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Financial statements represent an aggregate total of the company’s business information during a certain time period.  This information can be evaluated on the basis of historical, current and projected performance. Financial statement analysis is a common technique that allows business owners to review their company’s operational performance. Business owners will need to create financial statements from their company business transactions before conducting a financial statement analysis. Financial statement analysis compares ratios and trends calculated from data found on financial statements. Financial ratios allow you to compare your business’ performance to industry averages or to specific competitors. These comparisons help identify financial strengths and weaknesses. Financial statement analysis involves examining a company’s financial statements to make informed decisions. External parties utilize this process to assess the general well-being of a company, evaluate its financial performance and determine its business worth. Internally, stakeholders use it as a means of monitoring and managing the organization’s finances.

Financial ratios are dominant tools to help summarize financial statements and the financial health of a company. Stanley Block and Geoffrey Hart explain in the ‘Foundations of Financial Management’ that financial ratios are classified into four types of financial measurements: profitability,  asset utilization, liquidity, and debt utilization.

Profitability ratios assess the profit generated from various financial sources. These include the profit margin, return on assets and return on equity. To determine any of these ratios, divide net income by sales, total assets or stockholders’ equity, respectively.

Asset utilization ratios evaluate how effectively a company manages its assets. These ratios include receivables turnover, average collection period, inventory turnover, fixed asset turnover and the total asset turnover. With the exception of the average collection period, each of these ratios is calculated by dividing sales by the asset category specified in the ratio’s name.

Liquidity ratios assess the amount of assets that can be quickly converted into cash. These ratios are commonly used alongside cash flow statements to evaluate a company’s capacity to meet its obligations to creditors. The primary liquidity ratios are the current ratio and the quick ratio, which are calculated by dividing current assets and quick assets, respectively, by current liabilities.

Like asset utilization ratios, debt-utilization ratios measure how efficiently a company uses its debt. These ratios are debt to total assets, times interest earned and fixed charge coverage. Debt to total assets is calculated as it is stated, while the others are a little different—income before interest and taxes divided by interest and income before fixed charges and taxes divided by fixed charges.

Trend analysis

Trend analysis allows for the comparison of a company’s performance over specific time periods. For instance, managers can assess changes in their profit margin over five years. A thorough analysis should also incorporate industry benchmarks for a more comprehensive evaluation. Financial analysis is an important part of business management. Business owners often review financial information to ensure their business is generating enough capital to pay for expenses and provide the owner with a profit. While different types of financial analysis exist in the business environment, financial statement analysis is a common management tool. Financial statement analysis usually involves a personal review by the business owner.

Financial statement analysis usually includes quantitative and qualitative reviews by business owners. A quantitative review includes the use of various financial ratios. These ratios measure the company’s ability to meet short-term financial obligations, profitability of goods or services sold to consumers, use of financial assets to generate income and other information. The qualitative review uses personal judgment or inferences when making decisions based on the information.

Financial ratios provide a limited analysis of the company’s financial statements. These ratios calculate numerical indicators or percentage values based on the financial information contained in the statements. However, these indicators mean very little if not compared to competing business or industry standards. Business owners may find it difficult to compare their information with another company, which has similar business operations or financial obligations.

Business owners using qualitative analysis on financial statements may be limiting their reviews to the final output of financial information. While financial statements usually indicate how much profit the company has generated during a certain accounting period, financial statements typically do not provide enough information about the efficiency of business operations. Small businesses often can turn a profit even though too much money was spent on generating this income.

Business owners with a limited knowledge of accounting or financial analysis may be unable to properly analyze their operations. Business owners also may create financial statements that do not accurately reflect the company’s financial situation. Analyzing financial statements with incorrect information can misrepresent the owner’s understanding and decision-making process. Incorrect financial statements also misrepresent the company’s historical financial information, creating a difficult process for measuring business trends.

Qualified finance and professional accountants assist small businesses with setting up and analyzing financial statements. These professionals can also prepare business tax returns and help prevent major financial errors in recording and reporting business financial data. Additionally, business owners may seek their advice when making business decisions.

