor should be properly trained and oriented.
The understudy method makes the trainee assistance to the current jobholders. The trainee learns by experience, observation and imitation.
Position Rotation
The main objective of job rotation is like providing knowledge of each and every field so that trainee’s background is strong in the organization.
In this training method the trade skill learned under specialist guidance. The period is from six months to five years.
Special projects
This is a flexible training device. Such special project assignments grow ordinary out of an individual analysis of weakness by this method. The trainee not only acquires knowledge about the assigned activities but also learn how to work with others.
Selective Reading
In an organization group of trainees are gathered and their knowledge and background is advanced through selective reading. The reading may include professional journals and books.
Vestibule Schools
Vestibule schools are widely used in training for clerical and office jobs as well as factory production jobs.
Multiple Management
Multiple management emphasizes the use of committees to increase the flow of ideas from less experience managers to train them for positions of great responsibilities. 

Off the job methods are those methods in which trainees are sent outside for training.
Those methods are as follows:
Special Courses & Lectures
It is a formal training method. Such courses are organized for a short period from 2-3 days to a few weeks.
In this method the participant’s pools, their ideas and experiences in attempting to arrive to improved methods of dealing with the problems that are common subjects of discussion.
Case Study
This method increases the trainee’s power of observation, helping him to ask better questions and to look for broader ranger of problems.
Brain Storming
In this method a problem is posed and ideas are invited. Ideas are encouraged and criticism of any idea is discouraged.
Laboratory Training
Laboratory training is more concerned about changing individual’s behavior and attitudes.
Simulation is the presentation of real situation of organization in the training session.
There are other types of off the job training.
Lecture and demonstrations
Sensitivity training
Transnational analysis

In this phase training sites are prepared and many facilities are provided which is required to conduct the training program.

Once the program is designed and developed I needs to be implemented. there may arise many problems in this phase like unavailability of trainer, unwillingness of managers and other employees. To remove this training communication should be effective.

To make a training programme Effective and Efficient in nature few major points should be kept in mind and conducted out. These are
  1. Commitment of Management or unions
  2. Match between Training / Corporate objectives
  3. Developing a Learning organization
  4. Ensuring linkage between organization, operational and individual training needs
  5. Proper selection of trainee


This is the much important phase of training. In this the assessment is done to know that all the programmes are running on right track. It is done for the feedback whether transfer of training take place or not. 



A training need analysis or training need assessment is a methodical process of knowing that there is a need of training exists or not among the employee and if the need of training exists, which type of training is needed to reduced the gap between standard performance & actual performance of the employee in an organization. The main purpose of Training Needs Assessment is to recognize the Knowledge, Skills, and Abilities of the employee required in organizations to meet its standard performance. 

Training needs analysis conducted due to following reasons: -
  1. By applying Training need analysis, it is very easy to identify the deficiencies.
  2. Knowledge, Skills, and Abilities (KSA) of the employees are very important for the growth of an organization. Training need analysis helps to known whether the employees lack Knowledge, Skills, and Abilities or not.
  3. It helps to ensure that whether the training is provided to the right employee or not.
  4. With the help of training need analysis, it is easy to determine which type of training is required to the employees.

Training needs analysis is required in three levels:
ORGANIZATIONAL LEVEL ANALYSIS - This analysis determines what resources are required by the organization and how they are allocated so that maximum output achieved. Which types of attitudes are necessary for the growth?

OPERATIONAL LEVEL ANALYSIS – This analysis determines the knowledge, skills and abilities required for standard performance. It also determines the working method to fill the gap between standard and actual performance.

INDIVIDUAL LEVEL ANALYSIS – This analysis determines whether an employees need training or not. It also helps to know that an employee is capable of doing a job in good manner or not. 

Techniques for Training Needs Analysis
Observation of Employee’s Performance
By observing the performance of employee, it is very easy to evaluate that they need training nor not. It is also very easy to know the strengths and deficiencies of the employee which helps in design training need analysis.

Personal Interviews with the employees
It is very important to take interviews because it helps to know the thinking of the employees. What they think about their performance is clear from interview. It also helps to build personal relation with employee which is also very beneficial for the performance.

Questionnaires for employees
The questionnaire is also very important because it gives an ideas that what a large number of employee thinks. It is also very simple and easiest technique. Employees have to give the answer of some question asked by the management.

Job Analysis
Job analysis is very much important for the training need analysis. To study the all requirements and responsibilities of the job is very necessary.  

