ACCOUNTING FOR MANAGERS

2013

[ACCOUNTING FOR MANAGERS]

ACKNOWLEDGEMENT

I would like to express my gratitude to my supervisor sonam sadhu for the useful comments, remarks and engagement through the learning process of this report. I would like to thank my loved ones, who have supported me throughout entire process, both by keeping me harmonious and helping me putting pieces together. I will be grateful forever for your love.

Place: BARODA HUSSAIN H.PADRAWALA DATE:- 22/11/2013

Executive Summery

Citi is currently very good company In terms of every aspect. Also Citi has launched new scheme for investment which is considered one of the best from Citi. Citibankis the consumer banking division offinancial servicesmultinationalCitigroup. Citibank was founded in 1812 as theCity Bank of New York, laterFirst National City Bank of New York. As of March 2010, Citigroup is the third largest bank holding company in theUnited Statesby total assets, afterBank of AmericaandJPMorgan Chase. Citibank has retail banking operations in more than 160 countries and territories around the world.More than half of its 1,400 offices are in the United States, mostly inNew York City,Chicago,Los Angeles, theSan Francisco Bay Area,Washington, D.C.andMiami. More recently, Citibank has expanded its operations in theBoston,Philadelphia,Houston, andDallasmetropolitan areas.In addition to standard banking transactions, Citibank markets insurance, credit cards and investment products. Their online services division is among the most successful in the fieldclaiming about 15 million users.I would like to look at different aspects of Citi a little closer in my work, emphasizing on its history and development as well as new approaches and Citi current situation.I would like to give the brief idea about what is the current situation of balance sheet of the Citi. In this study I take a balance sheet of Citi group and try to analyse certain factors of thee balance sheet.

INDEX

Topic ParticularsPage. No

Acknowledgement1

Executive Summary2

1 Introduction 4

2 Introduction( Citi group)9

3 Balance sheet content 10

4 Working capital analyses 11

5Goodwill12

6 Cash equivalent 13

7 Long term investment 14

8Treasury stock 15

9Intangible assets 16

10Account payable 17

11Conclusion 18

12Bibliography 19

Introduction:-

Citi began operations in India over a century ago in 1902 in Kolkata. Citi is a significant foreign investor in the Indian financial market. The total capital employed in Citi's banking and financial services operations in India including retained earnings, is in excess of $3 billion. Citi is an employer of choice in India offering consumers and institutions a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services and wealth management.

As promoter-shareholder, Citi has played a leading role in establishing important market intermediaries such as depositories, credit bureau, clearing and payment institutions

Citi operates 42 full-service Citibank branches in 30 cities

Citi is the preferred banker to 45,000 small and mid-sized companies across India

Citi helped lay the foundation of the Indian software industry by establishing Citicorp Overseas Software Limited and Iflex Solutions Limited. Citi pioneered the ITES industry in financial services through Citigroup Global Services Limited (CGSL). Oracle acquired Iflex in 2005 and CGSL was acquired by Tata Consultancy Services in 2008

Citi India added two more green certified buildings to its office premises in 2012 and in 2013, moved its headquarters to The First International Financial Centre (FIFC), a world-class environmentally friendly building

Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Citi serves the full spectrum of clients in India - from helping India's top global corporations commit capital, make markets and manage their global cash positions to supporting the growth ambitions of the country's small and mid-sized enterprises and enabling individuals and households save, invest, spend, borrow and protect their money with trust and confidence.

Citi India's products and services are organized under two major segments: Institutional Clients Group (ICG) and Global Consumer Bank (GCB).

The ICG serves Citi's best-in-class products, services and execution through four major client groups: Global Banking, Global Markets, Treasury & Trade Solutions, Securities & Fund Service and Citi Research. Citi Private Bank is also a division of the ICG.

Under GCB, Citi India offers the full range of consumer banking products and services. We serve our clients across the entire wealth continuum as they grow in affluence. We offer solutions for clients in every segment - beginning with our path breaking salaried proposition (CitiAtWork), the emerging affluent (Citibanking), the affluent (Citigold) and the High Net Worth individuals (Citigold Private Client) We pioneered the Non-Resident proposition in 1985 to serve the global Indian's unique banking and wealth management needs. With around 2.3 million cards in force, Citibank is one of the leading card issuers in India with a diverse suite of innovative and differentiated products. Citi Wealth Advisors is the firm's broker-dealer platform for retail clients.

