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hero honda

hero honda

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Published by: Suraj Singh on Nov 13, 2010
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TERM PAPER ON

HERO HONDA MOTORS LTD.
ACCOUNTING FOR MANAGERS

SUBMITTED TO:

SUBMITTED BY:
DIPENDRA KUMAR REG NO:-11000781 ROLL NO:-B32 MBA- I.T

Ms .Anushital sinha

HERO HONDA
Hero Honda Motors Ltd. is the world's largest manufacturer of two – wheelers, based in India. The company is a joint venture between India's Hero Group and Honda Motor Company, Japan that began in 1984. In 2001, the company achieved the coveted position of being the largest two-wheeler manufacturing company in India and the ‘World No.1’ two-wheeler company in terms of unit volume sales in a calendar year by a single company. Hero Honda has retained that coveted position till date. Today, every second motorcycle sold in the country is a Hero Honda bike. Every 30 seconds, someone in India buys Hero Honda's top-selling motorcycle – Splendor. These are some glorious years in Hero Honda history: 1985 1989 1991 1994 1997 1999 2001 2002 2003 2005 CD-100 SLEEK CD-100 SS Splendor Street CBZ PASSION DAWN, AMBITION CD-DAWN, SPLENDOR +, PASSION +, KARIZMA SUPER-SPLENDOR, CD-DELUX, GLAMOUR, ACHIEVER

Vision The Hero Honda story began with a simple vision – the vision of a mobile and an empowered India, powered by Hero Honda. This vision was driven by Hero Honda’s commitment to customer, quality and excellence, and while doing so, maintaining the highest standards of ethics and societal responsibilities. Hero Honda believes that the fastest way to turn that dream into a reality is by remaining focused on that vision. Strategy

Hero Honda’s key strategy has been driven by innovation in every sphere of activity – building a robust product portfolio across categories, exploring new markets, aggressively expanding the network and continuing to invest in brand building activities. Manufacturing Hero Honda bikes are manufactured across three globally benchmarked manufacturing facilities. Two of these are based at Gurgaon and Dharuhera which are located in the state of Haryana in northern India. The third and the latest manufacturing plant is based at Haridwar, in the hill state of Uttrakhand. Technology In the 1980’s Hero Honda pioneered the introduction of fuel-efficient, environment friendly four-stroke motorcycles in the country. Today, Hero Honda continues to be technology pioneer. It became the first company to launch the Fuel Injection (FI) technology in Indian motorcycles, with the launch of the Glamour FI in June 2006. Products Hero Honda's product range includes variety of motorcycles that have set the industry standards across all the market segments. The company also started manufacturing scooter in 2006. Hero Honda offers large no. of products and caters to wide variety of requirements across all the segments. Distribution The company's growth in the two wheeler market in India is the result of an intrinsic ability to increase reach in new geographies and growth markets. Hero Honda's extensive sales and service network now spans close to 4500 customer touch points. These comprise a mix of authorized dealerships, Service & Spare Parts outlets, and dealer-appointed outlets across the country. Brand The company has been continuously investing in brand building utilizing not only the new product launch and new campaign launch opportunities but also through innovative marketing initiatives revolving around cricket, entertainment and ground- level activation. Hero Honda has been actively promoting various sports such as hockey, cricket and golf. Hero Honda was the title sponsor of the Hero Honda FIH Hockey World Cup that was played in Delhi during Feb-March 2010. Hero Honda also partners the Commonwealth

Games Delhi 2010. 2009-10 Performance Total unit sales of 46,00,130 two-wheelers, growth of 23.6 per cent Total net operating income of Rs. 15860.51 Crores, growth of 28.1 per cent Net profit after tax at Rs. 2231.83 Crores, growth of 74.1 per cent Final dividend of 1500% or Rs. 30 per share on face value of each share of Rs. 2 EBIDTA margin for the year 17.4 per cent EPS of Rs. 111.77, growth of 74.1 per cent