Business owners can employ two utilizations of financial statement analysis: quantitative and qualitative. Quantitative analysis involves using formulas or ratios to break down financial statements into indicators, which serve as benchmarks for comparing the company's performance to industry standards. Qualitative analysis relies on personal judgment or inferences to evaluate financial statement information. Both types of analysis help business owners make informed decisions about their operations.

Quantitative analysis features different financial ratios for analyzing financial statement information. Ratios include liquidity, asset turnover, financial leverage and profitability. Liquidity ratios indicate how well the business can meet short-term financial obligations. Asset turnover ratios provide information on the company’s ability to use assets when generating sales. Financial leverage ratios determine the long-term solvency of the business. Profitability ratios help business owners calculate the amount of profit from consumer goods or services.

Businesses perform qualitative analysis by examining multiple financial statements simultaneously, a process known as horizontal or trend analysis. In this approach, business owners compile a document that includes the financial statement for the current month along with those from several previous months. By reviewing individual accounts or line items, they can identify trends in areas such as sales, cost of goods sold or expenses, helping to uncover insights into company operations.

A computerized accounting system is valuable for financial statement analysis, with many affordable accounting software options available. These programs can be customized to capture a company’s financial data based on pre-set instructions. Additionally, computerized systems help minimize calculation errors that business owners might make when reviewing financial statements.

Misconceptions

Financial statement analysis is not always the best management tool for measuring a company’s performance. Although financial statement analysis may indicate positive performance indicators, other issues may exist in the company. Business owners also should review production output, employee productivity and other internal business functions to avoid a myopic business decision-making process.

Nepal and Armenia established diplomatic relations on 26 March 1993, shortly after Armenia gained independence from the Soviet Union in 1991. Since the establishment of diplomatic ties, relations between the two landlocked countries have progressed slowly, and there is hardly any literature available on their bilateral relations. Therefore, this article aims to explore potential areas of collaboration between the two nations.

Historical context

Despite the late start, Nepal recognized the importance of engaging with emerging republics like Armenia as part of its broader foreign policy to diversify partnerships beyond South Asia. Similarly, Armenia, positioned at the crossroads of Eastern Europe and Western Asia, has aimed to expand its diplomatic presence by establishing connections with countries in Asia, including Nepal.

Historically, both nations have preserved distinct political and cultural identities while contending with foreign domination. Armenia endured invasions by powerful empires, including the Ottoman, Persian, and Russian empires. Similarly, Nepal maintained its independence throughout the colonial era, despite British imperial interests in South Asia. Nepal stands out for its unique blend of Hindu and Buddhist traditions, while Armenia is renowned for being the first nation to adopt Christianity as a state religion in 301 AD. These shared experiences of resisting external pressures, preserving independence, and navigating rich religious and cultural heritages have fostered mutual respect between the two nations.

Diplomatic ties

In order to facilitate diplomatic exchanges, Nepal’s embassy in Moscow often represents its interests in Armenia, while Armenia’s diplomatic mission in New Delhi oversees its relations with Nepal.

In recent years, Nepal and Armenia have shown greater interest in strengthening their diplomatic ties, particularly through high-level visits and participation in international forums. In Dec 2023, Narayan Prakash Saud, Minister for Foreign Affairs, visited Armenia to attend the Ministerial Meeting of the Landlocked Developing Countries. In May 2024, the National Assembly of Armenia hosted a delegation of the National Assembly of Nepal, where discussion took place about forming a Parliamentary Friendship Group to foster deeper collaboration and enhance people-to-people relations. During the visit, a Memorandum of Understanding was signed between the Chamber of Commerce and Industry of Yerevan and Nepal Chamber of Commerce. The Armenian side also expressed interest in investing in Nepal’s agriculture and tourism sectors. Additionally, in Sept 2024, Armenia hosted three participants from Nepal for its inaugural edition of the Yerevan Dialogue, organized by the Ministry of Foreign Affairs.

