A study of the effect of some financial indic...

A study of the effect of some financial indicators from P&L A/C & Balance Sheet on Share Price and forecasting the indicators of a chosen company for the future years-w.r.t. Retail Sector in India.

Author Name : Ms. Anupriya Prasad, Dr. Sougata Banerjee

ABSTRACT To value an organization, investors have to look at its financial position specifically its balance sheet and profit & loss a/c and its share prices through which a financial analysis of a company can be performed easily. This study tried to understand and estimate the impact (if any) of Balance Sheet and profit & loss a/c components on the share prices of the company and also tried to establish a significant relationship among them for which an attempt was made to create a model through correlations and multiple regression. Five companies were chosen on the basis of their ages, who are enlisted in the Bombay Stock Exchange (BSE) under the retail sector. Four components each from the Balance sheet as well as Profit and loss a/c for 5 financial years i.e., FY 2014-15, 15-16, 16-17, 17-18, 18-19, and the share prices for the same companies and same time frame were been taken into consideration in this research. As a Case for the purpose of forecasting through time series analysis for the period of 20 financial years (FY1999-2000 to FY2018-2019) of Trent Ltd was been performed, taking into the consideration Balance sheet and Profit & loss a/c components and share price so that investors can have some guidance and speculate regarding the status of the company which can provide a base for them to anticipate their trend of share price in the retail sector through this analysis and make best decision to invest in the most profitable company under the retail sector. Quantitative research completely on secondary data was executed and statistical tools like Correlation, Regression, and time series were implemented through SPSS 19. The study can benefit the retail sector as well as every other sector. It found out that some components of the Balance sheet and P&L a/c can explain a reasonable percentage of the cause behind share prices variation in the stock exchange and the B/S, P&L a/c and share prices trend for the future year can be considerably explained by the forecasted model. EPS was found to be the most significant component defining the share price.