These are some big personalities of hero Honda:

No Name of the . 1 Directors Mr. Brijmohan Lall Munjal 2 3 Mr. Pawan Munjal Mr. Toshiaki Nakagawa 4 5 Mr. Sumihisa Fukuda Mr. Om Prakash Munjal 6 7 Mr. Sunil Kant Munjal Mr. Masahiro Takedagawa 8

Designation

Chairman & Whole-time Director Managing Director & CEO Joint Managing Director

Technical Director Non-executive Director

Non-executive Director Non-executive Director

Mr. Satoshi Matsuzawa Non-executive Director

(Alternate Director to Mr. Takashi Nagai) 9 Mr. Pradeep Dinodia Non-executive & Independent Director 10 Gen.(Retd.) V. P. Malik Non-executive & Independent Director 11 Mr. Analjit Singh Non-executive & Independent Director 12 Dr. Pritam Singh Non-executive & Independent Director 13 Ms. Shobhana Bhartia Non-executive & Independent Director 14. Mr. Meleveetil Damodaran 15. Mr. Ravi Nath Non-executive & Independent Director Non-executive & Independent Director 16. Dr. Anand C. Burman Non-executive & Independent Director

COMPARATIVE BALANCE SHEET

Mar '09 Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Deffered Credit 39.94 39.94 0 0

Mar '10 39.94 39.94 0 0

absolute change 0 0 0 0 -335.73 0 -335.73 0 -12.46 -12.46 0

% change 0 0 0 0 -8.93 0 -8.83 0 -15.87 -15.87 0

3,760.8 3,425.0 1 8 0 0 3,800. 3,465. 75 02 0 0 78.49 66.03 78.49 66.03 0 0

Current Liabilities Provisions Total CL & Provisions total liabilities

1,678.9 3,965.6 3 9 1,026.3 526.97 5 2,205. 4,992. 90 04 6,085. 14 Mar '09 8,523. 09 Mar '10

2286.76 499.38 2786.14 2437.95

136.2 94.76 126.3 40.06

Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

2,516.2 2,750.9 7 8 1,092.2 942.56 0 1,573. 1,658. 71 78 120.54 48.14 3,368. 3,925. 75 71 326.83 436.4 149.94 108.39 1,863.4 217.49 8 2,408. 694.26 27 325.8 438.46 2.08 43.73 1,022. 2,890. 14 46 0 0 6,085. 8,523. 14 09 100.54 73.04 190.33 173.52

234.71 149.64 85.07 -72.40 556.96 109.57 -41.55 1,645.99 1,714.01 112.66 41.65 1,868.32 0.00 2,437.95 -27.50 -16.81

9.33 15.88 5.41 -60.06 16.53 33.52 -27.71 756.81 246.88 34.58 2002.4 182.78 0 40.06 -27.35 -8.83

COMPARATIVE PROFIT & LOSS A/C % ABSOLUTE CHANGE CHANGES S 24.37205 006 17.18450 951

31/3/2009

31/3/2010

Sales Turnover Excise Duty

13,553.23 1,227.85

16,856.43 1,016.85

3,303.20 -211.00

Net Sales Other Income Stock Adjustments Total Income Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

12,325.38 222.14 22.09 12,569.61 8,842.14 73.7 448.65 354.08 669.98 205.9 0 10,594.45

15,839.58 290.69 -11.54 16,118.73 10,822.99 81.05 560.32 454.36 885.03 280.64 0 13,084.39

3,514.20 68.55 -33.63 3,549.12 1,980.85 7.35 111.67 100.28 215.05 74.74 0.00 2,489.94

28.51189 984 30.85891 78 152.2408 33 28.2357 2092 22.40238 223 9.972862 958 24.89022 623 28.32128 333 32.09797 307 36.29917 436 0 23.5023 0545

