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What is financial health

Financial health is a description of the state of a person or companys finances. Someone with goodfinancial health usually deals well with their finances, makes their payments on time , and

knows how to manage their money . Someone inpoor financial health usually owes a lot of moneyand isnt making their payments on time.

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Television Eighteen India LimitedBalance Sheet 31 March 2006

As at As at31.03.2006 31.03.2005(Rs Mill ion) (Rs Mill ion)

So u ce of Funds

1. Shareholders' FundsShare Capital 210.4 169Reserves and surplus 1,959.80 925.5

2. Loan FundsSecured loans 1,051.40 759.4Unsecured loans 800.2 194

3. Deferred Tax Liability 111.5 3.8Tot a So u ces 4133 3 2051 7

App ca tio n or Funds4.Fixed Assets

Gross block 1,089.70 820.3Less: Accumulated Depreciation / Amortization -251.7 -186.8Net block 838.00 633.5

5. Investment 2050.6 1029.16. Current Assets, Loans & Advances

Inventories 5.1 4.4Sundry debtors 808.8 436.5Cash & bank balances 331.8 60.7Loan & advances 715 249.4

1860 7 751

7. Less:Current Liability and Provisions -630 -380.88. Net Current Assets 1230.7 370.29.Miscellaneous Expenditure(To the extent not written off or adjusted) 14 18.9

4 133 30 2051 7

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QU ES O S

1 S HE B US ESS HA EL OO F A ALHEAL H

2 ALSO ES BE HE S F A HA ES HA HA O UR EHE O PA YS F A AL POS O URING T HE FINANCIAL YEAR 200 6

3 WHAT ARE THE OTHE R FACTORS WE TAKE INTO ACC OUNT W HILE CO E NTING ON THE FINANCIAL HEALTH OF THE CO PA NY

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For Present CaseFor Present CaseFor ascertaining the financial health of this company there are certainFor ascertaining the financial health of this company there are certain

factors we should take into consideration:factors we should take into consideration:- -

For Financial year 05For Financial year 05- -0606

1.1. Long term natureLong term nature

Long term liabilities = 1851.6 (including both secured andLong term liabilities = 1851.6 (including both secured andunsecured loans)unsecured loans)

Deferred tax liability = 111.5Deferred tax liability = 111.5

Total L.T.L = 1963.1Total L.T.L = 1963.1

Long term Assets = 2888.5(including both investments andLong term Assets = 2888.5(including both investments andfixed assets)fixed assets)

From the above we can see the co. has sufficient long termFrom the above we can see the co. has sufficient long terma et for a ment of it lon term liabilitie .a et for a ment of it lon term liabilitie .

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2. Short term

Current assets = 1860.7(including loans and advances)

Current liabilities = 629.9

From the above we can see that the company has sufficient Current Assets for payment of its current liabilities. We can alsosay that the co. has sufficient amount of working capital(W.C = C.A C.L )

3. Reserves & surplus

Besides the above the co. has sufficient amount of reserves andSurplus of about 1959.8 ( in million).

On the basis of above factors we can say that the co. had a sound

financial Position for the year 05-06.

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S a

Fo finan ial y e ar 0 4 051. Long term nature

Long te rm lia bilitie = 953 4e f e rr ed tax lia bility = 3 8

Total L T.L = 957 .2

Long te rm ass e ts = 166 2. 7

Fr om t he a bo e we ca n s ee that t he co. has s ufficien t long te rmass e ts f or P aym en t of its l ong te rm lia bilitie s.

2. Short term

Curr en t ass e ts = 751 .0 ( l oa ns & a d a nce s als o included )Curr en t liabilitie s = 38 0. 9

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We ca n s ee that t he co. ha d s ufficien t c urr en t ass e ts f or paym en t of its c urr en t liabilitie s.

On the basis of all t he s e fact ors w e ca n say t hat t he co. ha d as ound fina ncial po sition f or the ye ar 0 4 05.

O e rall, On the basis of compa nys fina ncial po sition in bo th the ye ars w e ca n say t hat t he co. has a s ound fina ncialhe alth.

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Significant changes that occurred in the companys financial position

An incr e as e in the ass e ts po sitive e ff e ct on bala nce s hee tAn incr e as e in the liabilitie s neg ativ e e ff e ct on bala nce s hee t

A No. of cha nge s ha d occ urr ed in the compa nys fina ncial po sition

du ring the ye ar 200 6. T he s e ar e as f ollows:-1. Loa n f und sThe figu r e of s e cur ed loa ns ha d a ris e fr om 759 .4 to 1051 .4.

