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Components of current assets In case of unwinding what is paid 1st (debt/prefrencial shares ..) Structural diff between IFRS and IGAAP Various types of ratios (DUPONT Analaysis)+other ratio+EPS+EBIDTA ratio Significance of quick ratio / acid test ratio Various components of BS Varios componets of PL How to analyse BS Cash flow classification - operating / investing and fincancing Notes to accounts AFS/Held for sale / Held to maturity Diff between schedule VI and revised concepts: Goodwill/depreciation/amortization/Impairment (goodwill is impaired) Consolidation rule Share capital Consolidation process (Subsidiary / JV / Associate ) Bonds Bad debts / right off accounting Tax Capitalization / expense Retrospective / prospective accounting EPS Basic and diluted P/E EV(Enterprise value) Free cash flow to firm Market value=No of shares outstanding X current market price Return on Capital employed Economic value added (EVA)

Various components of PL
Gross Profit = Income Expense EBITDA (Earnings before Interest Tax Depreciation & Amortization) = Gross Profit = Revenue - COGS Significance of EBITDA: EBIDTA is use to analyze the operational efficiency of any organization. The components of financial statement like tax, interest, depreciation and amortization are independent of operational activity. EBIT = EBITDA Depreciation and amortization EBT (Earnings before tax) = PBT (Profit before tax) PAT (Profit after tax): = PBT - Tax Net Income = Net profit Net profit = PAT (Profit after tax) - MI (Minority Interest) Significance of PAT: PAT can be used to analyze the overall performance of the company Note: MI is always at consolidated level. At stand alone level MI = 0

SHARE CAPITAL

Definition

Authorised share capital is also referred to, at times, as registered capital. It is the total of the share capital which a limited company is allowed (authorised) to issue. It presents the upper boundary for the actually issued share capital. o Shares authorised = Shares issued + Shares unissued Issued share capital is the total of the share capital issued (allocated) to shareholders. This may be less or equal to the authorised capital. o Shares outstanding are those issued shares which are not treasury shares. These are all the shares held by the investors in the company.[2] o Treasury shares are those issued shares which are held by the issuing company itself, the usual result of a buyback. o Shares issued = Shares outstanding + Treasury shares

Issued capital can be subdivided in another way, examining whether it has been paid for by investors:

Subscribed capital is the portion of the issued capital, which has been subscribed by all the investors including the public. This may be less than the issued share capital as there may be capital for which no applications have been received yet ("unsubscribed capital"). Called up share capital is the total amount of issued capital for which the shareholders are required to pay. This may be less than the subscribed capital as the company may ask shareholders to pay by instalments. Paid up share capital is the amount of share capital paid by the shareholders. This may be less than the called up capital as payments may be in instalments ("calls-in-arrears").

Common Stock:

1. 2. 3. 4.

Represents equity ownership in a company. Voting rights to elect board of directors and corporate policy. Variable dividend payout In case of winding, common stock holders are last in line to receive payment.

Convertible stock: is a preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually any time after a predetermined date Preference Share (Preferred stock): Capital stock which provides a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of a liquidation. Like common stock, preference shares represent partial ownership in a company, although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Also unlike common stock, preference shares pay a fixed dividend that does not fluctuate, although the

company does not have to pay this dividend if it lacks the financial ability to do so. The main benefit to owning preference shares are that the investor has a greater claim on the company's assets than common stockholders. Preferred shareholders always receive their dividends first and, in the event the company goes bankrupt, preferred shareholders are paid off before common stockholders. In general, there are four different types of preferred stock: Cumulative preferred stock: Preferred stock on which dividends accrue in the event that the issuer does not make timely dividend payments. Most preferred stock is cumulative preferred. opposite of noncumulative preferred. Non-cumulative preferred stock: Preferred stock for which unpaid dividends do not accrue. opposite of cumulative preferred. Participating preferred stock: A preferred stock which, in addition to a regular dividend, also pays an additional dividend (the participating dividend) when common stock dividends exceed a specified amount. Convertible preferred stock (also called preferred stock) : Preferred stock that can be converted into a specified amount of common stock at the holder's option. Read more: http://www.investorwords.com/3775/preference_shares.html#ixzz23h68G5kh

