Revenue and Profit Analysis and Forecasting Telecom Part-I/E5...Proforma Balance Sheet As On _____...

E5-E6Revenue and Profit Analysis

and Forecasting

ALTTC, Ghaziabad

Financial Statements - Meaning

• The financial statements are nothing but the financial information presented in concise and capsule form, and the financial information is the information relating to the financial position of any firm.

• Final Product of the Accounting Process.• Indicate the completion of the accounting work for the

period.

ALTTC, Ghaziabad

Financial Statements - Meaning

• Should comply with the format and rules laid down by an

enactment concerning the enterprise.

• Comprises of

– Balance Sheet

– Profit & Loss Account (Income Statement)

– Cash Flow Statement

ALTTC, Ghaziabad

Proforma Balance SheetAs On ______________________

Capital and Liabilities Amount Assets Amount

Share Capital

Reserves & Surplus

Secured Loans

Unsecured Loans

Current Liabilities

Provisions

XXX

XXX

XXX

XXX

XXX

XXX

Fixed Assets XXX

Less: Dep. XXX

Investments

Current Assets

Loans & Advances

Miscellaneous

Expenditures

XXX

XXX

XXX

XXX

XXX

XXX XXX

ALTTC, Ghaziabad

Proforma Profit & Loss AccountFor the Year Ending ______________________

Particulars Amount Particulars Amount

Cost of Goods Sold

Operating Expenses

Non-Operating Expenses

Interest

Provision for Tax

Net Profit (Balancing

Figure)

XXX

XXX

XXX

XXX

XXX

XXX

Net Sales

Other Income

XXX

XXX

XXX XXX

ALTTC, Ghaziabad

Analysis of Financial Statements –Meaning and Necessity

• Analysis

– A comparison of one figure with another is a process of analysis

and is helpful in analyzing the situation and diagnosing the

problem.

ALTTC, Ghaziabad

Analysis of Financial Statements –Meaning and Necessity

• Financial Statement Analysis– Process of the critical examination of the financial information

contained in the financial statements in order to understand and make decisions regarding the operations of the firm.

– Involves making comparisons and establishing relationship among related items.

– It is linked with the purpose and interest of the agency involved.

for BSNL internal circulation only

ALTTC, Ghaziabad

Analysis of Financial Statements –Purpose

• Purpose may be to seek information relating to:

– Profitability

– Solvency

– Liquidity


ALTTC, Ghaziabad

Analysis of Financial Statements –Agency/Users

• Investors

• Government Authorities

• Creditors

• Banker

• Employees

• Management


ALTTC, Ghaziabad

Analysis of Financial Statements –Different Ways

• External and Internal

– External

– Internal

• Dynamic and Static

– Dynamic (Horizontal)

– Static (Vertical)


ALTTC, Ghaziabad

Analysis of Financial Statements –Techniques / Tools

• Comparative Financial Statements

• Common-Size Financial Statements

• Trend Percentages Analysis

• Ratio Analysis


ALTTC, Ghaziabad

Ratio Analysis - Meaning

• A ratio is a relationship expressed in mathematical terms between two individual or groups of figures connected with each other in some logical manner.

• Form of Ratios:– As a pure ratio like 4:1– As a rate of times like 2.5 times– As a percentage like 20%


ALTTC, Ghaziabad

Ratio Analysis - Uses

• Ratios – Useful by product of financial statements.• Ratios – Provide standardized measure of firm’s financial

position, profitability and riskiness.• Ratios – Useful in analyzing the performance of a firm

from different points of view.


ALTTC, Ghaziabad

Ratio Analysis - Uses

• Helps in Inter-Firm Comparison.

• Helps in Intra-Firm Comparison.

• To analyse the weak spots as well as strong points of

the enterprise.


ALTTC, Ghaziabad

Ratio Analysis - Classification

• Liquidity Ratios

• Profitability Ratios

• Turnover Ratios

• Leverage Ratios

• Valuation Ratios


ALTTC, Ghaziabad

Ratios

Liquidity

Ratios

Profitability

Ratios

Turnover

Ratios

Leverage

Ratios

Valuation

Ratios

Current

Ratio

Quick

Ratio

GP Ratio NP Ratio ROA Ratio ROCE

Ratio

Debt Equity

Ratio

Debt Ratio Interest

Coverage

Ratio

Inventory

Turn over

Ratio

Debtors Turn

Over Ratio

Creditors

Turn over

Ratio

Fixed Assets

Turn over Ratio

Assets Turn

over Ratio

Price – Earning

Ratio

MV

to BV Ratio

ALTTC, Ghaziabad

Liquidity Ratios

• Current Ratio = Current Assets

Current Liabilities

• Quick Ratio = Quick Assets

Current Liabilities


ALTTC, Ghaziabad

Profitability Ratios

• Gross Profit Ratio = Gross Profit *100

Net Sales

• Net Profit Ratio = Net Profit *100

Net Sales


ALTTC, Ghaziabad

Profitability Ratios

• Return on Assets Ratio

= Net Profit *100

Average Total Assets

• Return on Capital Employed Ratio

= Net Profit *100

Average Capital Employed


ALTTC, Ghaziabad

Turnover Ratios

• Inventory Turnover Ratio

= Cost of Goods Sold

Average Inventory

• Debtors Turnover Ratio

= Net Credit Sales

Average Debtors


ALTTC, Ghaziabad

Turnover Ratios

• Creditors Turnover Ratio

= Net Credit Purchases

Average Creditors

• Fixed Assets Turnover Ratio

= Net Sales _

Average Fixed Assets


ALTTC, Ghaziabad

Turnover Ratios

• Assets Turnover Ratio

= Net Sales _

Average Assets

ALTTC, Ghaziabad

Leverage Ratios

• Debt Equity Ratio

= Long Term Debt _

Total Shareholders Funds

• Debt Ratio

= Total Debts

Total Assets


ALTTC, Ghaziabad

Leverage Ratios

• Interest Coverage Ratio

= Earnings before Interest & Tax

Interest


ALTTC, Ghaziabad

Valuation Ratios

• Price-Earnings Ratio

= Market Price Per Share

Earnings Per Share

• Market Value to Book Value Ratio

= Market Price Per Share

Book Value Per Share


ALTTC, Ghaziabad

Some Working Capital Ratios

• Current Ratio

• Liquid Ratio

• Current Assets to Total Assets Ratio

• Current Assets to Total Sales Ratio


ALTTC, Ghaziabad

Ratio Analysis - Limitations

• Ratios are meaningful only in conjunction with the firm’s

past performance or other firms or industry average.

Taken by itself, a ratio provides only a limited

information.

• Ratios are subject to misinterpretation. Eg. A higher

Current Ratio is considered better but beyond a certain

limit it may signify inefficient use of resources of firm.


ALTTC, Ghaziabad

Ratio Analysis - Limitations

• Ratios are based on Accounting data based on historical

cost concept.

• Ratios are based on Accounting data that are based on

diverse accounting practices and principles.


For internal circulation of BSNLonly

Revenue and Profit Analysis and Forecasting Telecom Part-I/E5...Proforma Balance Sheet As On _____...

Documents

Transcript of Revenue and Profit Analysis and Forecasting Telecom Part-I/E5...Proforma Balance Sheet As On _____...