Landmark deals:-

BG Group PLCannounced its agreement to sell its 65.12% controlling interest in Gujarat Gas Company Limited, India's largest private sector natural gas distribution company, to a subsidiary of Gujarat State Petroleum Corporation Group for a consideration of approximately US$470 million. Citi is acting as the Exclusive Financial Advisor to BG Group on the transaction.

Rain CII Carbon LLChas executed a share purchase agreement with Triton to acquire 100% stake in RUTGERS NV, Belgium, for gross enterprise value of 702 million. The transaction is expected to be the largest ever Indian acquisition of a German business and provides product and end market diversification with Rutgers downstream processing operations and expands Rain CII's geographic footprint to Europe and other regions. Citi is acting as the Exclusive Financial Advisor to Rain CII on the transaction.

Citi acted as lead financial advisor toUnited Breweries (Holdings) Ltd. and United Spirits Ltd. ("USL")on the transaction involving Diageo PLC acquiring a stake in USL, through a combination of primary and secondary shares. On completion of the share purchases and in the event that the tender offer is fully subscribed, Diageo will hold 53.4% of the enlarged USL. This landmark partnership is the largest Inbound M&A transaction into India in the last 18 months and one of the largest Inbound M&A transactions ever in India.

Telenor ASAannounced that through its new wholly-owned Indian entity, Telexings Communications Services Pvt. Ltd, it has been successful in securing spectrum license to provide mobile telephony services in six of the most populous telecom circles in India. Telenor's total bid in the spectrum auction was approximately US$750 million. Telenor, through Telexings, also announced that it has signed a new partnership agreement with Lakshadweep Investments & Finance Pvt. Ltd. Citi is acting as the exclusive financial advisor to Telenor in connection with this transaction and its overall India restructuring efforts. Citi India, acting as joint book runner, priced an inaugural US$500 million 10-year USD senior unsecured bond offering forBharat Petroleum Corporation Limited. Key highlights of the transaction include largest order book oversubscription seen from an Indian issuer in 2012 YTD at 15.0x with 325 investors participating, excellent spread contraction and priced at the lowest spread vs. US Treasury amongst all 10-year bond issuances out of India in 2012.

Citi, acting as joint book runner, priced a successful US$250 million re-opening ofICICI Bank's4.70% notes due 2018. The transaction saw strong investor demand with an oversubscription of 5.6x with participation from over 140 investors. Citi continues to be the only bank to have led 15 out of 15 US dollar bond transactions out of India this year and continues to hold the top spot in the G3 debt capital markets league table since 2010.

Citi, acting as Left Lead Book runner, priced $400 million USD Senior Secured Notes and 210 million EUR Senior Secured Notes, supportingRain CII'sacquisition of RUTGERS. The proceeds of the bond offering, together with cash on hand at Rain CII and RUTGERS, will be used to fund the acquisition. This transaction marks the third foreign currency bond issuance by Rain Group in the last 5 years - with all three being led by Citi.

Citi acted as a Sole book runner forCarlyle Groupto sell their residual stake of 3.71% in HDFC Limited through a US$842 million Block Trade. This transaction represents the largest ever stake monetization by a private equity investor in India via a block trade.

Citi India acted as the joint book runner to a hugely successfully ~US$160 million QIP Offering byMahindra & Mahindra Financial Services Limited. Key highlights of the transaction include: priced without any discount and at par to the last closing price, overwhelming response from long-only public market investors across the globe and transaction was oversubscribed ~5x resulting in an overall demand of ~US$800 million.

Citi India acting as a sole book runner, completed monetization of CLSA Mauritius' 6.1% stake inApollo Hospitals("APHS") through a bulk trade of US$127 million. Citi was awarded the transaction through a competitive bidding process, where Citi outbid other investment banks and displayed the strength of its franchise. Key Highlights of the transaction include opportune timing given the liquidity in equity markets, transaction executed on the back drop of a sharp rally in APHS stock price and well-crafted investor targeting strategy led to early identification of a global long only investor, who anchored the book which was covered within 4 hours of launch. Citi India continues to be the first call bank for block trades.

