Post on 06-Apr-2018
transcript
8/3/2019 Financial Statement #1 - 2010
1/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Have you ever wondered what an
analyst does with the financialstatements of a company?
8/3/2019 Financial Statement #1 - 2010
2/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Do you believe that the financial position of a
company as revealed by its financial statements
is as clear as a blue sky without any clouds?
8/3/2019 Financial Statement #1 - 2010
3/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
A good growth of a company in the recent past impliesA good growth of a company in the recent past implies
the same story in future and hence, it represents athe same story in future and hence, it represents a
good investment opportunity!!! Will you like to grab it?good investment opportunity!!! Will you like to grab it?
8/3/2019 Financial Statement #1 - 2010
4/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Do not you ever wonder that a company isDo not you ever wonder that a company is
earning good profits but they have no money toearning good profits but they have no money to
pay any dividend to the shareholders??!!!!!!!!!pay any dividend to the shareholders??!!!!!!!!!
8/3/2019 Financial Statement #1 - 2010
5/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
And, so on
8/3/2019 Financial Statement #1 - 2010
6/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
If you are really and seriously
looking answers of all these
Then ...
8/3/2019 Financial Statement #1 - 2010
7/62
Dr. C. P. Gupta
Professor, Department of Financial Studies,South Campus, University of Delhi.
8/3/2019 Financial Statement #1 - 2010
8/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
HumbleHumble objectivesobjectives of the Course are make the participants comfortable with the mysteries lying
behind the financial numbers contained in financial statements.
make the participants aware of the properties of numbersderived from financial statements.
equip the participants with necessary tools and techniques toderive meaningful information to make sound decisions thatrequire use of information from financial statements.
allow the participants to explore and fathom out the strengthsand limitations of the numbers derived from financialstatements.
8/3/2019 Financial Statement #1 - 2010
9/62Our FIRST STEP is Our FIRST STEP is
8/3/2019 Financial Statement #1 - 2010
10/62
TowardsTowards
Understanding..
8/3/2019 Financial Statement #1 - 2010
11/62
8/3/2019 Financial Statement #1 - 2010
12/62
Financial Statement Analysis
Financial Statement Analysis comprises alltechniques employed by users of financialstatements to show important relationships inthe financial statements so as to understandbusiness and make decisions in a better way.
is a process of evaluating the relationship
between components parts of financialstatements to obtain a better understandingof a firms financial position and performance.
8/3/2019 Financial Statement #1 - 2010
13/62
Steps in Financial Statement Analysis
First StepSelect Information relevant to
decision under consideration
Second StepProcess the information to
Highlight significant relationships
Third StepInterpret and draw
Necessary inferences
8/3/2019 Financial Statement #1 - 2010
14/62
Who are the people doing Financial Statement Analysis?
Two sets of people
INTERNAL USERS
EXTERNAL USERS
8/3/2019 Financial Statement #1 - 2010
15/62
What is the source of information for the EXTERNAL
PEOPLE?
External users relyExternal users relyon publiclyon publicly--availableavailableinformation toinformation to
perform financialperform financialanalysisanalysis
Such information isSuch information iscontained in acontained in acompanys annualcompanys annual
reportreport
8/3/2019 Financial Statement #1 - 2010
16/62
THREE BASIC FINANCIAL STATEMENTS
1
Annual Report contains
8/3/2019 Financial Statement #1 - 2010
17/62
THREE BASIC FINANCIAL STATEMENTS
FOOTNOTES/SCHEDULES TO THE
FINANCIAL STATEME
NT
S
1
2
Annual Report contains
8/3/2019 Financial Statement #1 - 2010
18/62
THREE BASIC FINANCIAL STATEMENTS
FOOTNOTES/SCHEDULES TO THE
FINANCIAL STATEME
NT
S
SUMMARY OF ACCOUNTING METHODS
1
2
3
Annual Report contains
8/3/2019 Financial Statement #1 - 2010
19/62
THREE BASIC FINANCIAL STATEMENTS
FOOTNOTES/SCHEDULES TO THE
FINANCIAL ST
ATEME
NT
S
SUMMARY OF ACCOUNTING METHODS
MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL STATEMENTS
1
2
3
4
Annual Report contains
8/3/2019 Financial Statement #1 - 2010
20/62
FOUR BASIC FINANCIAL STATEMENTS
FOOTNOTES/SCHEDULES TO THE
FINANCIAL ST
ATEME
NT
S
SUMMARY OF ACCOUNTING METHODS
MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL STATEMENTS
AUDITORS REPORT
1
2
3
4
5
Annual Report contains
8/3/2019 Financial Statement #1 - 2010
21/62
8/3/2019 Financial Statement #1 - 2010
22/62
EXAMPLE #1.