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend

1,753.02 1,975.16 13.04 1,962.12 180.66 0 1,781.46 0 1,781.46 499.7 1,281.76 1,752.31 0 399.38 67.87

2,743.65 3,034.34 11.14 3,023.20 191.47 0 2,831.73 0 2,831.73 599.9 2,231.83 2,261.40 0 2,196.56 371

990.63 1,059.18 -1.90 1,061.08 10.81 0.00 1,050.27 0.00 1,050.27 100.20 950.07 509.09 0.00 1,797.18 303.13

56.50990 861 53.62502 278 14.57055 215 54.07824 19 5.983615 632 0 58.95557 576 0 58.95557 576 20.05203 122 74.1223 0059 29.05250 783 0 449.9924 884 446.6332

Tax Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs) 1,996.88 64.19 1,000.00 190.33 1,996.88 111.77 5,500.00 173.52 0.00 47.58 4,500.00 -16.81

695 0 74.12369 528 450 8.832028 582

COMMON SIZE BALANCE SHEET
Mar '09 Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Deffered Credit Current Liabilities Provisions Total CL & Provisions total liabilities '09 Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Share 39.94 39.94 0 0 3,760.81 0 3,800.75 0 78.49 78.49 0 1,678.93 526.97 2,205.90 6,085.14 Mar 100 % ar '10 39.94 39.94 0 0 3,425.08 0 3,465.02 0 66.03 66.03 0 3,965.69 1,026.35 4,992.04 8,523.09 ar '10 M 100 M % Share 0.47 0 0 40.19 0 0 0.78 0 46.53 12.05

0.66 0 0 61.8 0 0 1.29 0 27.6 8.66

2,516.27 942.56 1,573.71 120.54 25.87 1.99

2,750.98 1,092.20 1,658.78 48.14 19.46 0.57

Fixed Deposits Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Total CA, Loans & Advances Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

2.08 3,368.75 326.83 149.94 217.49 694.26 325.8 1,020.06 0 6,083.06 100.54 190.33 -

0.034 55.36 5.38 2.46 3.58 5.35

43.73 3,925.71 436.4 108.39 1,863.48 2,408.27 438.46 2,846.73 -

0.51 46.06 5.12 1.27 21.86 5.14

0 100

0 8,479.36 73.04 173.52 -

0 100

\

COMMON SIZE PROFIT & LOSS A/C

31/3/20 09 %

31/3/2010

%

Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

13,553. 23 1,227.8 5 12,325. 38 222.14 22.09 12,569. 61 8,842.1 4 73.7 448.65 354.08 669.98 205.9 0 10,594. 45

0.00 0.00 100.00 1.8 0.18 0 71.74 0.60 3.64 2.82 5.44 1.67 0.00 0.00

16,856.43 1,016.85 15,839.58 290.69 -11.54 16,118.73 10,822.99 81.05 560.32 454.36 885.03 280.64 0 13,084.39

0.00 0.00 100.00 1.85 0.07 0 68.33 0.52 3.54 2.87 5.58 1.77 0 0

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

1,753.0 2 1,975.1 6 13.04 1,962.1 2 180.66 0 1,781.4 6 0 1,781.4 6 499.7 1,281.7 6 1,752.3 1 0 399.38 67.87 1,996.8 8 64.19 1,000.0 0 190.33

0.00 0.00 0.11 0 1.47 0 0 0 0 4.05 10.4 0 0 0 0 0.00 0 0.00 0

2,743.65 3,034.34 11.14 3,023.20 191.47 0 2,831.73 0 2,831.73 599.9 2,231.83 2,261.40 0 2,196.56 371 1,996.88 111.77 5,500.00 173.52

0.00 0.00 0.07 0 1.21 0 0 0 0 3.79 14.09 0 0 0 0 0.00 0 0.00 0

TREND PROFIT & LOSS A/C
31/3/200 9 % 13,553.2 3 1,227.85 12,325.3 8 222.14 22.09 12,569.6 1 8,842.14 73.7 448.65 354.08 669.98 205.9 0 10,594.4 5

