Small signal stability is the ability of the power system to maintain synchronism under small perturbations. Such perturbations occur continuously on the system because of the small variations in load and generation where the system continuously adjusts itself to changing conditions. Restoring forces acting on the machines help them to maintain stable conditions. The system must be able to operate satisfactorily under these conditions and successfully supply the maximum amount of load. The "small signal" disturbances are considered sufficiently small for linearization of system equations to be permissible for the purpose of analysis. A general method, with all the preliminary steps, to perform small signal stability studies is presented in this paper. The approach presented is applied to the IEEE 118 bus system.