Ravi

CHAPTER – 1 INTRODUCTION
Introduction of Assets and liabilities Management
Asset and liabilities management is the process of managing the use of assets
and cash flow to reduce the firm’s risk of loss from not paying a liability on
time. Well-managed assets and liabilities increase business profits.
The Assets and Liabilities Management is a one of the Most Effective Tool for a
Management of Financial Risk in the Business. And reducing the future risk of
Business with the help of Balance Sheet and Financial Data in a Company
Initially pioneered by financial institutions during the 1970 as interest rates

become increasingly volatile, asset and liabilities management (often -
abbreviated ALM) is the practice of managing risks that arise due to mismatches
Between the assets and liabilities
The process is at the crossroads between the risk management and strategic
planning. It is not just about offering solutions to mitigate or hedge the risk
arising from the interaction of assets and liabilities but is focus on a long term
perspective; success in the process of maximizing assets to meet complex
Liabilities may increase profitability.
The modern ALM includes the allocation and management of assets, equity,
interest rate and credit risk management including risk overlays, and the
calibration of firm wide tools within this risk frame work for optimization and
management in the local regulatory and capital environment.
Often an ALM approach passively matches assets against liabilities (fully

hedged) and leaves surplus to be actively managed.
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FUNCTIONS OF ALM
1. Identifying the liquidity risk

2. Identifying the interest rate risk of the banks
3. Capital market risk
4. Funding and capital management
5. Currency risk management
6. Profit planning and growth
1 Liquidity risk:
The current and prospective risk is arising when the bank is unable to
meet its obligations as they come due without adversely affecting the
banks financial conditions. From an ALM prospective, the focus is on the
funding liquidity risk of the bank. It means the ability to meet its current
and future cash flow obligations and collateral needs, both expected and
unexpected. This mission thus includes the bank liquidity’s bench mark
price in the market.
2 Interest rate risk:
The risk of losses resulting from movements in interest rates and their
impact on future cash flows. Generally because bank may have a
disproportionate amount of fixed or variable rates instruments on either
side of the balance sheet. One of the primary causes Are mismatches in
terms of bank deposits and loans
3 Capital markets risk:
The risk from movements in equity and /or credit in the balance sheet an
insurer may wish to harvest either risk of fee premium. Risk is then
mitigated by options futures, derivative overlays which incorporate
tactical or strategic views.
2
4 Funding and capital Management:
As all the mechanism to ensure the maintenance of adequate capital on a
continuous basis It is a dynamic and ongoing process considering both
short and long term capital needs and is coordinated with a banks overall
strategy and planning cycles(usually a prospective time horizon of 2years)
5 Currency risk management :

The risk of losses resulting from movements in exchanges rates. To the
extent that cash flow assets and liabilities are dominated in different
currencies.
6 Profit planning and Growth:

The assets and liabilities management is improving the planning and
increasing the growth of the company etc…
7 In addition, ALM deals with aspects relating to credit risk as this function
is also to manage the impact of the entire credit portfolio (including cash,
investment, and loans) on the balance sheet. The credit risk, specifically in
the loan portfolio, is handled by a separate risk management function and
represents one of the main data contributors to the ALM team.
Objectives of ALM
 Analysis of current sources of fund and prudent management of the funds.

 To provide on asset and liability management view of integrated risk
management.
 To present a proven Solution set which Achieves Integrated Risk
Management.
 To provide a Theoretical view of Integrated Risk Management.
 Matching the assets financed by different types of duration of funds and
its monitoring.
 Formulating Gap management strategies for Interest mismatch for
different categories of assets and liabilities.
 Assessment of risk factors associated with assets including its cost and
returns.
3
Role of ALM
The responsibility for ALM is often divided between the treasury and
chief financial officer, (CFO). In smaller organization, the ALM process
can be addressed by one or two key persons (Chief Executive officer,
such as the CFO or treasurer).
The best majority of banks operate a centralized ALM model which