31/3/2010

%

Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Raw Materials Power & Fuel Cost Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

16,856.43 1,016.85 15,839.58 290.69 -11.54 16,118.73 10,822.99 81.05 560.32 454.36 885.03 280.64 0 13,084.39

124.37 82.82 128.511 130.82 -52.24 128.24 122.4 110 124.9 128.32 132.1 136.3 0 123.5

Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extraord Items) Tax Reported Net Profit Total Value Addition Preference Dividend

1,753.02 1,975.16 13.04 1,962.12 180.66 0 1,781.46 0 1,781.46 499.7 1,281.76 1,752.31 0

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

2,743.65 3,034.34 11.14 3,023.20 191.47 0 2,831.73 0 2,831.73 599.9 2,231.83 2,261.40 0

156.51 153.6 85.43 154.07 105.98 0 158.95 0 158.95 120 174.12 129.05 0

Equity Dividend Corporate Dividend Tax Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)

399.38 67.87 1,996.88 64.19 1,000.00 190.33

100.00 100.00 100.00 100.00 100.00 100.00

2,196.56 371 1,996.88 111.77 5,500.00 173.52

550 546.33 100 174.12 550 91.17

TREND BALANCE SHEET
Mar 39.94 39.94 0 0 3,760.81 0 3,800.7 5 0 78.49 78.49 0 1,678.93 526.97 2,205.9 0 6,085.1 4 Mar '09 Gross Block Less: Accum. Depreciation Net Block Capital Work in 2,516.27 942.56 1,573.7 1 120.54 100.00 100 100.00 100 100 100 100 100 100.00 100 100.00 100 100 100 100 100.00 100 100.00 100.00

'09 Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Deffered Credit Current Liabilities Provisions Total CL & Provisions total liabilities

Mar '10 39.94 39.94 0 0 3,425.08 0 3,465.02 0 66.03 66.03 0 3,965.69 1,026.35 4,992.04 8,523.09 Mar '10 2,750.98 1,092.20 1,658.78 48.14 109.33 115.88 105.40 39.94 100 100 0 0 91.07 0 91.17 0 84.14 84.14 0 236.2 194.76 226.3 140.06

Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

3,368.7 5 326.83 149.94 217.49 694.26 325.8 2.08 1,022.1 4 0 6,085.1 4 100.54 190.33

100.00 100 100 100 100.00 100 100 100.00 100 100.00 100 100

3,925.71 436.4 108.39 1,863.48 2,408.27 438.46 43.73 2,890.46 0 8,523.09 73.04 173.52

116.53 133.52 72.29 856.8 346.88 134.58 2102.4 282.7 0 140.06 72.65 91.17

RATIO ANALYSIS

Ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition, its operations and attractiveness as an investment. Financial ratios are calculated from one or more pieces of information from a company's financial statements. For example, the "gross margin" is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a financial ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a company's situation and the trends that are developing. A ratio gains utility by comparison to other data and standards. Taking our example, a gross profit margin for a company of 25% is meaningless by itself. If we know that this company's competitors have profit margins of 10%, we know that it is more profitable than its industry peers which is quite favourable. If we also know that the historical trend is upwards, for example has been increasing steadily for the last few years, this would also be a favourable sign that management is implementing effective business policies and strategies. Financial ratio analysis groups the ratios into categories which tell us about different facets of a company's finances and operations. An overview of some of the categories of ratios is given below.

• • • • • •

Leverage Ratios which show the extent that debt is used in a company's capital structure. Liquidity Ratios which give a picture of a company's short term financial situation or solvency. Operational Ratios which use turnover measures to show how efficient a company is in its operations and use of assets Profitability Ratios which use margin analysis and show the return on sales and capital employed. Solvency Ratios which give a picture of a company's ability to generate cash flow and pay it financial obligations.

