The working capital cycle (WCC) is the time it takes for a business to convert its current assets and liabilities into cash. It’s also known as the cash conversion cycle. In simple terms, the working capital cycle or operating cycle refers to the length of time required to convert non-cash current assets like raw materials,…
Financial statement analysis is a critical component of evaluating a company’s financial health, performance, and future prospects. Several analytical techniques are employed to interpret data from a company’s balance sheet, income statement, and cash flow statement. Among the most widely utilized methods are horizontal analysis, vertical analysis, and ratio analysis. Additional techniques include common-size statements,…
On June 19, 2025, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Project Finance) Directions, 2025, with the objective of establishing a standardized and robust regulatory framework governing project financing across all regulated entities (REs). These Directions are designed to streamline project-based lending, enhance credit discipline, and ensure financial prudence while…
Introduction Rearranging financial statements for analytical purposes involves restructuring the standard formats of the balance sheet, income statement, and cash flow statement. The objective is to highlight key performance indicators and interrelationships that support specific financial analyses. This process may include reclassification, consolidation, or restatement of financial data to uncover underlying trends and improve comparability.…
IntroductionFinancial statement analysis serves as a critical tool for bankers to evaluate a borrower’s creditworthiness, monitor loan performance, and manage financial risk. By examining key financial documents such as the balance sheet, income statement, and cash flow statement, bankers gain insights into an entity’s financial health, operational efficiency, and debt-servicing capacity. This process underpins sound…