enables oversight of the consolidated with lower level ALM units
focusing on business units and legal entities.
To assist and supervise the ALM unit an Asset and liability committee
(ALCO), whether at the board or management level, is established It as
the central purpose of attaining goals defined by the short and long term
strategic plans:
 To ensure adequate Liquidity while managing the banks spread
between the interest income and interest expense
 To approve a contingency plan
 To review and approve the liquidity and funds management policy
at least annually
 To link the funding policy with need ands and sources via mix of
liabilities and sale of assets (fixed vs. floating rate funds , wholesale
vs. retail deposit, Money market vs. capital market funding,
domestic vs. foreign currency funding….)
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Risk Management summary
Relevant ALM is deals mainly with the management of interest rate risk and
liquidity risk:
 Most global banks have bench marked their ALM frame work to the Basel
committee on Banking Supervision (BCBS) guidance ‘Principles for the
management and supervision of interest rate risk’ Issued in July 2004, this
paper as the objectives to support the Piller2 approach to Interest rate risk
in the banking book with in the Base2 capital frame work.
 In January 2013, the Basel committee as issued the full text of the revised
liquidity coverage ratio (LCR) as one of the key component of the Basel3
Capital frame work. This new coming ratio will ensure that banks will
have sufficient adequacy transformation level between their stock of
unencumbered High quality assets (HQLA) and there conversion into
cash to meet their liquidity requirements for a30-calender day liquidity
stress scenario (and thus hoping to cure short coming from Basel 2 that
was not addressing liquidity management
ASSETS
An asset is anything of value or resource of value that can be converted into

cash. Individuals, companies, and government own assets. For a company, an
asset might generate revenue, or a company might benefit in some way from
owning or using the assets.
Classification of Assets
Convertibility:
1. Current Assets 2. Fixed Assets
Physical Existence:
1. Tangible Assets 2. Intangible Assets
Usage:
1. Operating assets 2. Non operating Assets
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Tangible Assets
A Tangible assets is an assets that as a physical form. Tangible assets include

both fixed assets, such as machinery, buildings and land, and current assets, such
as inventory
Intangible Assets
An Intangible asset is an asset that as a Non Physical assets such as patents,

trademarks, copyrights, goodwill and brand recognition are all examples of
intangible assets.
Personal asset:
Personal Asset is an asset in the form of money or chattels. It could be any item
of economic value owned by an Indusial or corporation, especially which could
be converted to cash Examples are cash, securities, accounts receivables,
inventory, office equipment real estate, a car and other property.
Examples of personal assets are as;
 Cash and cash equivalents, certificate of deposits, saving accounts,

money market accounts, physical cash, Treasury bills
 Property or land and any structure that is permanently attached to it.
 Personal property – boats , collectibles, household furnishings, jewelry,
vehicles
 Investment – annuities, bonds, the cash value of life insurance policies,
mutual funds, pensions, retirement plans, (IRA, 401(k), 403(b), etc.)
stocks.etc…..
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Business Assets:
A business asset is an item of value owned by a company. Business assets span

many categories. They can be physical, tangible goods, such as vehicles, real
estate, computers, Office furniture, and other fixtures, or intangible items, such
as intellectual property
1. Current Assets: current assets are assets that can be converted into
cash within one fiscal year or one operating cycle. Current assets
are used to facilitate day to day operational expenses and
investments.
Current assets include:
 Cash and cash equivalents: Treasury bills, certificate of deposit

and cash
 Marketable securities: debt securities or equity that is liquid
 Accounts receivables: Money owned by customers to paid in the
short term
 Inventory: goods available for sale or raw materials
2. Fixed Assets: A fixed asset is a long term tangible piece of

property that a firm owns and use in its operations to generate
income. Fixed assets are not expected to be consumed or converted
in to cash within a year. Fixed assets are known as property, plant,
and equipment (PP&E).they are also referred to as Capital assets.
Examples of Fixed Assets:
Fixed assets can include buildings, computer equipment, software, furniture,

land, machinery, and vehicles. For example if a company sells produce, it’s a
delivery trucks are fixed assets. If a business creates a company parking lot, the
parking lot is a fixed asset. Note that a fixed asset does not necessarily have to
be “fixed” in all sense of the word. Some of these types of assets can be moved
from one location to another, such as furniture and computer equipment.
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Depreciation Method of Fixed Assets
Fixed assets lose value as they age. Because they provide long term income,
these assets are expensed then other items. Tangible assets are subject to
periodic depreciation, as intangible assets are subject to amortization. A certain
amount of the assets costs in expensed annually. The assets value decreases
along with its depreciation amount on the company balance sheet. The
Corporation can be match the assets cost with its long term value.
How a business depreciates an asset can cause it book value or the amount paid
for the asset, to differ from the current market value at which the asset could
sell. Unless it contains natural resources, land may not be depreciated, because it
cont be depleted.
Importance of Fixed Assets
Information about a corporation assets helps create accurate financial reporting,