Advantages of Maintaining good Employee Relation

Advantages of Maintaining good Employee Relation
Many study proved that a more engaged employee is also a more profitable and more productive employee. A satisfied employee can focus on organizational growth and cooperate with their colleagues. On the other hand, unsatisfied employee hampers the production of the organization and making the working environment not suitable for working.  So maintaining good employee relation is very much important for the development and growth of the organizations. Following are the advantages of maintaining good relations with the employees: -
Less Absenteeism: - Generally employee absent from duties due to illness. Stress is also one of the reasons for absenteeism.  When the relations of employee with manager or supervisior are not good then stress occurs.  To reduce the absenteeism in the organization, it is very necessary to maintain good relation with the employees. Good relations build confidence among the employees and they become satisfied with the management which bring high turnover.                                    
High Morale and Motivation: - Motivation of the employee lies between the money and accuracy. Reward and praise are very important for motivating a employee. Morale of the employee can be high by providing them a good working environment which is possible by maintaining good employee relation.  Employee with high morale and motivation is very useful for the growth of an organization.
Harmony in the Organization: - Good employee relation increases the job satisfaction. If an employee is satisfied then the workflow is very smooth. There is an environment of cooperation among the employee and less dispute and arguments. Employee shares their knowledge and experience with each other and harmony is maintained.
Attract Good Talent: - By maintaining good relations with the employees, the management knows which employee is mot qualified and suitable for a particular job. Providing right job to right people is very important for the success of any organization.
Less cost on training: - organizations which maintain good employee relation have to spend less on training and retention.  A satisfied employee doesn’t leave the job frequently as such there is no need of new employee which reduce the cost of training.  
Increase in Production: - if an employee is satisfied, he will work in full flow and take fewer breaks. He is committed with the production. A happy and satisfied worker improved his performance which led to the increase in production. 


It is obvious that in organizations, Employee interact with each other during work, officially and formally as well as informally and socially. Relationships develop among the employees during this course of interaction. These relationships are love, respect, hate, anxiety, fear, etc. These relationships are continuing for long time as the employee has to spent lot of time with them. Sometimes employee helps each other and sometime tries to make their colleague insult. 
A relationship involves feelings for each other. This feelings may be positive (friendly, wanting to be close) or negative (unfriendly, wanting to be distant). Positive feelings mean want to friendly with each other or want to help each other. Negative feeling mean hated each other or dislike each other. Relationships cannot exist without interactions. In relationship, no neutral point exists. We can’t say that Indifference is neutral because it tends to negativity.
Relationships depend upon the behaviours employee at their work. If the relationships are friendly and helping with each other, work can be done very smoothly leading to the fulfilling of organizational goal. Good attitudes and high motivation are the results of these relationships. Working with a team can only be possible when the positive relationships build between the employees. 
One of the most important things in Employee Relations that it ensure  that Employees are happy and help each other which resulted in high productivity.  Many problems and dispute can be solving by the assistance of Employee Relations. Employee Relations helps the management and employee to maintain a good friendly environment in the work place to satisfy their needs. High employee morale, building organizational culture, taking opportunity is possible with employee relations.
The organization must ensure that what type of workplace is required for their work. The employee must feel that they become treated very well in this organization so that they work with high morale and try to give their best.
One of the essential factors of making strong employee relation is to calculate the person, monetary & other resources available that strengthen the principle of the company. Organizations must know what type of employee (Managers, supervisiors and workers) are needed for carrying out the project in best way. The management must look that employee who hamper the productivity and disturb the working culture.
It is the responsibility of the management to escapes its employee from being frustrated. If the employee feels that they free treated unfairly they become frustrated. Application of good management tools in the organization helps the management to avoid confrontation.