Citi India acting as a selling broker for Government of India (GoI) raised ~US$1.1 billion, by monetizing GOI's 10% stake in India's largest Iron Ore mining company,NMDC Limited("NMDC"). This trade was done through the Offer For Sale (OFS) format and was Citi's 2nd consecutive equity offering for NMDC. Some of the key highlights of transaction include 2nd largest OFS executed in 2012 , 3rd largest equity deal in Indian capital markets in 2012YTD and the deal gained early momentum upon launch and witnessed a good response from both foreign and domestic institutions with the total demand aggregating to ~US$1.8 billion. With this transaction Citi is firmly on course to being the #1 equity house in India for the 6th consecutive financial year.

For the local accounting year ended March 31, 2013, Citi India reported a Profit After Tax ofRs.2,718 crore.

Citi:-

Citi is committed to financial inclusion, encompassing both access and capability. In 2012 we gave grants totalling INR 105.3 million and in 2013 have already provided grants of more than INR 93 million, towards the focus areas of Financial Capability & Asset Building, Youth Education & Livelihoods, Enterprise Development and Microfinance.

Since its inception in 1999 the Citi Foundation grant program has catalysed opportunities for approximately 1.9 million people across the country.

Employee engagement activities and volunteerism are strong drivers of the citizenship program. 1,500 Citi employees, families, friends, NGO partners and beneficiaries and the employees of large vendors, came together in 10 cities to participate in 19 events at Citi's Global Community Day on June 22, 2013. Citi's partnership with Teach For India saw participation from 135 employees, three of who were selected for the 2-year fellowship program in 2012. The Employee Payroll Giving Program had more than 300 employees contribute about INR 3.7 million, to six NGOs in 2012.

Citi extends its support to an array of cultural and social causes, as part of its local engagement with communities. Citi has co-created the Citi-NCPA Aadi Anant Festival of Indian Music, instituted the Citi-NCPA Guru Shishya Scholarship program to awards scholarships to deserving musicians and is the chief patron of the Symphony Orchestra of India.

Citi India set up its Diversity Council in October 2011 which outlined Awareness, Policies and Infrastructure and Capability Building as the cornerstones of its work to improve gender diversity at Citi India. In 2012 Citi hosted a roundtable on 'Gender Diversity: Setting the way forward in corporate India' with more than 15 HR heads of top companies participating. Citi also hosted its annual Citi Woman Leader Awards that honoured 9 first-year management students from the country's premier business institutions.Balance sheet analyses:-

Covering points:-

Working Capital Goodwill Cash Equivalent Long Term Investment Treasury Stock Intangible Assets Accounting payable

Working capital:- If a company's current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. A declining working capital ratio over a longer time period could also be a red flag that warrants further analysis. For example, it could be that the company's sales volumes are decreasing and, as a result, its accounts receivables number continues to get smaller and smaller.

2010 1913902000 - 1750434000 = 163468000

2011 1873878000 - 1696072000 = 177806000

2012 1864660000 - 167561000 = 189049000

The facts shows that there is significantly improvement in working capital since 2010- 2012. Working capital also gives investors an idea of the company's underlying operational efficiency. Money that is tied up in inventory or money that customers still owe to the company cannot be used to pay off any of the company's obligations. So, if a company is not operating in the most efficient manner (slow collection), it will show up as an increase in the working capital. This can be seen by comparing the working capital from one period to another; slow collection may signal an underlying problem in the company's operations.

Goodwill:- Goodwill is seen as an intangible asset on the balance sheet because it is not a physical asset like buildings or equipment. Goodwill typically reflects the value of intangible assets such as a strong brand name, good customer relations, good employee relations and any patents or proprietary technology.

201020112012

261520002541300025673000

Cash equivalent:- Cash and Cash Equivalents represent the amount of money the company has in bank accounts, savings bonds, certificates of deposit, andmoney market funds. It tells you how much money is available to the business immediately. How much should a company keep on the balance sheet? Generally speaking, the more cash on hand the better, though excessive amounts are likely to make investors unhappy as they would rather have the money paid out in the form of a dividend to be reinvested, spent, saved, or given to charity (nobody likes seeing someone else hoard wealth that rightfully belongs to them, especially if isn't doing anything to earn a good return). Not only does a decent cash hoard give management the ability to paydividendsandrepurchase shares, but it can provide extra wiggle-room when times get bad. Typically, a common stock investor is going to be happiest when the stock market falls apart if he or she owns a large, profitable business with large cash reserves and little to no debt.

Year 2010 20112012

Cash equivalent 437126000460334000399898000

Often, these strongly capitalized businesses can swoop in and take advantage of the maelstrom, buying up competitors for a fraction of their true value, or expanding market share as others in the industry are busy playing defence.