Nepal and Armenia, positioned between powerful neighbors, share common economic and strategic concerns. Both nations actively engage in multilateral platforms like the United Nations, where they advocate for global peace, sustainable development and climate action. As small, landlocked countries, they have frequently aligned on key global issues, championing multilateralism and the interests of developing nations. The two nations have also supported each other’s efforts for international recognition and collaboration. Armenia has consistently backed Nepal’s UN initiatives, particularly in climate change, human rights and peacekeeping. In turn, Nepal has shown solidarity with Armenia on matters of regional stability in the South Caucasus, often maintaining a neutral position on conflicts such as the Nagorno-Karabakh issue.

Cooperation

Both Nepal and Armenia are small economies, with $41bn and $20bn respectively. Nepal’s GDP is heavily reliant on agriculture, remittances and tourism, while Armenia’s economy is increasingly driven by technology, agriculture and mining. 

Tourism presents a viable area for collaboration. Both Nepal and Armenia are renowned for their rich cultural heritage and natural landscapes, attracting tourists from around the world. Nepal, home to the majestic Himalayas such as Sagarmatha and iconic cultural landmarks such as Lumbini and Pashupatinath, can promote itself to Armenian tourists seeking spiritual and adventure tourism experiences. Armenia’s ancient monasteries, historical landmarks and scenic landscapes offer unique travel opportunities for Nepali visitors.

The exchange of goods, although limited at present, could also see growth. According to the Ministry of Foreign Affairs of Armenia, Nepal exported goods and services worth $32,100 in 2021. There is almost non-existent export from Armenia to Nepal. However, there is huge potential for bilateral trade because Armenia has a growing tech sector, producing electronics, software, wines and processed food; while Nepal offers handicrafts, textiles and agricultural products such as tea, coffee and spices. The two countries can explore avenues for promoting trade in these areas, including the development of trade agreements and participation in international expos to showcase each other’s products.

Both Nepal and Armenia face difficulties in accessing global markets, which necessitates the creation of innovative economic strategies and regional partnerships. Collaborative efforts to improve infrastructure and logistics, as well as lessons from Armenia’s growing tech industry, could benefit Nepal as it seeks to modernize its economy.

Exchanges

Cultural exchange between Nepal and Armenia, though limited, holds great potential for building stronger people-to-people ties. Both countries boast rich cultural heritages that could be further promoted through academic partnerships, artistic collaborations, and tourism initiatives. Nepal’s cultural diplomacy, driven by its Hindu and Buddhist traditions, can resonate with Armenia’s deeply rooted Christian heritage. Joint cultural festivals, academic conferences and exchanges between scholars of history, religion and culture could pave the way for a deeper understanding of each other’s traditions.

Education is another key area where Nepal and Armenia can collaborate. Both countries have growing youth populations that can benefit from academic exchanges and scholarships. Armenian universities, particularly those specializing in technology and sciences, can attract Nepali students, while Nepal’s universities can offer programs related to Himalayan studies, Buddhism and development studies that may appeal to Armenian students. Armenia has become an increasingly popular destination for students seeking affordable, high-quality medical education. Armenian universities, like Yerevan State Medical University (YSMU), offer medical programs that are recognized by international medical bodies such as the World Health Organization (WHO). Nepali students can benefit from such opportunities. 

Furthermore, Armenia’s Armenian General Benevolent Union (AGBU) operates globally, including in Asia, and can serve as a platform for cultural and educational partnerships between the two nations. The AGBU has historically played a role in fostering Armenian diaspora communities and cultural preservation, and its outreach could be extended to promote Armenia-Nepal ties.

Challenges

Despite the potential for cooperation, several challenges impede the deepening of Nepal-Armenia relations. First and foremost, the geographical distance between the two countries, coupled with the absence of direct transport links, lack of e-visa facilities for Nepali nationals, and absence of their embassies in each other’s capital poses logistical difficulties for trade, tourism, and diplomacy. Without direct air connectivity, the costs of travel and trade remain high, limiting the frequency of exchanges.

Additionally, the lack of a formal trade agreement between Nepal and Armenia has hindered the growth of economic relations. Both can benefit from exploring the potential for bilateral trade agreements or investment treaties that can facilitate easier access to each other’s markets. Nepal has abundant potential for hydropower development, while Armenia is focusing on developing solar and wind energy. Both countries can collaborate in renewable energy sectors by sharing expertise and technologies to promote energy sustainability. 