Although financial ratio analysis is well-developed and the actual ratios are well-known, practicing financial analysts often develop their own measures for particular industries and even individual companies. Analysts will often differ drastically in their conclusions from the same ratio analysis.

RATIO ANALYSIS
1) LIQUIDITY RATIOS:
a)

Current ratio:

Current assets Current liabilities

2009 =

1,020.06 2205.9 =.46

2010 =

2846.73 4992.04 =.57

b)

Quik ratio :

liquid assets Current liabilities

2009 =

Liquid assts = current assets – stock

1020.06 – 326.83 = 693.23

QR =

693.23 2205.9 = .31

2010 =

liquid assets = 2846.73– 436.4 = 2410.33

QR =

2410.33 4992.04 =.48

 INTERPRETATION OF LIQUDITY RATIOS:
A) The ideal current ratio is 2:1. B) In 2009 it was .46:1 which does not match with ideal. C) In 2010 CR is .57:1 which is very & comparative low. D) According to this ratio the financial position of Hero Honda is not good. E) Current assets should be double of current liabilities. F) Quik ratio is good(.31:1) in 2009. The ideal QR is 1:1. G) In 2010 QR is 0.48:1 which is below desirable level. H) The main reason for this situation is raising more current liabilities.

2) SOLVENCY RATIOS :
Bebt equity ratio : debt Equity

A)

2009 =

78.49 3800.75 = .021

2010 =

66.03 3465.02 = .019

B)

Debt to total fund ratio :

debt Total funds

2009 =

78.49 6085.14 =.013 * 100 = 1.3

2010 =

66.03 8523.09 = .008 * 100 = .8

C)

Interest coverage ratio :

NPBIT Interest charges

2009 =

1975.16 13.04 = 151.47 times

2010 = 3034.34 11.14 = 272 times

INTERPRETATION OF SOLVENCY RATIOS:

A)The ideal DEBT EQUITY RATIO is 2:1. It means co. should arrange funds from debt twice than equity.
B)

In 2009 DER is .021 & in 2010 this is .19. Which is less than desirable level.

C)The DEBT TO TOTAL FUNDS RATIO should be under 50%. D) If it is more than 50% it would be risky for any organization because in that condition it will depends on outside liabilities. Which leads to higher interest.
E)

This ratio is under control in both years.

3) ACTIVITY RATIO :

A)

Stock turnover ratio : cost of goods sold Average stock

2009 = 12325 . 38 259.48 = 47.5 times

2010 = 15839. 58 381.615 = 41.51 times

B)

Capital turnover ratio(CTR) : cost of goods sold Total capital employed

Total capital employed (TCE) = Fixed assets + working capital

2009 =

TCE = 1573.71 + (1020.06– 2205.9) =1573.71 – 1185.84 = 387.87

CTR = 12325.38 387.87 = 31.77 times

2010 =

TCE = 1658.78 + (2846.73 – 4992.04) = 1658.78 – 2145.31 = - 486.53

CTR = 15839.58 -486.53 = - 32.56 times

C)

Fixed assets turnover ratio :

sales Total fixed assets

2009 =

12325.38 1573.71 = 7.83

2010 = 15839 .58 1658.78 = 9.55

D)

Working capital turnover ratio : cost of sales Working capital

2009 =

12325.38 1185.84 = 10.4

2010 = 15839.58 2145.31 = 7.38

 INTERPRETATION OF ACTIVITY RATIOS:
A)STOCK TURNOVER RATIO means how many times the inventories/ stock of a company is rotated in a year.
B)

It was 47.5 times in 2009 & 41.51 in 2010.

C)CAPITAL TURNOVER RATIO shows that how efficiently the capital is being used in the business. D) It is decreasing in last financial year. That shows inefficiency of this company

E) FIXED ASSETS TURNOVER RATIO shows how we are using our assets for generating sale. It also shows whether adequate investment in fixed assets.
F)

FATR is7.83 & 9.55 in respectively years.

