Group 1 Financial Statements

8/8/2019 Group 1 Financial Statements

http://slidepdf.com/reader/full/group-1-financial-statements 1/23

ON

TARGET

FINANCIAL STATEMENTS

Importance

Uses

Principles of Preparation

Limitations



ON

TARGET

IMPORTANCE OF FINANCIAL STATEMENTS

POINTS TO BE COVERED

FINANCIAL STATEMENTS

What are they?

TYPES OF STATEMENTS

USES OF FINANCIAL STATEMENTS

PRINCIPLES OF PREPARATION

LIMITATIONS



ON

TARGET

ON

TARGET

FINANCIAL STATEMENTSAbbas Sheikh Dawood-101Siddharth Devnani-302



ON

TARGET

What are Financial Statements?Financial Performance AnalyzersLanguage understandable by interested parties



ON

TARGET

TYPES OF STATEMENTS



ON

TARGET

FACTORS CONNSIDERED BEFORE INVESTING



ON

TARGET

EVALUATION METHODS

1.Ratio Analysis

2.

3.Cash Flow analysis4.



ON

TARGET

EVALUATION OF INVESTMENTS BY RATIO ANALYSIS



ON

TARGET

ON

TARGET

IMPORTANCEBhavuk Chandak-103



ON

TARGET

ON

TARGET

Shows how a business isdoing

Are very useful within theorganization for a

company's stockholders andto its board of directors, itsmanagers and someemployees, includinglabour unions.

IMPORTANCE

Delete this graphic orcopy it and use it onanother page or inanother presentation.



ON

TARGET

IMPORTANCE TO MANAGERS

Among the many users Managers arethe most beneficial and frequentusers of financial statementsparticularly those good in analyzing

and understanding the financialstatements.

Business Managers discover

problems in the statements and findthe action needed to be taken andexecutes the actions planned.



ON

TARGET

ON

TARGET

USESDharmendra Choudhary-104



ON

TARGET

USES OF FINANCIAL STATEMENTS



ON

TARGET

Financial institution s (banks and other lendingcompanies) use them to decide whether to grant acompany with fresh working capital or extend debtsecurities (such as a long-term bank loan or debentures)

to finance expansion and other significant expenditureand other duties declared and paid by a company.

Media and the general public are also interested infinancial statements for a variety of reasons. For

example if any person wants to become a shareholderin the company then the financial statements of thecompany’s previous years will help the person inchecking the creditability of the company



ON

TARGET

ON

TARGET

PRINCIPLES FOR PREPARINGVaibhav Choudhary-301



ON

TARGET

Economic Entity Assumption The accountant keeps all the owner’s

personal transactions different fromthe transactions of his business.

Monetary Unit Assumption Any Economic activity taking place is

measured in U.S. dollars, and theones which can be expressed in U.S.dollars are recorded.

accountants do not take into account

the effect of inflation on recordedamounts.



ON

TARGET

Time Period Assumption According to this principle it is possible to

report the ongoing activities of a business inrelatively short, distinct time intervals such as

the five months ended June 30, 2009, or the 5weeks ended June 1, 2009.

Cost Principle From an accountant's view point, the term

"cost" refers to the money spent (cashequivalent or cash) when an itemwas originally obtained, whether that purchasehappened 2 years ago or fifty years ago.

Full Disclosure Principle If certain information is important to an

investor or lender using the financialstatements, that information should bedisclosed within the statement or in the notesto the statement.



ON

TARGET

Going Concern Principle This accounting principle assumes that a

company will continue to exist long enough tocarry out its objectives and commitments andwill not liquidate in the foreseeable future.

Matching Principle The matching principle requires that expenses

be matched with revenues. For example, salescommissions expense should be reported in theperiod when the sales were made (and notreported in the period when the commissionswere paid)

Revenue Recognition Principle Under the accrual basis of accounting (as

opposed to the cash basis of accounting), revenues are recognized as soon asa product is sold, and not when the money wasreceived.



ON

TARGET

Materiality Because of this basic accounting principle or

guideline, an accountant might be allowed toviolate another accounting principle if anamount is insignificant. Professional judgment isneeded to decide whether an amount isinsignificant or immaterial.

Conservatism If a situation arises where there are two

acceptable alternatives for reporting an item,conservatism directs the accountant to choosethe alternative that will result in less netincome and/or less asset amount



ON

TARGET

ON

TARGET

LIMITATIONSShruti P Bihani-201



ON

TARGET

QUANTATIVE BUT NOT QUALATATIVE

LIMITATIONS

1.

2.Quality of revenue3.

4.Lack of innovation5.

6.Poor Operational Strategies7.

8.Lack of TechnologicalDevelopment

9.10.Risk Factors11.

1.

2.Human Resource3.

4.Quality & Reputation of

management5.

6.Morale of employees7.

8.Change in management

1.

2.Latest IndustryTrends

3.

4.Changes in Taste of the customer

5.

6.Opportunity Cost



ON

TARGET

REFERENCE TO CASE STUDY



ON

TARGET

THANK YOU

Abbas Sheik Dawood-101

Siddharth Devnani-302Bhavuk Chandak-103Dharmendra Choudhary-104

Vaibhav Chaudhary-301Shruti Bihani-201

Documents

Group 1 Financial Statements