Both Nepal and Armenia are known for their trekking routes. Nepal is famous for the Annapurna and Everest Base Camp treks, while Armenia offers scenic hikes such as the Transcaucasian Trail and Mount Aragats. Both countries stand to benefit by promoting each other’s tourism sector that will enhance people-to-people relations which will open new avenues of collaborations. 

Another challenge is the limited awareness and understanding between the people of Nepal and Armenia. Cultural and educational exchanges, while promising, are still in their infancy, and greater efforts are needed to foster grassroots-level connections. Both governments need to invest in cultural diplomacy and encourage private sector involvement in promoting tourism and trade.

Prospects 

The future of Nepal-Armenia relations holds promise as both countries recognize the benefits of collaboration in a globalized world. Nepal can learn from Armenia’s technological advancements, while Armenia can benefit from Nepal’s experiences in sustainable tourism and renewable energy development. Armenia’s experience in digital transformation and e-governance can be shared with Nepal, which is working on improving its digital services for government and citizens. Knowledge-sharing workshops and collaborations on digital literacy and smart governance initiatives can be mutually beneficial. The development of institutional frameworks for trade, tourism and academic exchange is essential to unlocking the potential of this partnership.

Furthermore, greater cooperation in multilateral platforms, particularly on issues such as climate change, sustainable development and peacebuilding, will strengthen their diplomatic ties. Both Nepal and Armenia, as small landlocked nations, share similar concerns about connectivity, environmental sustainability and the challenges of globalization, offering opportunities for collaboration in international forums. Nepal is one of the largest contributors to UN peacekeeping missions, while Armenia also participates in peacekeeping operations. Both countries can collaborate in the training and exchange of peacekeepers, sharing expertise in maintaining global peace and security. Both Armenia and Nepal, as members of the Non-Aligned Movement (NAM), can collaborate on multilateral platforms such as NAM and the United Nations to advocate for the interests of small, landlocked nations and promote peaceful resolutions to global conflicts.

Nepal and Armenia are at an early stage of their bilateral relationship and the foundations are being laid for a deeper partnership. By overcoming challenges related to geography, trade and connectivity, both nations can enhance their cooperation in the areas of diplomacy, economics, culture and education, contributing to their mutual prosperity in the years to come.

The author is a research director at Nepal Institute for International Cooperation and Engagement

In every stone, sculpture and structure of our cultural heritage, there lies a narrative of resilience, creativity, and the enduring spirit of humanity. The cultural heritage of the Kathmandu Valley is more than a glimpse into our history; it’s the vibrant pulse of our identity, weaving together generations through the enduring stories etched in every temple, street and monument. The traditional values embedded within its iconic temples, grand palaces and bustling marketplaces have been meticulously preserved over centuries, reflecting a way of life that remains central to the identity of its people. These cultural elements are not merely relics of the past but continue to play an integral role in the daily lives of Kathmandu’s residents, influencing everything from religious ceremonies to social interactions.

However, as Kathmandu confronts the rapid changes brought about by the 21st century, this cradle of tradition finds itself at a critical juncture. The pressures of urbanization and modernization are reshaping the city’s landscape, presenting both opportunities and challenges. According to recent data, Kathmandu has seen a population surge of over 60 percent in the last two decades, with urban sprawl encroaching upon historically significant areas. Amidst this transformation, the integration of cutting-edge technologies like the Internet of Things (IoT) offers a promising yet delicate path forward. IoT, with its capacity to connect devices and gather real-time data, is being explored as a tool to safeguard and enhance Kathmandu’s cultural heritage. For instance, sensors can monitor the structural health of ancient monuments, alerting authorities to potential risks before they become critical.

As Kathmandu evolves into a smart city, the challenge lies in ensuring that this technological advancement does not come at the expense of its rich cultural heritage. The intersection of tradition and technology is more than just a balancing act; it is a necessary evolution. The goal is to create a smart city that not only embraces modernity but also preserves the essence of Kathmandu’s historical and cultural identity, ensuring that the treasures of the past are protected for future generations while the city moves confidently into the future.

