This action might not be possible to undo. Are you sure you want to continue?
M. Syed Kunmir
BALANCE SHEET ANALYSIS
Sources of Funds
1) Capital 2) Reserves & Surplus 3) Term Liabilities 4) Current Liabilities
BALANCE SHEET ANALYSIS Uses of Funds 1) Fixed Assets 2) Intangible Asets 3) Non Current Assets 4) Current Assets .
BALANCE SHEET ANALYSIS Capital 1) Authorised Capital 2) Issued Capital 3) Subscribed Capital 4) Paid-up Capital .
BALANCE SHEET ANALYSIS Reserves 1) Subsidy Received From The Govt 2) Development Rebate reserve 3) Revaluation of fixed assets 4) Issue of Shares at Premium 5) General Reserves Surplus The credit balance in profit and loss account .
Reserves and P&L Surplus Less Intagible Assets .BALANCE SHEET ANALYSIS Tangible Net Worth This refers to the total funds arrived by paidup capital .
directors repayable over a period of time Remark : The company can raise public deposits to the extent of 25% of paid up capital plus free reserves and 10% from share holders for the maturity period ranging from 6 months to 3 yrs .BALANCE SHEET ANALYSIS Term Liabilities Redeemable preference shares Debentures Deferred payment gaurantees Public Deposits(Repayable after 12 months) Term loans and unsecured loans from friens. relatives.
unless the repayment is on deferred terms sundry creditors advances from dealers and customers interest accrued but not paid tax provisions Dividend declared and payable .loans deferred credit inst falling due in 12 mths public deposits maturing within 12 months unsecured loans.BALANCE SHEET ANALYSIS Current Liabilities Working capital bank borrowings T.
BALANCE SHEET ANALYSIS Contingent Liabilities Tax disputes Legal litigations Bills and cheques discounted with banks Claims against the company not acknowledged .
BALANCE SHEET ANALYSIS Fixed Assets Infrastructure like land & building plant & machinery Vehicles Furniture & fixtures Depreciation Straight line method Written down Value Method Remark : Dep added to profit to arrive repayment obligation especially in term loans .
.BALANCE SHEET ANALYSIS Investments 1) Shares And Securities 2) Associate Companies 3) Fixed deposits with banks/finance companies Remark : While analysing bal sheet we can analyse necessity of such investments Remark : While fixed deposits with banks are considered as fixed assets. the investmetns in associate concerns are treated as non current assets.
BALANCE SHEET ANALYSIS Non Current Assets Deferred recievables/Overdue recievables(like disputed amounts and Over Due > 6 mths) Non moving stocks/inventory/un usable spares Investment/Lending to associate concern Borrowing of the directors from the company Telephone deposits/ ST deposits etc .
BALANCE SHEET ANALYSIS Intangible Assets Preliminary & Preoperative expenses Deferred Revenue Expenditure Goodwill Trade mark Patents Rem : The o/s balance to be written off every year by charging P&L account .
BALANCE SHEET ANALYSIS Current Assets Raw materials.finished goods. Bank deposits .etc .spares and consumables Sundry debtors and recievables < 6 mths Advances paid to suppliers of raw materials Cash and bank balances Interest recievables Other current assets such as Government securities. work-in-progress..
associate concerns are to be treated as non cur ast The slow moving and absolete inventory .BALANCE SHEET ANALYSIS Notes All expenses or provisions or advances or loans etc which are accrued and payable within 12 months are current liablities When a company makes investments in unconnected avenues such as shares. securites.NCA .
Min three years bal sh ana would be more meaningful It is a mixture of facts. ( ex Over due recievable > 6 mths as NCA is a acccounting convention . the conventions are practiced by the finance managers of the company.BALANCE SHEET ANALYSIS Notes Bal Sh Analy not only to be quantitative but to be qualitative It is the fin pos on a part date. opinions and conventions While opinions are of the company¶s management.
BALANCE SHEET ANALYSIS Notes The valuation of the stock is done as per the opinion of the management Depreciation method may be changed to boost profit It may be silent on key personnel and staff turnover Marginal changes in the classification of certain items would lead to different results. .
BALANCE SHEET ANALYSIS Notes Management competence Investment decision Resorting to window dressing experience of the promoters Board comprises of only family members The key personnel of the company The structure of the organisation The authority and decision making are decentralised .
public response . book value..BALANCE SHEET ANALYSIS Notes The state of industrial relations Financial systems and procedures management control planning. forecasting capacity utilisation status of the technology awareness of the market. budgeting.. EPS.etc for listed co: share prices.etc . competitions . dividend record.
interest. commission and discount etc) Hence operating profit is a yard stick for operating profit of the company Operating profit = Sales Revenue.Operating Cost .Profit & Loss Account It is a summary of revenue earned and expenses incurred which ultimately results in profit or loss of to the company No defined format in law Operating revenue = Sales revenue Non_operating revenue = Other income ( out of sale of investments.
central sales tax applicable. Net Sales The sales figure excluding all the factors explained above are the net sales. state sales tax applicable.Profit & Loss Account Gross Sales Gross sales includes excise duty to be charged to the customer. . the discount o be allowed to distributors/dealers/customers. The gross sales appears in the P&L account comprises of all the above part from the basic unit price.
ironing. hooks.packing etc. buttons. Cost of Prod exclu selling & admn exp & int cost .Profit & Loss Account Cost of production This is the cost incurred right from the procurement of raw material to the finished good. canvas. For ex in a garment firm following cost is incurred while production 1) cost of raw material cloth. zips etc 2) Maintenace of sewing machines 3) payment of wages to workers 4) power 5) washing.
Profit & Loss Account Selling And General Administarative Expenses Maintaining office staff for admn & acctg marketing effort payment of salaries/Tr All to marktg personnel All the expenses which are not directly connected to manufacturing are classifed as selling and/or general expenses .
.Profit & Loss Account Cost of goods sold Cost of goods sold includes all manufacturing expenses and the adjustments for opening and closing stock Cost of Goods sold = Opening stock + Purchases + Manufacturing expenses .Cost of goods sold.Closing stock Gross Profit is arrived deducting figure of cost of goods sold from the sales figure ie Gross profit = Sales .
Profit & Loss Account Operating Profit is arrived deducting selling.(Sel & adm exp + Prov bad debt + mis exp ) Profit Before Tax When other income is added and other expenses are deducted from the operating profit we get profit before Tax ie PBT = Op Profit + oth Inc .taxes .oth exp Net Profit When provision for taxes is deducted from the Profit Before Tax we get Net profit ie Net Profit = PBT . provision for bad debts. administrative and general expenses . ie Op Profit = Gr Prof . interest and miscellaneous expenses from the gross profit.
All those expenses which are not directly connected with operations of the unit are classified under this head.e a) Preliminary expenses written off b) Loss suffered due to sale of assets & share . i. i.Profit & Loss Account Non Operating Income/Expenses The income earned by the unit from other than manufacturing and seling operations is classified under this head .e a) Interest earned on fixed deposits b) Dividends and profit earned by sale of assets and share.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.