Business valuation, and through financial analysis. Investors and creditors use
these reports to determine a company’s financial health and decide whether to
buy shares in or lend money to the business. Because company may use a range
of accepted methods of recording, depreciating, and disposing of its assets,
analysts need to study the notes on the corporation’s financial statements to find
out how the numbers where determined.
Fixed assets are particularly important to capital –intensive industries, such as

manufacturing, that requires large investments in PP&E When business is
reporting persistently negative net cash flow for the purchase of fixed assets, this
should be a strong indicator that the firm is in growth mode.
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Liabilities
The debts and obligations of a business Liabilities represent claims of creditors

on the assets of a business. For example: Note payables, Accounts payables,
Salary payable, wages payable, Interest payable, Other accrued expenses
Payable, Income tax payable, Customer Deposits, Warranty Liability, Un
earned Revenue, Lawsuits Payable, Bonds payable, etc…
A liability is defined by the following characteristics:
 Any type of borrowing from persons or bank for improving a business or

personal income that is payable during short or long time.
 A duty or responsibility to others that entails settlement by future transfer
or use of assets, provisions of services, or other transaction yielding an
economic benefit, at a specified determinable date, on occurrence of a
specified event, or demand.
 A duty or responsibility that obligates the entity to another, leaving it little
or no discretion to avoid settlement.
 A transaction or event obligating the entity that has already occurred.
Classification of Liabilities
Liabilities are reported on a balance sheet and are usually divided in to two
categories:
 Current liabilities – these liabilities are reasonably expected to be

liquidated within a year. They usually include payable such as wages ,
accounts, taxes, and accounts payable, un earned revenue when adjusting
entries, portions of long term bonds to be paid this year, short term
obligations (e.g. from purchase of equipment).
 Long term liabilities – these liabilities are reasonably expected not to be
liquidated within a year. They usually include issued long term bonds,
notes payables, long term leases, pension obligations, and long term
product warranties.
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Core Functions of Assets and Liabilities Management
 Managing gaps:
The objective is to measure the direction and extant asset- liability mismatches
through the funding or maturity gap. The aspect of ALM stresses the importance
of balancing maturities as well as cash flows or interest rates for a particular set
time horizon.
For the Management of interest rate risk it may take the form of matching the
maturities and interest rates of loan and investments with the maturities and
interest rates of deposits, equity and external credit in order to maintain adequate
profitability. In other words, it is the management of the spread between interest
rate sensitive assets and interest rate sensitive liabilities.
 Static/dynamic gap measurement techniques:
Gap Analysis suffers from only covering future gap direction of current existing
exposures and exercise of options (i.e. prepayments) at different point in time.
Dynamic Gap analysis enlarger the perimeter for a specific asset by including
‘what if’ scenarios on making assumptions on new volumes, (changes in
business activity, future path of interest rate, changes in pricing, shape of yield
curve , new pre payments transactions, what is forecast gap positions will look
like if entering into a hedge transaction)
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CHAPTER – 2
COMPANY PROFILE AND OWERVIEW
Space Design Furniture And Fixtures India Private Limited is a Private

Incorporated on 08 December 2009. It is classified as Non-got Company and
is registered at register of companies, Bangalore. Its Authorized capital is
Rs50, 00,000 and it’s paid up capital is Rs.1, 00,000. It is involved in
manufacture of furniture.
Space Design Furniture & Fixtures India Private Limited’s Annual General
Meeting (AGM) was last held on 29 September 2018 and as per record of
Ministry of Corporate Affairs (MCA) its balance sheet was last filed on 31
March 2018.
Directors of Space Design Furniture and Fixtures India Private limited are
SHAM SUNDER KATI , ASHWINIMAHANADI BALAKRISHNA,
NARAYANARAMYA, ANANTHANARAYANA and.
Space Design Furniture and Fixtures India Private Limited’s Corporate

Identification Number is (CIN) U336101KA2009PTC051783 And its
registration number is 51783 its Email address is nagaraja@4dimentions.com
and its registered address is No.2,1ST MAIN ROAD, PETE CHENNAPPA
INDUSTRIAL LAYOUT, MAGADI MAIN ROAD , KAMAKSHIPALYA
BANGLORE KA 560079 IN
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MEMORANDAM OF ASSOTIATION
The Name of the Company “Space Design Furniture and Fixtures India
Private Limited ’’The Registered Office of the company will be situated in the
State of Karnataka
Main Objects of the company to be pursued by the Company of its Incorporation
To carry on and undertake the Business of Consultancy, manufacturing,

