Accounting for Managers Piyush Mba
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ACCOUNTING FOR MANAGERS ACCOUNTING FOR MANAGERS ASSIGNMENT ON ´FINANCIAL STATEMENT ANALYSISµ FINANCIAL STATEMENT ANALYSISµ SUBMITTED BY: PIYUSH BHARDWAJ MBA (SEM-1) ROLL NO. 13
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ACCOUNTING FOR MANAGERS ACCOUNTING FOR MANAGERS
ASSIGNMENT
ON´́FINANCIAL STATEMENT ANALYSISµFINANCIAL STATEMENT ANALYSISµ
SUBMITTED BY:
PIYUSH BHARDWAJ
MBA (SEM-1)
ROLL NO. 13
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INTRODUCTION
� Analysis of financial statements is a systematic process of the critical examination of the financial informationcontained in the financial statements in order tounderstand and make decisions regarding the operation of the firm.
� A study of relation among various financial facts andfigures.
� This process of division, establishing relationship &interpretation thereof to understand the working orfinancial position of business is known as
´Financial Statement Analysisµ.
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USESUSES
On the basis of financial analysis we can take
variety of decisions in various areas:
SECURITY ANALYSIS
CREDIT ANALYSIS
DEBT ANALYSIS
DIVIDEND DECISION
GENERAL BUSINESS
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PROCESS
T he main functions which are used in the
process of analysis and interpretation are:
REARRANGEMENT OF FINANCIAL STATEMENTS
COMPARISON
ANALYSIS INTERPRETATION
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COMPARATIVE FINANCIAL STATEMENT
Comparative financial statement is a tool of financial analysis thatdescribes changes in each item of the financial statement in bothabsolute amount and percentage term taking the item in precedingaccounting period as base.
OBJEC TIV ES
1. Information about the nature of changes influencing financial
position and performance of an enterprise.
2. Point out the weakness and soundness about liquidity, profitability
and solvency of an enterprise.
3. Forecasting and Planning.
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Under this technique we prepare two
statements----
1. COMPARATIVE BALANCE SHEETS
2. COMPARATIVE INCOME STATEMENT
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COMPARATIVE BALANCE SHEET
AS ON 31. MARCH 2008 & 2009
particulars
SOURCES OF FUNDS
Share capital:
Equity
preference reserves & surplus
Share holders funds
LO AN FUNDS
secured loan
Unsecured loans
Total funds provided
APP LI C ATI ON OF FUNDS
Fixed assets
Investment
Net current assets:
current assets, loans & advances
less: current liabilities and provisions
Miscellaneous expenditures
T OTAL
2008
Rs.
2009
Rs.absolute
changes
Percentage
changes
c
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COMPARATIVE BALANCE SHEET
as on 31.march.2008 & 2009
AS ON 31. MARCH 2008 & 2009
particulars
SOURCES OF FUNDSShare capital:
Equity
preference
reserves & surplus
Share holders funds
LOAN FUNDS
secured loan8% debentures
Total funds provided
APPLICATION OF FUNDS
Fixed assets
Investment
Net current assets:current assets
less: current liabilities
total
2008
Rs.
600000
300000
300000
1200000
600000
1800000
1200000
300000
300000
1800000
2009
Rs.
900000
600000
300000
1800000
600000
2400000
1500000
300000
600000
2400000
absolute
changes
300000
300000
600000
600000
300000
300000
600000
Percenta
ge
changes
50
100
50
33.33
25
100
33.33
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COMPARATIVE INCOME STATEMENTfor the year ended 31st march,2008 & 2009
Particulars 2008 absolute
charges
(increase or
decrease)
Percentage
charges
(increase ordecrease)
2009
Net sales
Less: cost of goods sold
Gross profit
Less: operating exp.
(office, administration, selling
and distribution)
Net operating profit
Add: other income
Less: non operating exp.
Profit before interest & tax
Less :interest paid
Profit before tax
Less: income tax paid
Profit after tax
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Example: from the following information, prepare comparative
income statements of Exe Ltd.
sales
Cost of goods sold
office administration, selling
& distribution exp.
other incomes
interest paid
tax rate
2008
Rs.
3000000
2400000
150000
60000
60000
50%
2009
Rs.
3300000
2520000
180000
60000
60000
50%
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Thank you
