Financial Statements

cash flow statement

the term adjusted purchase means the purchase value adjusted with opening stock and closing stock. i.e.- adjusted purchase= opening stock+purchases-closing stock

Jitendra Kumar Nath

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It's important to have good controls over your cash. Otherwise, you may find your cash disappearing! A few examples include ensuring only certain people in the company are signatories (i.e. can sign checks), have access to bank account information, and can create bank accounts. Cash is critical to running your business so it's important you have good controls to protect your cash!!

Financial ratios can be used for comparison

• between two or more companies (ex: comparison between ICICI and HDFC Banks)

• between two or more industries (ex: comparison between the Banking and Auto industry)

• between different time-periods for the same company (ex: comparison on the results of the company in the current financial year and the previous year)

• between a single company and the industry performance

Ratios are generally meaningless unless we benchmark them against something else. Like say past performance or another company. Ratios of firms that operate in different industries, which face different risks, capital requirements, competition, customer demand etc can be very hard to compare.

To know the liquidity position of a firm.

To know the principle source of cash.

To know the uses of cash.

To be used widely by banks,financial institutions and other credits granting institutions for judging repayment capacity of a firm.

To analyse inflow and outflow of cash.

Plz refer to tis link.

http://www.accountingformanagement.com/variance_formulas.htm

I want company balance sheet as per schedule 6 part1 of the companies act. 1956.

Limitations of Financial Ratios

There are some important limitations of financial ratios that analysts should be conscious of:

- Many large firms operate different divisions in different industries. For these companies it is difficult to find a meaningful set of industry-average ratios.

- Inflation may have badly distorted a company's balance sheet. In this case, profits will also be affected. Thus a ratio analysis of one company over time or a comparative analysis of companies of different ages must be interpreted with judgment.

- Seasonal factors can also distort ratio analysis. Understanding seasonal factors that affect a business can reduce the chance of misinterpretation. For example, a retailer's inventory may be high in the summer in preparation for the back-to-school season. As a result, the company's accounts payable will be high and its ROA low.

- Different accounting practices can distort comparisons even within the same company (leasing versus buying equipment, LIFO versus FIFO, etc.).

- It is difficult to generalize about whether a ratio is good or not. A high cash ratio in a historically classified growth company may be interpreted as a good sign, but could also be seen as a sign that the company is no longer a growth company and should command lower valuations.

- A company may have some good and some bad ratios, making it difficult to tell if it's a good or weak company.

In general, ratio analysis conducted in a mechanical, unthinking manner is dangerous. On the other hand, if used intelligently, ratio analysis can provide insightful information.

Financial ratios are not very useful on a stand-alone basis; they must be benchmarked against something. Analysts compare ratios against the following:

1.The Industry norm - This is the most common type of comparison. Analysts will typically look for companies within the same industry and develop an industry average, which they will compare to the company they are evaluating. Ratios per industry are also provided by Bloomberg and the S&P. These are good sources of general industry information. Unfortunately, there are several companies included in an index that can distort certain ratios. If we look at the food and beverage ratio index, it will include companies that make prepared foods and some that are distributors. The ratios in this case would be distorted because one is a capital-intensive business and the other is not. As a result, it is better to use a cross-sectional analysis, i.e. individually select the companies that best fit the company being analyzed.

2.Aggregate economy - It is sometimes important to analyze a company's ratio over a full economic cycle. This will help the analyst understand and estimate a company's performance in changing economic conditions, such as a recession.

3.The company's past performance - This is a very common analysis. It is similar to a time-series analysis, which looks mostly for trends in ratios.

When two establishments join through a merger, duplication of departments is avoided, reducing operational costs. There are some disadvantages of mergers, like job losses and creation of monopolies.

Under Generally Accepted Accounting Principles, the term Current usually refers to the next twelve months. Any thing that has a "life" over that time period, is considered Long-term, (or Non-Current).