conversions, trading assembling, Participating in designing, planning
commissioning, executing all type of concepts, planning in interiors, more
particularly into retail interior designs, interiors of housing of all kind of projects
and services of varied types, as to hotels, recreational clubs, Scoping and land
scoping requirements, super markets, chain stores, exhibitions, event
management , Industrial estates and which includes all type of commercial
establishments and such other business which requires in achieving above
objectives including civil ,structural, electrical services, project design, design
oriented etc. and such other allied activities.
To carry on the business of manufacturers, traders, converters, consultants,

advisors, associates, on all matters relating to designing interiors , project
management of interiors, exhibition design, services relating to interiors,
interiors and related technology management for all kind of commercial concern
for any kind, And undertake such services either individually or in partnership
or association with other firms or organization, on a mutually agreeable fees
basis, and also to plan and expand the business of depending on the growth and
prospects of the industry, trade, commerce and business.
To carry on the business of manufacturing , traders, converters, consultants,

advisors, business advisers associates for design , manufacture and marketing of
all kind of furniture, either for interiors or exteriors, using any kind of materials,
for all kind of purposes and utilities, either by own manufacture or by sub
contract manufacture and various other means and to establish shops,
showrooms, dealership and other modes of marketing mechanisms for the
marketing of such products and all other allied and associated products.
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To carry on the business of manufacturing , traders, converters, consultants,
advisors, business advisers associates for design , manufacture and marketing of
all kind of furniture, either for interiors or exteriors, using any kind of materials,
for all kind of purposes and utilities, either by own manufacture or by sub
contract manufacture and various other means and to establish shops,
showrooms, dealership and other modes of marketing mechanisms for the
marketing of such products and all other allied and associated products.
ARTICLES OF ASSOTIATION
The Regulations contained in Table ‘A’ in the first Schedule to the companies
Act, 1956, so for as the same are applicable to a Private company, as defined in
the Act, shall apply to this company in this same manner as if all such
Regulations of Table ‘A’ are specifically contained in the Articles, subject to the
modifications here in contained.
Company is a private Company within the meaning of section 3(1) of the

companies Act 1956 having a minimum paid up capital of Rs.1,00,000/-
(Rupees one Lac only) or such higher paid up capital as may be prescribed and
accordingly.
SHARES
The authorized share capital of the company shall be as per class V of the
Memorandum of Association. Subject to the Provisions of these Articles, the
shares shall be under the control of the board, who may allot or otherwise
dispose of the same to such persons and such terms and conditions and at such
time as the Board may think fit subject to article 2 hereof.
The board may allot fully paid up shares to minors represented by their
guardians, if it so decides.
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BUY BACK OF SHARES
Subject to provisions of the Act, and other applicable statutory regulations, the
company may purchase its own shares or other specified securities from time to
time.
REDUCTION OF CAPITAL
The company may (subject to the provisions of section 78, 80, and 100 to 105
inclusive of the act) from time to time by special resolution reduce its share
Capital and any capital redemption reserve account or premium account in any
manner for the time being authorized by law and in particular may pay off any
capital on the footing that it may be called up again or otherwise.
INDEMNITY
Subject to the provisions of Section 201 of the Act, the chairman, Directors,
Auditors, Managing Director and the Officers for the time being in relation to
any affaires of the company and their heirs, executers, administrators shall be
Indemnified out of the assets and funds of the company for or against all suits,
proceedings, cost, charges, losses, damages and expenses, which they are any of
them shall or may incur or sustain by reasons of any actions done or committed
in or about the execution of their duties in respect of their office except those
done by their willful neglect or default. Any such officer or trustee shall not be
answerable for acts, omissions, neglects or defaults of any other officer or
trustee.
COMMON SEAL
The common seal of the company shall not be affixed to any instrument except
by the authority of a resolution of the board and in the presence of at least two
conclusive proof of execution of the documents.
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SECRECY
Every Director, Manager, Auditor, Treasurer, trustee, Member of a committee,

officer, servant, agent, accountant, or other persons employed in the business of
the company shall if so required for the Directors Before entering upon his
duties, sign a declaration pledging himself to observe a strict secrecy respecting
all transactions and affaires of the company with the customers and the state of
accounts with individuals and in matter relating thereto, and shall by such
declaration, pledge himself not to reveal any of the matters which may come to
his knowledge in the discharge of his duties except when required so to do by
the Directors or by law or by the person to whom such matters relate and except
so for as may be necessary in order to comply with and of the provision in these
present contained.
GENEREL MEETINGS
Any Annual general meeting of the company may be convened by giving not
less than 7days notice in writing. All other General meetings may be convened
by giving not less than 3 days notice in writing.
The provisions of section 176(2) of the companies Act, 1956 shall not apply to
this company.
The provisions of section 173 of the companies Act, 1956 shall not apply to this
company.
INSPECTION OF BOOKS
No member shall be entitle to inspect the Companies books without permission