THREE BASIC FINANCIAL STATEMENTS
1
8/3/2019 Financial Statement #1 - 2010
23/62
EXAMPLE #1.
THREE BASIC FINANCIAL STATEMENTS
1
8/3/2019 Financial Statement #1 - 2010
24/62
EXAMPLE #1.
THREE BASIC FINANCIAL STATEMENTS
1
8/3/2019 Financial Statement #1 - 2010
25/62
EXAMPLE #2.
FOOTNOTES/SCHEDULES TO THE
FINANCIAL STATEMENTS
2
8/3/2019 Financial Statement #1 - 2010
26/62
EXAMPLE #3.
SUMM
ARY
OF ACCOU
NT
INGMETH
OD
S 3
8/3/2019 Financial Statement #1 - 2010
27/62
EXAMPLE #4.
MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL STATEMENTS
4
8/3/2019 Financial Statement #1 - 2010
28/62
EXAMPLE #5.
AUDITORS REPORT
5
8/3/2019 Financial Statement #1 - 2010
29/62
EXAMPLE #6.
COMP
AR
AT
IVE
FINANCIALD
AT
A FOR
ASERIES OF YEARS
6
8/3/2019 Financial Statement #1 - 2010
30/62
Now, we are ready with ALL NECESSARY BAGGAGE OF
FINANCIAL INFORMATION.
8/3/2019 Financial Statement #1 - 2010
31/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
And, proceed for understanding
financial statements of Tata Steel
8/3/2019 Financial Statement #1 - 2010
32/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
33/62
8/3/2019 Financial Statement #1 - 2010
34/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Particulars 2008 2009 2010
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 6,203.30 6,203.45 887.41
Share Warrants
Reserves and Surplus 21,097.43 23,972.81 36,074.39
Total Shareholders' Fund 27,300.73 30,176.26 36,961.80
LOAN FUNDS
Secured Loans 3,520.58 3,913.05 2,259.32
Unsecured Loans 14,501.11 23,033.13 22,979.88
18,021.69 26,946.18 25,239.20
DEFERRED TAXLIABILITY (NET) 681.80 585.73 867.67
PROVISION FOREMPLOYEESEPARATION
COMPENSATION 1,071.30 1,033.60 957.16
TOTAL 47,075.52 58,741.77 64,025.83
(Rs. in Crores)
BALANCE SHEET OF TATA STEELLIMITEDAS AT 31STMARCH
8/3/2019 Financial Statement #1 - 2010
35/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Particulars 2008 2009 2010
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 6,203.30 6,203.45 887.41
Share Warrants
Reserves and Surplus 21,097.43 23,972.81 36,074.39
Total Shareholders' Fund 27,300.73 30,176.26 36,961.80
LOAN FUNDS
Secured Loans 3,520.58 3,913.05 2,259.32
Unsecured Loans 14,501.11 23,033.13 22,979.88
18,021.69 26,946.18 25,239.20
DEFERRED TAXLIABILITY (NET) 681.80 585.73 867.67
PROVISION FOREMPLOYEESEPARATION
COMPENSATION 1,071.30 1,033.60 957.16
TOTAL 47,075.52 58,741.77 64,025.83
(Rs. in Crores)
BALANCE SHEET OF TATA STEELLIMITEDAS AT 31STMARCH
8/3/2019 Financial Statement #1 - 2010
36/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
BALANCE SHEETOF TATA STEELLIMITEDAS AT 31STMARCH
(Rs. in Crores)
Particulars 2007 2008 2009
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 580.67 6,203.30 6,203.45
Share Warrants 147.06
Reserves and Surplus 13,368.42 21,097.43 23,972.81
Total Shareholders' Fund 14,096.15 27,300.73 30,176.26
LOAN FUNDS
Secured Loans 3,758.92 3,520.58 3,913.05
Unsecured Loans 5,886.41 14,501.11 23,033.13
9,645.33 18,021.69 26,946.18
DEFERRED TAXLIABILITY (NET) 748.94 681.80 585.73
PROVISION FOREMPLOYEESEPARATIONCOMPENSATION 1,107.08 1,071.30 1,033.60
TOTAL 25,597.50 47,075.52 58,741.77
8/3/2019 Financial Statement #1 - 2010
37/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Particulars 2008 2009 2010
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 6,203.30 6,203.45 887.41
Share Warrants