IoT in urban development

IoT, which connects devices and systems to collect and exchange data, is at the forefront of Kathmandu's smart city initiatives. From traffic management to waste disposal, IoT is being utilized to make city services more efficient and responsive. Smart sensors monitor air quality, smart grids optimize energy use and smart transportation systems aim to reduce congestion. The vision is clear—an interconnected city where technology enhances the quality of life for all its residents.

However, the application of IoT extends beyond just improving urban infrastructure. For a city like Kathmandu, which is steeped in history, IoT holds the potential to play a pivotal role in preserving its cultural heritage. By embedding sensors in heritage sites, monitoring environmental conditions, and using data analytics, authorities can better protect these invaluable assets from both natural and human-induced threats.

Cultural heritage at risk

While Kathmandu’s smart city evolution is exciting, it also brings challenges, particularly concerning its ancient heritage. The city’s temples, palaces and monuments, many of which are UNESCO World Heritage Sites, are under constant threat from pollution, uncontrolled urbanization and the effects of climate change. The 2015 earthquake, which caused severe damage to many heritage sites, was a stark reminder of their vulnerability.

As Kathmandu modernizes, the risk is that these cultural landmarks could be sidelined or even compromised. The bustling urban environment poses a direct threat to the preservation of these sites, as new developments often encroach upon historical areas. Moreover, without careful planning, the introduction of modern technologies could lead to a homogenization of the city's character, erasing the very elements that make it unique.

Real-world applications

In response to these challenges, IoT offers promising solutions. Around the world, IoT has been successfully deployed to monitor and protect cultural heritage. For instance, in Italy, smart sensors are used in the Colosseum to monitor vibrations and structural health, helping to prevent damage from both environmental factors and tourism.

In Kathmandu, similar technologies could be employed to safeguard heritage sites. Sensors can monitor humidity, temperature and air quality around sensitive monuments, providing real-time data that can trigger preventive measures. For example, if a sensor detects rising humidity levels that could lead to mold growth on ancient frescoes, immediate action can be taken to address the issue. Additionally, IoT can aid in crowd management, ensuring that the influx of tourists does not overwhelm fragile sites.

Innovation and preservation

Despite its potential, the integration of IoT in heritage preservation is not without challenges. There is a fine line between protecting a site and over-intervening. The deployment of modern technology in ancient sites raises ethical and practical concerns. Will these technologies alter the very essence of the sites they aim to protect? Can the data collected be used responsibly without infringing on the cultural significance of these landmarks?

Furthermore, the local community’s perspective is crucial. For centuries, Kathmandu’s cultural heritage has been preserved through traditional practices passed down through generations. The introduction of IoT must respect and incorporate these practices, ensuring that the technology enhances—and not replaces—the community’s role in preservation.

Future prospects

The future of Kathmandu as a smart city lies in its ability to innovate while honoring its past. IoT can play a significant role in this journey, but it must be implemented thoughtfully. Policymakers, technologists and heritage conservationists must collaborate to create a framework that leverages technology to protect the city’s cultural heritage.

This could involve establishing guidelines for the use of IoT in heritage sites, ensuring that the technology does not compromise the integrity of these places. Additionally, investment in training for local communities to manage and interpret IoT data could empower them to take a lead role in preservation efforts.

Conclusion

Kathmandu’s journey toward becoming a smart city is an opportunity to create a model for urban development that respects and preserves cultural heritage. The integration of IoT into this vision is not just a possibility but a necessity if we are to protect the city’s ancient treasures for future generations. However, this must be done responsibly, with a clear understanding that technology is a tool to enhance, not replace, the cultural and historical essence of Kathmandu.

As we move forward, it is imperative that we strike a balance between innovation and preservation, ensuring that Kathmandu’s evolution into a smart city does not come at the cost of its rich cultural heritage. With careful planning and responsible use of IoT, Kathmandu can set an example for cities around the world, demonstrating that progress and preservation can go hand in hand.