of the Directors or be entitled to any information in respect of any of the
companies trading or any matter which is or may be in the nature of a trade
secret, or secret process which may relate to the conduct of the Business of the
Company and which in the opinion of the Directors, it will not be expedient in
the interest of the members of the company to communicate to the public.
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DIRECTORS
The company shall have not less than two and not more than twelve Directors
including all kind of directors.
The First Directors of the Company shall be the following:
(i) Mrs. ASHWINI. M.B.

(ii) Mrs. SHANTA. B.S.
The First Directors above named shall hold the office for life and all other
directors appointed shall retire at every Annual General Meeting and may seek
re-appointment.
Number of shares qualification is necessary for any indusial for appointed as a

Director of the Company.
The Board may from time to time appoint one or more of their body to the office
of chairman or Managing Director joint Managing Director, Technical Director,
Executive Director, Finance Director or other office with any designation
including president and the like on such terms and on such remuneration
(weather) by way of salary or commission or partly in one way or another) with
such allowances, perquisites, amenities and the like, as the board may think fit.
The Board shall have power to co operate one or more persons to be the
Directors so that the total number shall not exceed six. The Board shall have
power to appoint Alternate Directors in the manner mentioned in Section 313 of
the Companies Act of 1956.
The Space designers each Director is holding 5000 shares of 10 each in Space
designers etc….
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CHAPTER – 3
RESEARCH DESIGN
Area of study: Finance & Accounts Department of space designers.
Data collection: Collection of historical data through the Finance & Accounts
Department with the help of finance and accounts Manager.
Primary data: Collection of primary data through the vouchers & Receipts of
the Company & row data of the Company.
Secondary data: Collection of data through the interaction between the me and
Finance Manager of the space designers India private Limited
Research Problem
After the research of finance and accounts department of the space

designers identifying “The Company is not maintained Balance sheet. It is
an opportunity for me to the construct the Balance sheet with available row
data & sagest the company for How to maintain financial statements or
Balance sheet, And also identifying the financial position of the Space
designers India Private Limited.
Tools of Assets and liabilities Management
 Gap analysis,
 Duration analysis,
 Value-at-risk-method
 Risk Management
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 Gap analysis: Basically Assets and liabilities both are rate sensitive in
different degree. It is therefore necessary to identify rate sensitivity
among different groups of assets and liabilities and match identical groups
of assets with liabilities. In the ALM process, Gap is generally used for
quantifying the rate sensitive groups only (as compared to rate insensitive
groups of liabilities like current deposits, float funds etc.)
In other words, GAP is the “excess” of interest sensitive assets over
interest sensitive liabilities or vice-versa > If Risk sensitive liabilities and
risk sensitive Assets are equal when difference of two (GAP, RSA-RSL)
becomes a NIL, Net interest Margin (NIM) is free from any effect of
interest rates Movements.
 Duration Method: Under this Method, Impact of changes in interest rate

on the market value of assets liabilities is considered. Duration analysis is
carried out with respect to cash flow and average maturity.
 Value at risk (VAR) Method: This method is Variant of the practice of

“market to market” approved securities based on Yield-to Maturity.
 Risk Management: Under this process, the risk profiles of assets and
liabilities are evaluated to ensure that they are within the acceptable
levels of risk. The availability of hedging mechanisms (e.g. derivative
instruments) would facilitate risk management. The reserve bank of India
issues specific guidelines to be followed by banks for managing their
respective. Asset and liability management. Asset and liabilities
management. Although the principles of management assets and
liabilities based on basal committee have been given above some
important points of the guidelines issued by the RBI( these are review by
periodically to suit the changing atmosphere of the monetary and
economic policies of the government)
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CHAPTER – 4
DATA ANYLESISS AND INTERPRETATION
Income statement
It is a statement of Inflow and Outflow of cash or Receipts and Payments