Reserves and Surplus 21,097.43 23,972.81 36,074.39
Total Shareholders' Fund 27,300.73 30,176.26 36,961.80
LOAN FUNDS
Secured Loans 3,520.58 3,913.05 2,259.32
Unsecured Loans 14,501.11 23,033.13 22,979.88
18,021.69 26,946.18 25,239.20
DEFERRED TAXLIABILITY (NET) 681.80 585.73 867.67
PROVISION FOREMPLOYEESEPARATION
COMPENSATION 1,071.30 1,033.60 957.16
TOTAL 47,075.52 58,741.77 64,025.83
(Rs. in Crores)
BALANCE SHEET OF TATA STEELLIMITEDAS AT 31STMARCH
8/3/2019 Financial Statement #1 - 2010
38/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Particulars 2008 2009 2010
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 6,203.30 6,203.45 887.41
Share Warrants
Reserves and Surplus 21,097.43 23,972.81 36,074.39
Total Shareholders' Fund 27,300.73 30,176.26 36,961.80
LOAN FUNDS
Secured Loans 3,520.58 3,913.05 2,259.32
Unsecured Loans 14,501.11 23,033.13 22,979.88
18,021.69 26,946.18 25,239.20
DEFERRED TAXLIABILITY (NET) 681.80 585.73 867.67
PROVISION FOREMPLOYEESEPARATION
COMPENSATION 1,071.30 1,033.60 957.16
TOTAL 47,075.52 58,741.77 64,025.83
(Rs. in Crores)
BALANCE SHEET OF TATA STEELLIMITEDAS AT 31STMARCH
8/3/2019 Financial Statement #1 - 2010
39/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Particulars 2008 2009 2010
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 6,203.30 6,203.45 887.41
Share Warrants
Reserves and Surplus 21,097.43 23,972.81 36,074.39
Total Shareholders' Fund 27,300.73 30,176.26 36,961.80
LOAN FUNDS
Secured Loans 3,520.58 3,913.05 2,259.32
Unsecured Loans 14,501.11 23,033.13 22,979.88
18,021.69 26,946.18 25,239.20
DEFERRED TAXLIABILITY (NET) 681.80 585.73 867.67
PROVISION FOREMPLOYEESEPARATION
COMPENSATION 1,071.30 1,033.60 957.16
TOTAL 47,075.52 58,741.77 64,025.83
(Rs. in Crores)
BALANCE SHEET OF TATA STEELLIMITEDAS AT 31STMARCH
8/3/2019 Financial Statement #1 - 2010
40/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Particulars 2008 2009 2010
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 6,203.30 6,203.45 887.41
Share Warrants
Reserves and Surplus 21,097.43 23,972.81 36,074.39
Total Shareholders' Fund 27,300.73 30,176.26 36,961.80
LOAN FUNDS
Secured Loans 3,520.58 3,913.05 2,259.32
Unsecured Loans 14,501.11 23,033.13 22,979.88
18,021.69 26,946.18 25,239.20
DEFERRED TAXLIABILITY (NET) 681.80 585.73 867.67
PROVISION FOREMPLOYEESEPARATION
COMPENSATION 1,071.30 1,033.60 957.16
TOTAL 47,075.52 58,741.77 64,025.83
(Rs. in Crores)
BALANCE SHEET OF TATA STEELLIMITEDAS AT 31STMARCH
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
41/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Particulars 2008 2009 2010
SOURCES OF FUNDS:
SHAREHOLDER'S FUNDS
Share Capital 6,203.30 6,203.45 887.41
Share Warrants
Reserves and Surplus 21,097.43 23,972.81 36,074.39
Total Shareholders' Fund 27,300.73 30,176.26 36,961.80
LOAN FUNDS
Secured Loans 3,520.58 3,913.05 2,259.32
Unsecured Loans 14,501.11 23,033.13 22,979.88
18,021.69 26,946.18 25,239.20
DEFERRED TAXLIABILITY (NET) 681.80 585.73 867.67
PROVISION FOREMPLOYEESEPARATION
COMPENSATION 1,071.30 1,033.60 957.16
TOTAL 47,075.52 58,741.77 64,025.83
(Rs. in Crores)
BALANCE SHEET OF TATA STEELLIMITEDAS AT 31STMARCH
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
42/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Innovative Ways ofFunding
Share WarrantsShare Warrants a way to keep a Source ofFunds readyfor any future requirement.