Human Resource Management: an overview

Human Resource Management is an essential part of management. Human Resource is a very important resource for any management and human resource management helps the management to take the right step to satisfy its human resource and got maximum output from them. Its main objective is to identify the knowledge, key skills, dedication of the employees and distribute the rewards among the good employees whenever required so that the goals of the organisation are fulfilled.  Human Resource Management also looks up the training and development activities of the employees to enhance the capability. It is also the responsibility of the Human Resource Management that they recruit the best employees at an optimal cost to increase the efficiency and productivity.
Every organization need a Human Resources management department for various functions such as recruiting  new employees, tracking and recording employees sick leave and absenteeism, making policies to monitoring benefits etc.
The main functions of Human Resource Management are to recruit, select, train and develop the employee of an organization.
  1. Human Resource Planning: Human Resource Planning is known as the process of supplying right type of people in the right number by forecasting the future demand and supply of the organization.
  2. Job Analysis: The method of learning, understanding and collecting various informations of a specific job related to its responsibilities and operations. Job Descriptions and Job Specification are the two immediate products of Job Analysis.
  3. Recruitment: Recruitment is the procedure of searching and attracting suitable candidate for employment. This process starts when the new employees are required for the organization and finish when the applicant submit their applications. The new employees are selected among the pool of applicants.
  4. Selection: Selection is the process of picking the right candidates who are best for the job and organization among the applicants.
  5. Placement: Placement is the process of the distribution of people to a job. The right employee must be posted in right place to get better result.
  6. Training and development: Training and development is an effort to improve the performance of employee by providing an environment where employee learns how to increase their skills and knowledge. This will change the attitude of the employee resulted in high performance. Employee’s Performance Deficiency can be filled by the training and development.
  7. Remuneration: Remuneration is the payment which an employee gets after every month end from the organization for his or her contribution.
  8. Motivation: Motivation is a psychological process that influences an employee to do his or her work in proper manner so that they have a chance of getting reward or financial gain.
  9. Communication: The process of understanding and exchanging information among the employee is known as communication.
  10. Health and Safety: Health and Safety of the employees are two important factors for getting maximum output from the employees. The human resource management must focus on it to ensure good health and safety of the employees.
  11. Participative Management: Workers participation may be used as the participation of workmen or their recognize representative in the decision making process, negotiations, exchange of information.
  12. Welfare: Welfare means all the facilities which are necessary for the growth of the workmen must be provide to them by the employer so that they perform their duty with high morale.
  13. Transfer: Transfer is the process in which the job place of an employee or nature of job of an employee changes without changing in the remuneration or responsibilities.
  14. Separations: Separations is the process where an employee resigned from his job or the employer dismisses an employee from the job.
  15. Employee Relations: Employee relation is related with the rules, policy and procedures adopted by employer and unions to decide the incentive for attempt and other circumstances of employment, to defend the benefit of the employed and their employers, and to control the ways in which employers treat their employees.
  16. Disputes and their settlement: Industrial disputes mean difference between employers and employees, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non-employment or terms of employment or with the conditions of labour of any person.


The following methods of analysis are generally used:
  • Comparative statements
  • Trend analysis
  • Common – size statements
  • Fund flow Analysis
  • Cash flow Analysis
  • Ratio Analysis
  • Cost – volume profit Analysis
From the above methods we have selected RATIO ANALYSIS to analyze the financial position of SAIL because this is one of the most powerful tools of analyzing the financial statement of a concern. It is from the help of ratios that the financial statement can be analyzed more clearly and decisions can made from such analysis.
Ratio analysis is a technique of analysis and interpretation of financial statements. It is a process of establishing and interpreting various ratios for helping in making certain decisions. However, ratio analysis is not an end in itself. It is only a means of better understanding of financial strengths and weaknesses of a firm. The following are four steps involved in the ratio analysis:
  • Selection of relevant data from the financial statements depending upon the objective of analysis.
  • Calculation of appropriate ratio from the above data.
  • Comparison of the calculated ratios with the ratios of the same firm in the past, or the ratios developed from projected financial statements or the ratios of some other firms or the comparison with the ratios of the industry to which the firm belongs.
  • Interpretation of the ratios.
CLASSIFICATION OF RATIOS (according to test)
In view of the financial management or according to test satisfied, various ratios have been classified as below:

Liquidity refers to the ability of a concern to meet its current obligations as and when these become due. The short term obligations are met by realizing amount from current flotation or circulating assets. The current assets should either be liquid or near liquid. The sufficiency or insufficiency of current assets should be assessed by comparing them with short- term liquidities. The current assets can pay off current liabilities, and then liquidity position will be satisfactory. On the other hand, if current liabilities may not be easily met out of current assets then liquidity position will be bad. To measure the liquidity of the firm, the following can be calculated:
  • Current ratios
  • Quick ratios
  • Absolute liquid ratios

The term ‘solvency’ refers to the ability of a concern to meet long term obligations. The long–term indebtedness of a firm includes debentures holders, financial institutions providing medium and long term – term loans and other creditors selling goods on installment basis. The long term creditors of a firm are primarily interested in knowing the firm’s ability to pay regularly interest on long- term borrowings, repayment of the principal amount at the maturity and the security of their loans. The following ratios serve the purpose of determining the solvency of the concern:
  1. Debt-Equity ratio
  2. Funded-debt to total capitalization ratio
  3. Propriety ratio or equity ratio
  4. Solvency ratio or ratio of total liabilities to total assets
  5. Fixed assets to net worth or proprietor’s funds ratio
  6. Fixed assets to long-term funds or fixed asset ratio
  7. Ratio of current assets to proprietor’s funds
  8. Debt service ratio or interest coverage ratio
  9. Cash to debt service ratio