statement it is useful for identifying the annual income of the particular business
in one financial year or financial period.
PRO FORMA OF INCOME STATEMENT
The Income statement of ________ as on 31 March……
Revenues Amount
1 Sales Xxx
2 Cost of Sales Xxx
Gross Profit Xxx
Expenses
3 Advertising @5%of Sales X
4 Utilities Xx
5 Maintenances Xx
6 Rent Xx
7 Salaries (Administration, Marketing and Xxx
staff etc.)
8 Office suppliers Xx
9 Telephone Xx
10 Professional fees X
11 Bad Debts Xx
12 Insurance Xx
13 Postage Xx
14 Miscellaneous expenses X
Total Expenses Xxx
15 NET PROFIT(Before Depreciation, Xxx
Interest & Owners Drawings)
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Depreciation of Fixed Assets
Depreciation is the permanent and continuing decrease in the quality, quantity or

value of an asset.
Depreciation is an accounting Method of allocating the cost of tangible assets

over its useful life and is used to account for declines in value. Business can
deduct the cost of the tangible assets they purchase as business expenses.
However business must depreciate these assets according to IRS rules about
how and when the company can take deduction.
FRO FORMA OF DEPRECIATION OF FIXED ASSETS
Statement of Depreciation in Space Designers as on 31/March 2019
Assets Beginning Rate of Depreciation Ending Book

Book value Depreciation Expenses Value
Land and
Building XXX XX XXX XXX
Computer &
Office
Equipments XXX XX XXX XXX
Plant &
Machinery XXXX XX XXX XXX
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Cash Flow Statement
It is a Statement of Inflow and Outflow of Cash in each activity of the Business

in The Particular Financial year Like, Operating activity, financial activity,
Investment activity, Etc….
The Cash flow Statement is a Financial Statement That Summarizes the Amount
of Cash and Cash Equivalents Entering and Leaving a Company.
PRO FORMA OF CASH FLOW STATEMENT
Particulars Amount
A. Cash Flow From Operating Activity
Net Income as per Income Statement XXX
Add: Depreciation expense Xxx

Increase in accounts receivable Xxx
Decrease in Inventory Xxx
Decreasing in accounts payable (xxx)
Cash from Operating activity XXX
B. Cash Flow From Investing Activity __
C. Cash Flow From Financing Activity
Borrowing of Long term debt Xxx
Borrowing of Short Term Debt Xxx
Cash From Financing Activity XXX
Net Increase in Cash Xxx
Add: Cash at the Beginning of the Year Xxx
Cash at the end of the year
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Balance Sheet
It is a statement of sources and applications of funds in any organization or

company. It is useful for identifying financial position of the company.
Note: Sources are equal to applications. It means the assets are equal to
liabilities.
PRO FORMA OF BALANCE SHEET
The Balance sheet of _________as on 31 March……..
Liabilities Amount Assets Amount

Current Liabilities Current Assets
Bills Payable Xx Bills Receivables Xxx
Creditors Xxx Cash & Bank Balance Xxx
10%Short term loans Xxx Debtors/Stock Xxx
Total Current Liabilities XXX Total Current Assets XXX
Non – Current Liabilities Non-Current Assets

8%Debentures Xxx Land & Building Xxx
Total Non-Current XXX Computer & Office
Liabilities Equipments Xx
Total Liabilities XXXX Plant and Machinery Xxx

Equity
Owner`s Capital Xxx
Retained Earnings Xxx
Total Equity XXX Total Non-Current Assets XXX
Total Liability & Equity XXXX Total Assets XXXX
Note: In this Balance Sheet Format is helpful for Maintenance of Balance Sheet
in Space Designers India Private Limited and also useful for applying Asset and
Liability Management for analyzing financial position of the Space Designers
India Private Limited.
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Financial Year 2016-17
Income Statement of Space Design India Private limited as on 31/03/ 2016
Revenues Amount
A Sales 2,50,00,000
B Cost of Goods Sold 1,70,00,000
C Gross Profit (A-B) 80,00,000
D Expenses
A Advertising @3% of Sales 1,50,000
B Utilities 50,000
C Maintenances 1,35,000
D Rent (50,000 X 12 Months) 6,00,000
E Salaries(Office & Administration) 20,00,000
F Telephone Bill 50,000
G Professional fees 50,000
H Bad debts 5,00,000
I Postage 1,00,000
J Insurance 2,00,000
E Total Expenses 38,35,000
F Profit Before Interest & Depreciation 41,65,000

(D-E)
G Interest and Depreciation 9,48,714

(3,60,000+5,88,714)
H Net Profit (F-G) 32,16,286
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Land and
Building 29,40,105 5% 1,40,005 28,00,100
Computer &
Office
Equipments 6,60,036 20% 1,10,006 5,50,030
Plant &
Machinery 25,96,727 15% 3,38,703 22,58,024
Calculation of Interest and Depreciation
Depreciation
 Land and Building 28,00,100X5% = 1,40,005

