stretegicmanagement full topic of ptu

7/28/2019 stretegicmanagement full topic of ptu

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Presentation onFinancial

Statements

Presented by-

Hardeep Singh (118)

Harminder Kaur (119)

Inderpreet(120)

Jeevan jyoti(121)

Kamaljeet(122)

Kamaljeet(123)Komal Sharma(124)


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Financial Statements

A financial statement (or financialreport) is a formal record of thefinancial activities of a business,

person, or other entity. For abusiness enterprise, all the relevantfinancial information, presented in astructured manner and in a form easy

to understand, are called the financialstatements


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Objectives of Financial Statements

objective of (general purpose)financial statements is toprovide information about the:

financial position;

financial performance; and

changes in financial position ofthe entity to the wide range of

users in making economicdecisions.


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Accounting Standard 3

This standard applies to theenterprises:

Having turnover more than Rs.50 Crores in afinancial year;

Listed companies;

Cash flow statement of listed companies shall bepresented only under the indirect method asprescribed in AS 3


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Balance Sheet

In financial accounting, a balance sheet orstatement of financial position is a summary ofthe financial balances of a soleproprietorship, a business partnership, a

corporation or other business organization Astandard company balance sheet has threeparts: assets, liabilities and ownershipequity

Represented by basic accounting equationAssets = liabilities + Owner equity


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Components of Balance sheet

The three key sections of abalance sheet are:

Assets

Liabilities

Owners equity


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Owners equity

Owners equity is the residual interest in theassets of a business after liabilities are deducted.It is the net worth of a business and equals thedifference between assets and liabilities. Equityrepresents the amount belonging to the owneronce all financial obligations have been met.

Equity includes the initial and ongoing capital

investments made by the owners, retainedearnings (or accumulated losses), and reserves.Capital is any cash or assets the owner hascontributed to the business. Retained earningsare any profits that are reinvested in thebusiness. Reserves are profits set aside for

particular purposes such as asset replacement, ormajor building maintenance. Owners equity is also referred to as

proprietorship, members funds, capital, orshareholders equity.


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Assets

Assets are the resources that a business uses tooperate its business such as cash, inventories, landand buildings, and equipment. Essentially, assets areany items of value owned or controlled by thebusiness that contributes towards generatingrevenue. Assets are categorised as either current ornon-current assets.

Current assets:are items of value that are expected to be consumed

or converted into cash within the next 12 months.Examples include cash, inventory that is turning overregularly and accounts receivable.

Non-current assets:are not expected to be consumed or converted into

cash within the next 12 months. Examples includeassets that the business would generally keep formore than one year such as plant and equipment,

cars and buildings.


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Liabilities

Liabilities are the financial obligations or debts of the

business and include claims that creditors have on thebusinesss resources such as accounts payable, bankoverdrafts, provision for employees annual leave andlong service leave, tax liabilities, and loans payable.Essentially, liabilities are amounts owed by thebusiness to external parties. Liabilities are categorisedas either current or non-current liabilities.

Current liabilities:

are expected to be paid within the next 12 months andinclude creditors, (accounts payable), inventorypurchases, overdraft, short-term loans and credit carddebts.

Non-current liabilities:are not expected to be settled within the next 12months and include mortgages on buildings andequipment, and long term loans.


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Income Statement

A financial statement that measures a

company's financial performance over aspecific accounting period. Financialperformance is assessed by giving a summaryof how the business incurs its revenues andexpenses through both operating and non-operating activities. It also shows the netprofit or loss incurred over a specificaccounting period. It also shows the netprofit or loss incurred over a specificaccounting period, typically over a fiscalquarter or year.

Also known as the "profit and lossstatement" or "statement of revenue andexpense.


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Cash Flow Statement

statement of cash flows is a financialstatement that shows how changes inbalance sheet accounts and incomeaffect cash and cash equivalents, andbreaks the analysis down to

operating, investing, and financingactivities. Essentially, the cash flowstatement is concerned with the flowof cash in and out of the business.

The statement captures both thecurrent operating results and theaccompanying changes in the balancesheet.


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Definitions

Cash comprises cash on hand anddemand deposits with banks.

Cash equivalents are short term,highly liquid investments that arereadily convertible into knownamounts of cash and which are

subject to an insignificant risk ofchanges in value.

Cash flows are inflows and outflowsof cash and cash equivalents.


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Operating Activities

These are principal revenue producing

activities of the enterprise.

Examples: Cash receipts from sale of goods / rendering

services;

Cash receipts from royalties, fees, commissionsand other revenue;

Cash payments to suppliers of goods andservice;

Cash payments to and on behalf of employees.


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Investment Activities

The activities of acquisition and disposal of longterm assets and other investments not included incash equivalent are investing activities.

It includes making and collecting loans, acquiringand disposal of debt and equity instruments,property and fixed assets etc.

Examples of cash flows arising from investingactivities are as follows: Cash payments to acquire fixed assets

Cash receipts from disposal of fixed assets

Cash payments to acquire shares, warrants or debtinstruments of other enterprises and interest in jointventures

Cash receipt from disposal of above investments


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Financing Activities

Those activities that result in changes in size and

composition of owners capital and borrowing ofthe organization.

It includes receipts from issuing shares,debentures, bonds, borrowing and payment ofborrowed amount, loan etc.

Sale of share

Buy back of shares

Redemption of preference shares

Issue / redemption of debentures

Long term loan / payment thereof

Dividend / interest paid


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Thank You

Documents

stretegicmanagement full topic of ptu