S imilarily , t he r e was a ris e in the un s e cur ed loa ns fr om 194 .0 t o 800.2. An incr e as e in the liabilitie s m e a ns t hat it has a neg ativ e

Impact on the co. fina ncial po sition .

2. I nve stm en tsThe compa nys i nve stm en ts ha d incr e as ed fr om 102 9.1 to 20 50. 6

An incr e as e in inve stm en ts has a po sitive impact on the co.fina ncial po sition .

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3. D eb tors

The deb tors has i ncr e as ed fr om 436 .5 to 808 .8 . W e ca n say t hat t he cr ed it sal e shas I ncr e as ed wh ich has a po sitive impact on the co . fina ncial po sition .

4. Cas h & ba n bala nce s

The cas h & ba n bal. has i ncr e as ed fr om 60. 7 to 331 .8 . Th is is a po sitive impacton the co . fina ncial po sition .

5. Othe r c urr en t ass e ts

The o the r ass e ts lik e inven tory a nd loa ns a nd a dva nce s has als o incr e as ed wh ich le av e s a po sitive impact on the co . fina ncial po sition .

6. Fixed ass e ts

Th is has i ncr e as ed , it m e a ns t hat t he co . has pu rchas ed mor e fixed ass e tswh ich e ithe r Me a ns e ithe r its cas h has de cr e as ed or long te rm lia b ilitie s hasincr e as ed . wh ile a n Incr e as e in the fixed ass e ts has a po sitive impact.

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7. C urr en t liabilitie s

The curr en t lia b ilitie s has als o incr e as ed fr om 38 0. 9 to 629 .9 . Th is is a

neg ativ e impact .

8. D e f e rr ed tax lia bility

Th is has i ncr e as ed . It has a neg ativ e impact .

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O ther factors for determining the financial health

In addition to the fact ors m en tioned be f or e the r e ar e ce rtai n othe r fact ors f or de te rmining fina ncial he alth.

1. P r ofit / loss of the compa ny

if the compa ny has he althy pr ofits it m e a ns t hat it has a good Fina ncial po sition . w he r e as if t he co. is i n loss t hat it will hav e aDe ficit .

2. Fu tur e pr os pe cts

This is als o s een r eg ar ding the co. in ne ar f utur e . W he the r the Co. has s ufficien t working ca pital or whe the r it has s ufficien tass e ts t o s ustai n its activiti e s if a ny un f or e s een circ umsta nce socc ur in the f utur e .

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3 . Sh ar e ca p ital

If the co. Iss ued s har e ca pital is c on tinuou sly i ncr e asi ng thatme a ns t hat t he inve st ors hav e faith in the compa ny that is t he yar e inve sting in it. This is a no the r ind icat or of the fina ncialHe alth. It is a si gn of good fina ncial he alth .

4 . C ompe titors

It de te rmine s w he r e a c o. sta nd s a gainst c ompe titors havi ng the sam e ar e a of ope rati on . it is a no the r ind icat or of its fina ncial

he alth.

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CONCLUSION

Overall, from the given case we can infer that the co. isin a strong financial Position. The co. has sufficient amount of reserves & surplus, the co. issued Share capital iscontinuously increasing , the co. has sufficient amount of Long Term assets , investments, current assets which aresufficient enough to say That the co. has a strongfinancial health.

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THANK YOU

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VERTICAL ANALYSIS

CURRENT ASSETS LONG TERM ASSETS

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Vertical Analysis Vertical AnalysisWhat DoesWhat Does Vertical Analysis Vertical Analysis Mean?Mean?

A me thod of fina ncial stat e men t a nalysisin which e ac h en try f or e ac h of the thr ee maj or

cat ego rie s of acc oun ts (ass e ts, lia bilitie s a nd equ itie s) i na bala nce s hee t is r ep r e s en ted as a pr opo rtion of the total acc oun t. T he mai n a dva nta ge sof analyzi ng a bala nce s hee t in this ma nne r is t hat t he

bala nce s hee ts of bu sine ss e s of all siz e s ca n e asilybe compar ed . It als o mak e s it e asy t o s ee r e lative a nnu alcha nge s i n one bu sine ss