 Computers & office Equipments 5,50,030X20% = 1,10,006
 Plant & Machinery 22,58,024X15% = 3,38,703
5, 88,714
Interest
10% Short term loans 1200000X10% = 1, 20,000
8%Debentures 3000000X8% = 2, 40,000
3, 60,000
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Cash flow Statement of Space Designers as on 31/03/2016
Particulars Amount
A. Cash Flow From Operating Activity
Net Income as per Income Statement 32,16,286
Add: Depreciation expense 5,88,714
Increase in accounts receivable 23,00,000
Decrease in Inventory 22,00,000
Decreasing in accounts payable (55,00,000)
Cash from Operating activity 28,05,000
B. Cash Flow From Investing Activity __
C. Cash Flow From Financing Activity
Borrowing of Long term debt __
Borrowing of Short Term Debt __
Cash From Financing Activity __
Net Increase in Cash 28,05,000
Add: Cash at the Beginning of the Year 7,23,370
Cash at the end of the year 35,28,370
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Balance sheet of Space Designers India Private Limited as on 31/03/2016
Bills Payable 5,65,974 Bills Receivables 13,56,830
Creditors 11,,01,680 Cash & Bank Balance 35,28,370
10% Short term loans 12,00,000 Debtors/Stock 25,00,000
Total Current Liabilities 28,67,654 Total Current Assets 73,85,200
Non– Current Liabilities Non-Current Assets
8%Debentures 30,00,000 Land & Building 28,00,100
Total Non-Current 30,00,000 Computers &Office

Liabilities Equipments 5,50,030
Total Liabilities 58,,67,654 Plant and Machinery 22,58,024

Equity
Owner`s Capital 60,00,000
Reserves & Surplus

Transfer to General Reserve
(32, 16,286X35%) 11,25,700
Total Equity 71,25,700 Total Non-Current
Assets 56,08,154
Total Liability & Equity 1,29,93,354 Total Assets 1,29,93,354
26
Revenues Amount
A Sales 2,20,00,000
D Expenses
B Utilities 80,000
C Maintenances 35,000
D Rent (50,000 X 12 Months) 6,00,000
I Postage 60,000
J Insurance 1,00,000
H Net Profit 1,45,486
27

Land and
Building 28,00,100 5% 1,40,005 26,60,095
Computer &
Office
Equipments 5,50,030 20% 1,10,006 4,40,024
Plant &
Machinery 22,58,024 15% 3,38,703 19,19,321
Depreciation
1. Land and Building 28,00,100X 5% = 1,40,005

2. Computers & office Equipments 5,50,030X 20% = 1,10,006
3. Plant & Machinery 22,58,024X15% = 3,38,703
5, 88,714
Interest
10% Short term loans 9, 28,190X10% = 1, 20,000
8%Debentures 20, 00,000X8% = 1, 60,000
2, 80,000
28
Creditors 18,98,380 Cash & Bank Balance 24,36,420
Short term loans 9,28,190 Debtors/Stock 28,00,000
Non–Current Liabilities Non-Current Assets
Land & Building 28,00,100

8%Debentures 20,00,000 Less Depreciation 1,40,005
(2800100X5%) 26,60,095
Total Non-Current Computers &Office
Liabilities 20,00,000 Equipment 5,50,030
Less Depreciation 1,10,006
(550030X20%) 4,40,024
Total Liabilities 53,26,570 Plant and Machinery 22,58,024
(2258024X15%) 19,19,321
Equity
29
Reserves & Surplus 3,29,000
Transfer to General Reserve + 50,920
(145486X35%) 3,79,920

Assets 50,019,440

Revenues Amount
A Sales 3,00,00,000
D Expenses
a Advertising @1% of Sales 3,00,000
b Utilities 1,50,000
c Maintenances 80,000
d Rent (50,000 X 12 Months) 6,00,000
e Salaries(Office & Administration) 16,35,800
f Telephone Bill 87,000
g Professional fees 58,000
h Bad debts 8,00,000
I Postage 98,000
j Insurance@1% on Sales 3 ,00,000
30
4. Land and Building 26,60,095X 5% = 1,33,004

5. Computers & office Equipments 4,40,024X 20% = 88,004
6. Plant & Machinery 19,19,321X15% = 2,87,898
5, 08,908

Land and
Computer &
Office
Plant &
31
10%Short term loans 6,39,080 Debtors/Stock 30,00,000