In the traditional sense, there is a significant difference in that purchasing merely reflects the act of acquisition, while procurement encompasses more elements of the supply chain (re logistics, transportation etc.). One might even consider purchasing to be the poor man's version of procurement. That said and for all intents and purposes, the debate (if one could call it that) is moot. As a result of Supply Chain awareness increasing at the executive level due to its importance to an organization's bottom line, defining and confining the role of the purchasing department to such a narrow scope does a disservice to the profession. In an article from last summer titled Procurement's Expanding Role and the Executive of the Future (see the first link under Web Resources), I reviewed a roundtable that was hosted by CPO Agenda. In its entirety the post concerning the roundtable, which included CPO participants from organizations such as Nestle and Danone, is definitely a worthwhile read! However, one point that stood out was the conclusion by the majority of senior executives in which they expressed the belief that the best individual to run a purchasing department is someone who does not actually have a purchasing background. (At this stage the silence amongst my seminar audiences is usually deafening.) It would not be unreasonable for one to conclude that the historically narrow definition of purchasing/procurement has contributed, at least in part, to this position. Going beyond the realm of traditional supply chain elements (and by the way, the term supply chain is a misnomer in that it implies a sequential architecture when in reality, the acquisition process involves the synchronization of both internal as well as external stakeholders), it is important that supply chain professionals expand their area of thought and practice to include other departmental interests such as those of finance and in particular the CFO. The importance of this point was demonstrated in an article I wrote earlier this year, in which I referenced a number of reports indicating that 73% of all savings claimed by purchasing departments were not accepted by finance as true savings (included amongst the savings claims that were denied was the myth of purchase avoidance). Titled Bridging the Communications Gap Between Finance and Purchasing (see the second link), the research findings indicated that, "Too often, finance executives in Corporate America simply don't believe that purchasing departments are really bringing in the savings they claim." This disconnect according to CFO feedback, "may be because financing and purchasing don't speak the same language." Based on the above, the importance of differentiating between purchasing and procurement while interesting is at the end of the day an exercise in futility. Therefore you need to look beyond the scope of functional distinctions to see and understand the broader role your profession plays in the day-to-day success of your organization. Then, and only then will you be able to make the contribution in which all purchasing/procurement professionals are capable of providing.

An inconclusive audit is one in which the evidence presented is not definite under the specific requirements needed. Information that may be conclusive in other situations can sometimes be inconclusive during an audit.

Expressed as a decimal, 30 percent is equal to 0.3.

The cost of Preference Capital may be defined as the dividend expected by the preference Shareholders.

There are two types of Preference Shares:-

1. Irredeemable

2. Redeemable

The first category is a kind of continuous security in the sense that the principal is not to be returned for a long time or is likely to be available till the life of the company. The redeemable preference Shares are issued with a Maturity date so that the Principal will be repaid at some future date. Accordingly, the Cost of Preference Shares is calculated separately for these 2 situations.

owner's contributed money

sources of Funds

1. Profit from Operations

2. Issue of Shares

3. Issue of Debentures

4. Bank Loan (Long Term)

5. Sale of fixed Assets

Application of Funds

1. Expense for operations

2. Redemption of shares

3. Redemption of Debentures

4. Payment of Loans

5. Purchase of Assets

withdraw and deposit entry

An exchange gain is when a company buys something one day at one rate of currency but then actually pays for what they bought a different day and the rate of currency is different and higher will cause an exchange gain. An exchange loss is when the rate of currency is lower when company actually pays for item and enters it in the books.

Accounting as a "language of business" communication the financial results of an enterprise to various interested parties by means of financial statmetns which have to exhinit a "true and fair" view of its state of affairs.

Accounting standards which seek to sugest rules and criteria of accounitng measurements, have to keep the set of rules, social needs, legal requirments and technological developmetns in view.

Formulation of proper accounting standards, therefore is a vital step in developing accounting as a business lanuguage.

Please provide me the list of closing journal entreis requried to enter in books to finalize the P&L and B&S

The revenue reserve refers to the portion of the business profits that are usually retained by the company for investments for future growth. There are usually not redistributed to the shareholders through the special or regular dividends.

Income statement.

Realization: when sold and coverted to cash (or claims to cash) Recognition: when recorded in the financial statements.