Right IssueRight Issue a quicker way of raising funds as compared to
general public issue and with some kind of underwriting fromTata Sons.
2% Cumulative Convertible Preference Shares2% Cumulative Convertible Preference Shares away to keep a least pressure on companys cash flows.
Foreign Currency Convertible AlternativeForeign Currency Convertible AlternativeReference SecuritiesReference Securities carrying a coupon of 1% p.a. and ifit is to be redeemed then, it will be redeemable at a premium of23.34% of the principal amount.
8/3/2019 Financial Statement #1 - 2010
43/62
WHAT NEXT IN OURWHAT NEXT IN OUR
AGENDA?AGENDA?
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
44/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Share Warrants
The preferential issue of equity shares/ Fully Convertible
Debentures (FCDs)/ Partly Convertible Debentures (PCDs) or
any other financial instruments which would be converted into
or exchanged with equity shares at a later date, by listed
companies whose equity share capital is listed on any stockexchange, to any select group of persons under Section 81(1A)
of the Companies Act 1956 on private placement basis shall be
governed by these guidelines.
An amount equivalent to at least TWENTY FIVE percent ofthe price fixed as per Chapter-XIII of DISCLOSURE AND
INVESTOR PROTECTION GUIDELINES, SEBI shall become
payable for the warrants on the date of their allotment.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
45/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Share WarrantsPrice
Where the equity shares of a company have been listed on a stockexchange for a period of six months or more as on the relevant date,the issue of shares on preferential basis (other than an issue ofshares on preferential basis to Qualified Institutional Buyers notexceeding five in number,) shall be made at a price not less thanhigher of the following:
i) The average of the weekly high and low of the closing prices of the relatedshares quoted on the stock exchange during the six months preceding therelevant date;
OR
ii) The average of the weekly high and low of the closing prices of the relatedshares quoted on a stock exchange during the two weeks preceding the
relevant date.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
46/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
47/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Security Premium Account
The Securities Premium Account may be applied by the
company-
(a) in paying up unissued shares of the company to be issued
to members of the company as fully paid bonus shares;
(b) in writing off the preliminary expenses of the company;
(c) in writing off the expenses of, or commission paid or
discount allowed on, any issue of shares or debentures of
the company; or
(d) in providing for the premium payable on the redemption of
any redeemable preference shares or of any debentures of
the company.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
48/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Deferred Tax Assets/Deferred Tax Liabilities
ACCOUNTING STANDARD 22:
The differences between taxable income and accounting income can be classified into
PERMANENT DIFFERENCES and TIMINGDIFFERENCES.
PermanentPermanent differencesdifferences areare thosethose differencesdifferences betweenbetween taxabletaxable incomeincomeandand accountingaccounting incomeincome whichwhich originateoriginate inin oneone periodperiod andand dodo notnotreversereverse subsequentlysubsequently..
TimingTiming differencesdifferences areare thosethose differencesdifferences betweenbetween taxabletaxable incomeincome andandaccountingaccounting incomeincome forfor aa periodperiod thatthat originateoriginate inin oneone periodperiod andand areare
capablecapable ofof reversalreversal inin oneone oror moremore subsequentsubsequent periodsperiods.. TheThe taxtax effectseffects ofof timingtiming differencesdifferences areare includedincluded inin thethe taxtax expenseexpense inin thethe
statementstatement ofof profitprofit andand lossloss;; andand asas deferreddeferred taxtax assetsassets oror asas deferreddeferred taxtax liabilities,liabilities,
inin thethe balancebalance sheetsheet..