(2660095X5%) 25,27,091
Total Non-Current Computers &Office 4,40,024
Liabilities 14,00,780 Equipment 88,005
(440024X20%)
(1919321X15%) 16,31,423
Equity
32
Transfer to General Reserve +4,83,803
(1382294X35%) 8,63,723

Assets 45,10,533
Revenues Amount
A Sales 3,00,00,000
D Expenses
B Utilities 1,50,000
C Maintenances 80,000
D Rent (50,000 X 12 Months) 6,00,000
I Postage 98,000
J Insurance@1% on Sales 3 ,00,000
33


Land and
Computer &
Office
Plant &
34
10%Short term loans 6,39,080 Debtors/Stock 30,00,000

(2660095X5%) 25,27,091
Total Non-Current Computers &Office 4,40,024
Liabilities 14,00,780 Equipment 88,005
(440024X20%)
(1919321X15%) 16,31,423
35
Equity

Transfer to General Reserve +4,83,803
(1382294X35%) 8,63,723

Assets 45,10,533
36

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CHAPTER – 1 INTRODUCTION

Introduction of Assets and liabilities Management

Initially pioneered by financial institutions during the 1970 as interest rates

Often an ALM approach passively matches assets against liabilities (fully

1. Identifying the liquidity risk

2 Interest rate risk:

3 Capital markets risk:

5 Currency risk management :

6 Profit planning and Growth:

 Analysis of current sources of fund and prudent management of the funds.

The best majority of banks operate a centralized ALM model which

An asset is anything of value or resource of value that can be converted into

1. Current Assets 2. Fixed Assets

1. Tangible Assets 2. Intangible Assets

1. Operating assets 2. Non operating Assets

A Tangible assets is an assets that as a physical form. Tangible assets include

An Intangible asset is an asset that as a Non Physical assets such as patents,

Examples of personal assets are as;

 Cash and cash equivalents, certificate of deposits, saving accounts,

A business asset is an item of value owned by a company. Business assets span

 Cash and cash equivalents: Treasury bills, certificate of deposit

2. Fixed Assets: A fixed asset is a long term tangible piece of

Examples of Fixed Assets:

Fixed assets can include buildings, computer equipment, software, furniture,

Importance of Fixed Assets

Information about a corporation assets helps create accurate financial reporting,

Fixed assets are particularly important to capital –intensive industries, such as

The debts and obligations of a business Liabilities represent claims of creditors

A liability is defined by the following characteristics:

 Any type of borrowing from persons or bank for improving a business or

 Current liabilities – these liabilities are reasonably expected to be

 Static/dynamic gap measurement techniques:

COMPANY PROFILE AND OWERVIEW

Space Design Furniture And Fixtures India Private Limited is a Private

Space Design Furniture and Fixtures India Private Limited’s Corporate

Main Objects of the company to be pursued by the Company of its Incorporation

To carry on and undertake the Business of Consultancy, manufacturing,

To carry on the business of manufacturers, traders, converters, consultants,

To carry on the business of manufacturing , traders, converters, consultants,

Company is a private Company within the meaning of section 3(1) of the

Every Director, Manager, Auditor, Treasurer, trustee, Member of a committee,

No member shall be entitle to inspect the Companies books without permission

The First Directors of the Company shall be the following:

(i) Mrs. ASHWINI. M.B.

Number of shares qualification is necessary for any indusial for appointed as a

Area of study: Finance & Accounts Department of space designers.

After the research of finance and accounts department of the space

Tools of Assets and liabilities Management

 Duration Method: Under this Method, Impact of changes in interest rate

 Value at risk (VAR) Method: This method is Variant of the practice of

DATA ANYLESISS AND INTERPRETATION

It is a statement of Inflow and Outflow of cash or Receipts and Payments

PRO FORMA OF INCOME STATEMENT

The Income statement of ________ as on 31 March……

Depreciation is the permanent and continuing decrease in the quality, quantity or

Depreciation is an accounting Method of allocating the cost of tangible assets

FRO FORMA OF DEPRECIATION OF FIXED ASSETS

Statement of Depreciation in Space Designers as on 31/March 2019

Assets Beginning Rate of Depreciation Ending Book

It is a Statement of Inflow and Outflow of Cash in each activity of the Business

PRO FORMA OF CASH FLOW STATEMENT

A. Cash Flow From Operating Activity

Net Income as per Income Statement XXX

Add: Depreciation expense Xxx