G) WORKING CAPITAL TURNOVER RATIO tells the velocity of the utilization of net working capital.
H)

This ratio has decreased from 10.4 to 7.38 times in last year. This kind of changes may be dangerous for an organization.

4) PROFITABILITY RATIOS :
Net profit ratio : net profit sales

A)

2009 =

1281.76 12325.38 = .104 * 100 = 10.4

2010 =

2231.83 15839.58 = .141 * 100 = 14.1

B)

Operating profit ratio : operating profit Sales

2009 =

1753.76 12325.38 = .142 * 100 = 14.2

2010 =

2743.65 15839.58 = .173 * 100 = 17.3

C)

Earning per share : net profit after preference dividend No of Equity shares

2009 =

1281.76 1996.88 = .642

2010 =

2231.83 1996.88 = 1.12

D)

Dividend per share : equity dividend No. of equity

2009 =

399.38 1996.88 =.20

2010 =

2196.56 1996.88 = 1.1

E)

Payout ratio = dividend per share Earning per share

2009 =

0.20 0.642 = .31 * 100 = 31

2010 =

1.1 1.12 = .98 * 100 = 98

 INTERPRETATION OF PROFITABILITIES RATIOS:

1)THE NET PROFIT & OPERATING PROFIT OF HERO HONDA HAS INCREASED IN LAST 2 YEARS WHICH IS THE STAGE COMPANY WANTS IT. 2)IN 2009 THEY WERE EARNING .642 ON EVERY SHARE BUT IN 2010 THIS HAS INCREASED TO 1.12. 3)THE DIVIDEND HAS ALSO INCREASED IN LAST TWO CONSECTIVE YEARS. 4)HERO HONDA IS PAYING DIVIDEND AT 98 % OUT OF THEIR EARNING PER SHARE.

CASH FLOW STATEMENT OF 2010
CASH FROM OPERATING ACTIVITIES 2686.64
= 2831.73 = 11.14 = 2602.84 = 1826.67 = 1100.00

=

NET PROFIT BEFORE TAX (+) INTEREST (+) INCREASE IN CURRENT LIABILITIES (-)INCREASE IN CURRENT LIABILITIES (-) INCOME TAX PAID

CASH FLOW FROM INVESTING ACTIVITIES ( 527.9)
(85.07) (556.96) 72.4 41.65

=

PURCHASE OF FIXED ASSETS = PURCHASE OF INVESTMENTS = WORK IN PROGRESS FIXED DEPOSITES = =

CASH FLOW FROM FINANCING ACTIVITIES (2109.3)
DIVIDEND PAID INTEREST PAID LOAN PAID = (2085.7)

=

= (11.14) = (12.46)

NET DECREASE IN CASH & CASH EQUILANTS = 49.44 (+) OPENING BALANCE OF CASH & CASH EQUILANTS 13.45 CLOSING BALANCE OF CASH & CASH EQUILANTS 63.15 = =

FUND FLOW STATEMENT Fund Flow Statements summarize a firm’s inflow and outflow of funds. Simply put, it tells investors where funds have come from and where funds have gone. The statements are often used to determine whether companies efficiently source and utilize funds available to them. This statement shows the flow of funds, flow of funds means movement of working capital over a period of time. In other words , increase or decrease in the working capital reflects the flow of funds. When a transaction increases the working capital , it is known as a source of fund and when it decreases the working capital, it is termed as use of funds. When a business transaction does affect the working

capital, no flow of funds take place. So we can say that a statement which depicts the various sources and uses of fund is known as fund flow statement.