The United Nations General Assembly proclaimed the period between 2022 and 2032 as the International Decade of Indigenous Languages to draw global attention toward the critical situation of many indigenous languages and to mobilize stakeholders and resources for their preservation, revitalization and promotion.  In an era of rapid media evolution, radio still has the power to bring people together and provide communities with vital news and information and local language radio programs. Currently, 365 community radios are operating in 77 districts of Nepal. These radios are operated by rural communities, including women, Dalit and Janjati communities.  These community radios have been shifting the power paradigm from elites to poor. Community radios in Nepal have been addressing the diversities of the country in a proper manner as they are spreading awareness by airing radio programs and news in more than 40 local languages. Maximum number of local radios are presenting diversity in Nepal.

Nepali society is very diverse as it features people from 125 ethnic groups speaking 129 languages. One can see an entirely different culture, geography and languages in every 3 hours walk from the north to the south or the east to the west. Only mainstream media and national radio cannot unleash the potential of diversity of this magnitude.

While localizing the issue, the challenges and hindrance that were faced previously should be internalized and necessary amendments should be made to ensure that these issues are not faced again. Media can work effectively on this issue. For social transformation reformation in present law and policy should be undertaken. Decentralization of authority and power is one way to empower local level and necessary laws should be formulated to ensure people enjoy the perks of decentralization.

Community radios has been playing the role of media in disseminating information and raising awareness through its programs at the grassroots level connecting it to the central level.  Diverse radios producing programs in various languages have made it possible to share information to a wide range of people throughout the country, thereby playing a role in social transformation.

Though the problem is not solved by the radio, it helps in challenging traditional thought processes and helps bring change from the grassroots. The reach of the media has also ensured that many incidents are not hidden or sidelined but are featured nationwide and leave the authority with no other option but to take action and help bring positive change.

Caste, gender, class and creed-based discrimination still exists in our country. The feudalistic social and cultural practices have ensured that the marginalized and poor communities are left far behind from the development benefits. After the emergence of the local and community radios, people are more concerned about their daily needs and their supply chain. Community radios are organized, operated and managed by the people in the community and it is generated to protect, promote the social, economic, cultural and political condition locally and nationally.

Community radio serves as a basic medium of communication for the right to information and freedom of speech. Community FM radios are trying to change the daily lifestyle of their audiences through radio programs. Community radios are picking up grassroot-level issues, which are making direct impacts on people’s lives. They are producing and broadcasting radio programs on various social, political and economic issues in various languages.

In Nepal, community radio is a reliable source of information for the elite to the people who are marginalized. Community radios have been helping to bring about positive changes in local communities through radio programs. Various awareness programs and public service announcements are broadcasted every day. Participation of women and people from marginalized communities has increased in development, political and economic activities because of these radios. In rural areas, women have started local enterprises either from their homes or rented spaces. Service providers are providing quality services to the right holders. Community radios have been empowering local people and making policy-makers accountable. In the 2015 April earthquake and 2017 October floods, community radios were only means of communication at the local level. 

The history of community radio started in 1947 when the Bolivian Labor Association operated the radio for the benefit of their community. In Nepal, the history of community radio began in 1996.

The country remained poor as the people were not aware in the past. In Nepal, 65 percent of the total population and only 42 percent women are literate.  Community radios have the capacity to reach the entire population of the country. However, other media have very limited reach and basically serve the elites. In this situation, community radios are considered as the absolute means of communication for rural communities. Community radios have been connecting the community with the state.

Community radios are the sources of information for the people from rural to urban and poor to rich. It is more than mechanical equipment, studios and frequencies. It is the means of hope, aspiration, security and future of their audiences. They broadcast pro-poor contents mostly overlooked by the commercial or mass-medias. Community radio is the approach rather than physical assets. The community radios are operated by the community to supply their informational needs for transforming their life and society.

Community radios are not-for-profit institutions. They are operated by community-based organizations for their social benefits. Community radio is advocating elimination of all harmful traditional practices through radio programs and their social movement. The subject of social inclusion and social transformation should be the issue of concern to everyone and not just the government and some organizations. Traditional discrimination still prevails in the society. Human trafficking, domestic violence and discrimination against women are still rampant. Many organizations have been working on these issues but real change is yet to be seen. 

In summary, community radios can play a vital role in bringing about positive transformation in our society. 

The author is chief of (CIN)) at ACORAB