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
49/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Look at the following information and suggest what
should be the cost of plant and machinery purchased!!!!!
Suggest at what cost the
asset will be shown in the
Balance Sheet.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
50/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
What is the difference between
Depreciation
Amortization
Depletion
Impairment
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
51/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
All assets are subject todepreciation except
freehold land.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
52/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Impairment Loss (AS-28)
An enterprise should assess at each balance sheet date
whether there is any indication that an asset may be
impaired. If any such indication exists, the enterprise
should estimate the recoverable amount of the asset.
An impairment loss is the amount by which the carrying
amount of an asset exceeds its recoverable amount.
This Standard defines recoverable amount as the higher
of an assets net selling price and value in use.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
53/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
54/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Accounting for Investments(AS 13)Accounting for Investments(AS 13)
InvestmentsInvestments are assets held by an enterprise for earning income by way of
dividends, interest, and rentals, for capital appreciation, or for other benefits to
the investing enterprise. Assets held as stock-in-trade are not 'investments'.
A CurrentCurrentInvestmentInvestment is an investment that is by its nature readily realizableand is intended to be held for not more than one year from the date on which
such investment is made.
A Long Term Investmentis an investment other than a current investment.
An Investment Property is an investment in land or buildings that are not
intended to be occupied substantially for use by, or in the operations of, the
investing enterprise.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
55/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Types ofInvestments(AS 13)Types ofInvestments(AS 13)
Current
Investments
Long Term
Investments
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
56/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Current Investments
A current investment is an investment that is by itsnature readily realizable and is intended to be held fornot more than one year from the date on which suchinvestment is made.
The carrying amount for current investments is thelower of cost and fair value. In respect of investmentsfor which an active market exists, market valuegenerally provides the best evidence of fair value.
For current investments, any reduction to fair value and anyreversals of such reductions are included in the profit and lossaccount.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
57/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Long-Term Investment
A long term investment is an investment otherthan a current investment.
Long-term investments are usually carried at cost.However, when there is a decline, other thantemporary, in the value of a long term investment, thecarrying amount is reduced to recognize the decline.
Where there is a decline, other than temporary, in the carryingamounts of long term investments, the resultant reduction inthe carrying amount isis chargedcharged toto thethe profit profit andand losslossstatementstatement..
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
58/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
59/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Disclosure AS 13
Investments should be disclosed in
financial statements as the aggregateamount of quotedquoted andand unquotedunquoted
investmentsinvestments , giving the aggregate
market value of quoted investments.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
60/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
ACCOUNTING FOR CHANGES IN
FOREIGN EXCHANGE RATES (AS-11)
AS-11 requires that any exchange differences
arising due to reinstatement/translation/
settlement of monetary items are to be
recognized in Profit and LossAccount.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
61/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
The Companies (Accounting Standards) Amendment
Rules, 2009 relating to Accounting Standard (AS) 11:
In respect of accounting periods commencing on or after 7th December, 2006
and ending on or before 31st March, 2011, at the option of the enterprise,
exchange differences arising on reporting of long-term foreign currency
monetary items at rates different from those at which they were initiallyrecorded during the period, or reported in previous financial statements,
insofar as they relate to the acquisition of a depreciable capital asset, can be
added to or deducted from the cost of the asset and shall be depreciated over
the balance life of the asset, and in other cases, can be accumulated in aForeign Currency Monetary Item Translation Difference Account in the
enterprises financial statements and amortized over the balance period of
such long-term asset/liability but not beyond 31st March, 2011, by
recognition as income or expense in each of such periods.
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
8/3/2019 Financial Statement #1 - 2010
62/62
FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS
Whats the difference betweenReserve and Provision?
Provision is charged to Profit and LossAccount where as Reserve is anappropriation of profit.
Provision is charged to Profit and Loss
Account before calculating the net profitor loss, but Reserve can be made onlywhen there is profit.
Provision is created for specificpurpose, while ReserveReserve may be createdfor general purpose as well.
Provision are not invested in outsidesecurities. ReservesReserves reduces divisibleprofit can be invested in outsidesecurities.