CHANGES IN WORKING CAPITAL
2 0 0 9 2 0 1 0 IN C R E A S E IN W .C DE CR EA SE IN W. C

P A R T I C U L A R S CURREN T ASSETS: Inventori es Debtors Cash Loans & Advance s FIXED DEPOSIT ES CURREN T LIABILITI ES: Current liabilities Provision s Changes in WC

32 6. 83 14 9. 94 21 7. 49 32 5. 8 2. 08 16 78 .9 3 52 6. 97

4 3 6. 4 1 0 8. 3 9 1 8 6 3. 4 8 4 3 8. 4 6 4 3. 7 3

10 16 9.5 45 7 .9 41. 55 9 11 2. 66 41 22 .6 86. 5 76 49 9.3 8 18 29 00 37. .3 26 11 36. 96

Net decrease in WC 3965.6 9 1026.3 5

Fund flow statement
Sources To decrease in work in progress To decrease in work in capital To funds from operation application amount To sale of fixed asset 85.07 72.4 By payment of unsecured loans 1136.96 By Uses of reserves 12.46 335.73 3023.2 By payment of 11.14 interest 1100 By payment of tax By purchase of 556.96 investments amount

Fund from operation
Net profit before tax as on 31mar 2010 Add: depreciation 2831.73 191.47 3023.2

INTERPRETATION STATEMENT

OF

FUNDS

FLOW

Inventories have increased from 326.83 to 436.4. Because of this working capital also increased. Debtors are current assets that is why decreases in debtors leads to same results in working capital.

Here cash & bank balance is increases by 1645.99. This is the reason to increase in WC. Loans & advances & fixed deposits are increasing by 154.31. These are giving same impact on WC. The current liabilities of jet airways are increasing in comparison of last year & that is why WC is decreasing by 2286.76 by this transaction. The provisions also our current liabilities & these are increasing by 499.38 in a financial year. The decrement in WORKING CAPITAL is 1136.96. The jet airways have sold its fixed assets of 85.07 in last year to create sources of money. They paid some unsecured loans (12.46) in last financial year.

 

COST SHEET Cost sheet is a statement of cost. In other words, when costing information are set out in the form of a statement, it is called cost sheet. It is usually adopted when there is only one product is produced and all costs are incurred for that product only. Cost sheet may be prepared for a week, monthly, quarterly or yearly indicating various components of cost as prime cost, works cost, cost of production, cost of goods sold, total cost and also profitability on a production. The preparation of cost sheet depends on the cost data provided by cost accounting. Due to differences in the nature of cost data there are three different cost sheet Performa may be used. (a) Cost sheet with break up cost: These types of cost sheet contains two column as total cost, cost per unit of out put. A specimen of cost sheet with imaginary figure. (b) Cost Sheet with treatment of Stock: This type of cost sheet is maintained in case of manufacturing concern. Generally there are three types of stock as (1) Stock of Raw material, (2) Stock of work in progress and (3) Stock of finished goods. The treatment of stock in cost sheet has been given in a separate Performa. (c) Estimated cost sheet or price quotation: Price quotation means quoting the minimum price for obtaining a specific order. The quotation is send in the form or estimated cost sheet having one column. In estimated cost sheet all elements of cost and overhead expenses are calculated in the following manner. Estimated direct material Estimated labor cost Estimated overhead

Interpretation: This is the cost sheet of HERO HONDA MOTORS LTD.. This shows the overall cash flow for the year 2009 and 2010. As we see the total prime cost of the company increase this year this shows that company use more direct material this year as compare with previous year. There is also increase in total factory over head this include interconnect and port change, installation, power and fuel, rent and repairs and maintenance this all increase the

cost of factory overhead cost. This is all incurred within the factory while production. The salaries and sales and marketing expenses also decrease this year as compare with previous year. This because of huge cutting in employee’s cost. Because of total increase in prime cost, total factory cost, and decrease in administration overhead and also selling and distribution overhead and total factory overhead, total increase is less than total decrease for that it decrease the cost of sales of the company. It decreases the total profit of the company as compare with this year that is 2010.

REFERENCES:

1)

www.google.com

2) Wikipedia
3)

www.herohonda.com

4) Text book
5)

www.moneycontrol.com

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