Funds are invested in various assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume of the sales. The better the management of assets, the large is the amount of sales and the profits. Activity ratio measures the efficiency or effectiveness with which a firm manages its resources of assets. These ratios are called turn over ratios because they indicate the speed with which assets are converted or turned over into sales. The following ratios are calculated:
  1. Inventory turnover ratio
  2. Debtors turnover ratio
  3. Fixed assets turnover ratio
  4. Total assets turnover ratio
  5. Working capital turnover ratio
  6. Payables turnover ratio
  7. Capital turnover ratio
The primary objective of a business undertaking is to earn profits. Profit earning is considered essential for the survival of the business. Profitability ratios are calculated to measure the overall efficiency of the business. Generally, profitability ratios are calculated either in relation to sales or in relation to investment. The various profitability ratios are as follows:
  • Gross profit ratio
  • Operating ratio
  • Operating profit ratio
  • Net profit ratio
  • Expense ratio

  • Return on investments
  • Return on capital
  • Return on equity capital
  • Return on total resources
  • Earnings per share
  • Price-earnings ratio



As we known business is concerned with the financial activities. In order to ascertain the business every enterprise prepares the certain statement, known as financial statement. Financial statements at least refer to the two statements which are prepared by a business concern at the end of the financial yearThese are:
  1. Income statement or Trading and Profit and Loss account which is prepared by a business concern in order to known the profit earned and loss sustained during a specific period.
  2. Position statement or Balance Sheet which is prepares by a business concern on a particular date in order to known them financial position.

These statements are added the statement of Retained Earnings and some other statement (such as fund flow statements, cash flow statements, etc.) and schedules of fixed assets (such as Investments and Equipments) and Debtors etc. to give a full view of financial affairs.


”Financial Statements” are interim reports, presented annually and provide a summary of the accounts of business enterprise, the balance sheet reflecting the assets, liabilities and capital as on a certain date and the income statement showing the results of operation during a certain period.


Financial Statement primarily includes two basic statements:
  1. The income statement or profit and loss account
  2. The position statement or balance sheet.

However, generally accepted accounting principle (GAAP) specifies that a complete set of financial statements must include;
1. An Income Statement
2. A Balance Sheet.
3. A Statement of changes in owners account.
4. A Statement of changes in financial position.


On this basis, the financial analysis can be external and internal analysis:
EXTERNAL ANALYSIS - This analysis is made by those persons who are not directly concern with the enterprise. These include investors, potential investors, creditors, potential creditors, governments’ agencies, credit agencies and the general public. They do not have access to the enterprise. They do not have access to the detail records of the company and have to depend mostly on published statements.

INTERNAL ANALYSIS – The internal analysis made by those persons who have access to the books of accounts. They are the members of the organization. Analysis of financial statements or other financial data for managerial purposes is the example of internal type of analysis. The internal analyst can give more reliable result than external analyst because every type of information is at its disposal.
 On this basis, the analysis can be long-term and short-term analysis:
Long-term Analysis – This analysis is made in order to study the long-term financial stability, solvency and liquidity as well as profitability and earning capacity of a business concern. The purpose of making such type of analysis is to know whether in the long run the concern will be able to earn a minimum amount which will be sufficient to maintain a reasonable rate of return on the investment so as to provide funds required for modernization, growth and development of the business and to meet its costs of capital. This type of analysis helps the long-term financial planning which is essential for the continued success of a business.
Short-term Analysis: This analysis is done to know the short-term solvency of the firm. Stability and liquidity of the firm is also determined by short-term analysis. To know the Earning capacity of the business, Short term analysis is very important for the firm. The main objective of short term analysis is to know whether the firm have sufficient funds available or not to meet the short term requirement and it have capacity of borrowing fund or not to meet the demand in future. The Short Term Analysis is prepared by taking the reference to the items of current assets and current liabilities to know sufficient knowledge about the company’s current position which may be helpful for short-term financial planning and long-term planning.

On the basis, the analysis may be horizontal analysis and vertical.
Horizontal or Dynamic Analysis: Horizontal analysis refers to the comparison of financial data of a company for several years. The figures for this type of analysis are presented horizontally over a number of columns. The figures of the various years are compared with standard or base year. A base year is a year chosen as beginning point. This type of analysis is called ‘Dynamic Analysis’ as it is based on the data from year to year rather than on data of any one year. This is very useful for long-term trend analysis and planning.
Vertical or Static Analysis: This analysis is made to review and analyze the financial statement of one particular year only. In this analysis the figures from financial statement of a year are compared with a base selected from the same year’s statement. Common size financial statements are financial ratios is the two tools employed in vertical analysis.

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