Difference between preference share and equity share


1. Preference Shares have a finite tenure and carry a fixed rate of dividend. While dividends to equity are paid only after payment to preference share and rate of dividend is not fixed 2. Preference share holders are not owners of the company and do not enjoy any voting right. Whereas Equity Shares has voting right & they are the real owners of company. 3. Preference share paid before equity in case of wind up

In case of wind up the sequence of payment is as follows: 1. Bond holder (Debt) 2. Preference share 3. Common share

Components of Balance sheet

Balance Sheet

Total Assets

Total Liability

Equity

Current Assets Inventories Trade receivables Cash and cash equivalents Short term loans and advances Advance tax and TDA

Non Current Assets

Current Liability

Non Current Liability

Equity attributable to equity holder of company

Minority Interest (Only in consolidated BS)

Short-term borrowings (secured / unsecured); Trade payables; Other current liabilities; Short-term provisions Deferred tax liability Long Term borrowing (Secured/Unsecured loans) Other long term liabilities Long term provisions (Employee benefit)

Share Capital -- Equity Share capital -- Preference share capital Share application money

Property, Plant and Equipment Investment subsidiaries, associate and JV Long term bank deposit Intangible assets (License/Patents) Goodwill Deferred income taxes Other current liabilities

Reserves and Surplus - Currency translation reserve -AFS reserve -RETAINED EARNINGS* -Other reserves

Current maturities of Secured / Unsecured long term debt Current maturities of Finance lease obligations Unpaid dividends Advances from Customers Income received in advance Payables to Capital Creditors Other payables (Sundry Deposits/Forward contract)

Other Reserves Capital reserve Fair value reserve on AFS Debenture redemption reserve Asset Revaluation reserve Capital Redemption Reserve General reserve Preference share redemption reserve Other long term liabilities Long term advances from customer Long term credit from suppliers *Profit / Loss for the year is transferred to RETAINED EARNINGS

Short-term provisions Provision for employee benefits Provision for Dividend Provision for direct/indirect taxes Others (Environmental expenses/ Dismantling)

Miscellaneous topics
Other current asset/liability Restricted Cash

Restricted cash is cash not available for immediate use. Such cash cannot be used by a company until a certain point or event in the future. Lets take a look at a few examples. Example 1: A large equipment manufacturing company received an advance payment (deposit) from its customer for a piece of equipment to be finished and shipped within the next six months. According to the customer contract, the manufacturer must transfer this deposit in a separate bank account and cannot use it until the equipment is shipped. This advance payment received from the customer represents restricted cash on the manufacturers books because it cannot be used until a future event (the shipment of equipment). Once the equipment is shipped, the manufacturer will be able to use the cash in their operations. Example 2: A company sets aside an equal amount of cash each month for liquidation (payment) of a long-term debt. The debt is to be paid off in two years. The amount of cash set aside is restricted for future use only, and thus, it represents restricted cash. When the time of debt settlement comes, the company will use the accumulated funds to pay off the debt. If the restricted cash balance is material, then this balance is shown separately from cash and cash equivalents on the balance sheet. Depending on when cash is expected to be used, restricted cash can be classified as a current (short-term) or non-current (long-term) asset. In cases when restricted cash is expected to be used within one year after the balance sheet date, it should be classified as a current asset (Example 1). However, if restricted cash is not expected to be used within one year after the balance sheet date, it should be classified as a non-current asset (Example 2).

Forex in standalone books:


There can be forex in standalone books in case a loan is there is foreign currency loan. Example outstanding loan on March 11 = 2500 USD = 112500 INR (@45 INR = 1 USD). Assuming that there is repayment done and no additional interest to be paid the value of outstanding loan on March 12 = 2500 USD = 125000 INR (@50 INR = 1 USD) . The increase in load amount in due to exchange rate is Forex loss NOTE: Usually foreign currency loan is taken only for CAPEX

TAX
Tax = Current tax + Deferred tax Current Tax: Deferred Tax: