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(3.1)

Managerial

Accountancy

Presented to…Prof. Seema

Ma’am

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Priya 10Sanjal 22Farheen

34Vishnu

42

Group Members

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Flow of the Presentation

IntroductionAdvantagesLimitationsHow to prepare it?FormatPrimary DataSumConclusionBibliography

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An aspect of technical analysis that tries to

predict the future movement of a stock

based on past data.

Trend analysis is based on the idea that

what has happened in the past gives traders

an idea of what will happen in the future. 

Introduction

Definition

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When to use it?

•When one wants to use historical data to

predict future.

•When one wants to Compare the current

values

with the past values.

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•Trend shows the direction of the change.

•Trend are easy to calculate, interpret and

understand.

•It is a quick method of analysis.

•It is more accurate.

•It reveals potentially fruitful areas of audit

investigation.

•It is being readily accepted due to its

widespread use

Advantages

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Limitations

•Choice of base year.

•No. of years

•Different accounting policies.

•It provides little insight into the root causes

of variation

•It is being heavily influenced by the choice

of the base fiscal period

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How to prepare it?

•It is Calculated in percentage.

•Draw the format.

•Assign the particulars and amount

respectively.

•Take 100% in base years % column.

•To find out the further years % value

apply the formula:Current year x100 Base year

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Vertical financial statement of (trend analysis)

Particulars 2005 (Rs.) 2006 (Rs.) 2007 (Rs.) 2005 (%) 2006 (%) 2007 (%)Sources of funda. Share holders fund(i) Share capital xx xx xx 100% xyz% xyz%(ii) Reserves/ Surplus xx xx xx 100% xyz% xyz%Net worth xxx xxx xxx 100% xyz% xyz%b. Borrowed fund(i) Secured fund xx xx xx 100% xyz% xyz%(ii)unsecured fund xx xx xx 100% xyz% xyz%Capital employed xxxx xxxxx xxxxxx 100% xyz% xyz%

Application of funda. Fixed assets xx xx xx 100% xyz% xyz%b. Investments xx xx xx 100% xyz% xyz%c. Working capital(i) Current assets xx xx xx 100% xyz% xyz%(ii) current liabilities xx xx xx 100% xyz% xyz%working capital (i-ii) xxx xxx xxx 100% xyz% xyz%Capital employed xxx xxxx xxxxx 100% xyz% xyz%Total capital employed xxxxx xxxxxx xxxxxx 100% xyz% xyz%

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Vertical income statement of (trend analysis)

Particulars 2005 (Rs.) 2006 (Rs.) 2007 (Rs.) 2005 (%) 2006 (%) 2007 (%)Net sales xxxxx xxxxxx xxxxxx 100% xyz% xyz%less: C.O.G.S xx xx xx 100% xyz% xyz%Gross Profit xxx xxxx xxxxx 100% xyz% xyz%less: Operating exp.a. Administrative exp. xx xx xx 100% xyz% xyz%b. Selling exp. xx xx xx 100% xyz% xyz%c. Financial exp. xx xx xx 100% xyz% xyz%Operating profit xxx xxx xxx 100% xyz% xyz%add: Operating income xx xx xx 100% xyz% xyz%less: Non-operating exp xx xx xx 100% xyz% xyz%add: Non-Operating income xx xx xx 100% xyz% xyz%less: Debenture interset xx xx xx 100% xyz% xyz%less: Tax xx xx xx 100% xyz% xyz%Profit after tax before appropriation xxxxx xxxxxx xxxxxx 100% xyz% xyz%less: Appropriation xx xx xx 100% xyz% xyz%Retained Earning xxxx xxxxx xxxxxx 100% xyz% xyz%

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Primary Data

Data of- Rassaz Multiplex

Given by- Mr. Ritesh,

Accountant

Contact no.- 28114682

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Q1. Which kind of financial statement does your institute follw? (i.e Horizontal or Vertical) Vertical

Q2. Why vertical statement? It reports each amount as a percentage of another item.

Q3. Which format does your institute opt in vertical statement? comparative

Q4. Why comparative and not the others? It is Easy to compare with previous year item.

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Particulars 2001 (Rs) 2002 (Rs) 2003 (Rs)Share capital 50,000 50,000 50,000Reserves/ Surplus 5,000 10,000 10,000Secured loan 3,000 5,000 5,000Unsecured loan 2,000 6,000

60,000 65,000 71,000

Q1. From the following balance sheet prepare trend analysis:

Solution:

Vertical financial statement of (trend analysis)

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Particulars 2001 (Rs) 2002 (Rs) 2003 (Rs) 2001 (%) 2002 (%) 2003 (%)Sources of fund a. Share holders fund (i) Share capital 50,000 50,000 50,000  100%  100% 100% (ii) Reserves/ Surplus 5,000 10,000 10,000  100%  200%  200% Net worth 55,000 60,000 60,000  100%  120%  120%b. Borrowed fund      Secured loan 3,000 5,000 5,000  100%  166.67%  166.67%Unsecured loan 2,000 - 6,000  100%  -  300% 5,000 5,000 11,000  100%  100%  220%Total capital Employed 60,000 65,000 71,000 100%  108.33%  118.33%

Working Note:Reserves/surplus: 2002 % 2003% 10,000 x100 =200% 10,000 x100 =200% 5,000 5,000

Net worth: 60,000 x100 =120% 60,000 x100 =120% 55,000 55,000

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Conclusion

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Bibliography

•http://www.accounting4management.com/horizontal_analysis_or_trend_analysis.htm

•http://www.sao.state.tx.us/resources/Manuals/Method/data/16trendd.pdf

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