Long term investment:- The long-term investments account differs largely from the short-term investments account in that the short-term investments will most likely be sold, whereas the long-term investments may never be sold.

A common form of this type of investing occurs when company A invests largely in company B and gains significant influence over company B without having a majority of the voting shares. In this case, the purchase price would be shown as a long-term investment.

Treasury stock:- Treasury stock is often created when shares of a company are initially issued. In this case, not all shares are issued to the public, as some are kept in the companys treasury to be used to create extra cash should it be needed. Another reason may be to keep a controlling interest within the treasury to help ward off hostile takeovers.

Alternatively, treasury stock can be created when a company does a share buyback and purchases its shares on the open market. This can be advantageous to shareholders because it lowers the number of shares outstanding. However, not all buybacks are a good thing. For example, if a company merely buys stock to improve financial ratios such as EPS or P/E, then the buyback is detrimental to the shareholders, and it is done without the shareholders' best interests in mind.

A downfall in treasury stock represent that they are liquidising the bonds or stock share to increase the value of their firm.

Intangible Assets:- An asset that is not physical in nature. Corporate intellectual property (items such as patents, trademarks, copyrights, business methodologies), goodwill and brand recognition are all common intangible assets in today's marketplace. An intangible asset can be classified as either indefinite or definite depending on the specifics of that asset. A company brand name is considered to be an indefinite asset, as it stays with the company as long as the company continues operations. However, if a company enters a legal agreement to operate under another company's patent, with no plans of extending the agreement, it would have a limited life and would be classified as a definite asset.

Year Assets

20107504000

20116600000

20125697000

While intangible assets don't have the obvious physical value of a factory or equipment, they can prove very valuable for a firm and can be critical to its long-term success or failure. For example, a company such as Citi bank wouldn't be nearly as successful were it not for the high value obtained through its brand-name recognition. Although brand recognition is not a physical asset you can see or touch, its positive effects on bottom-line profits can prove extremely valuable to firms such as Citi bank, whose brand strength drives global sales year after year.

But the intangible assets are currently at downfall so the Citi bank need to take some steps to improve goodwill and increase the rat.

Account Payable:-

An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable entry is found on a balance sheet under the heading current liabilities. Accounts payable are often referred to as "payables".Another common usage of AP refers to a business department or division that is responsible for making payments owed by the company to suppliers and other creditors.

Accounts payable are debts that must be paid off within a given period of time in order to avoid default. For example, at the corporate level, AP refers to short-term debt payments to suppliers and banks. Payables are not limited to corporations. At the household level, people are also subject to bill payment for goods or services provided to them by creditors. For example, the phone company, the gas company and the cable company are types of creditors. Each one of these creditors provide a service first and then bills the customer after the fact. The payable is essentially a short-term IOU from a customer to the creditor. Each demands payment for goods or services rendered and must be paid accordingly. If people or companies don't pay their bills, they are considered to be in default.

Conclusion:- In this report we try to analyse the factors which are more important for anyone who try to invest and analysed the balance sheet. This are factors needs to be see:- A Quarter, Not a Trend:Even if Citigroup posts a disappointing quarter because of weakness in FICC trading, its hardly the end of the world. Every broker or broker-dealer in interest-rate products and currencies was hit by weakness in those markets during the quarter. Uncertainty over the Federal Reserves taper plans probably had a bunch of traders sitting on their hands. Volume will bounce back.

Global Footprint:Citigroup is by far the most diversified U.S. bank, with operations in more than 160 countries. Despite global weakness, that sprawling footprint actually boosted profitability in the second quarter, as credit quality improved throughout the world. When global sluggishness finally turns into acceleration, Citi is uniquely positioned to profit.

Valuation:Long cheap for a reason, Citigroups stock now looks like a bargain, trading at a book value per share of 0.84. Thats well below peers.JPMorgan Chase(JPM) trades 1.01 times book, whileWells Fargos(WFC) price-to-book is 1.52. Furthermore, shares offer a 30% discount to their own five-year average on a forward earnings basis, according to data from Thomson Reuters Stock Reports.

So overall Citi bank can give good return in future with a view to seeing their balance sheet.

Bibliography:-

http://in.finance.yahoo.com/q/bs?s=C

http://www.online.citibank.co.in/press-room/citi-in-india.htm

www.finacialstatemnt.co.in

Thank you Hussain Padrawala 4 | Page