financial statement analysis2 1222943155866672 8

8/9/2019 Financial Statement Analysis2 1222943155866672 8

1/46

FINANCIAL STATEMENT ANALYSISFINANCIAL STATEMENT ANALYSIS

In the previous class, we startedIn the previous class, we started

with Financial Statement Analysiswith Financial Statement Analysis


2/46


3/46

Financial Statement Analysis

No#1 Understanding

No#2 Analysis


4/46


First, we proceed for understandingfinancial statements of Tata Steel


5/46



6/46


First, we take Balance sheet

Sources of Funds Side


7/46


BALANC

MARCH


8/46


BALANC

MARCH


9/46


BALANC

MARCH


10/46


BALANC

MARCH


11/46


BALANC

MARCH

C S S S


12/46


BALANC

MARCH

FINANCIAL STATEMENT ANALYSIS


13/46


BALANC

MARCH



14/46


Now, lets move to

Application of Funds Side

BALANCE SHEET OF TATA STEEL LIMITED AS AT 31ST MARCH


15/46


(Rs. in Crores)

Particulars 2007 2008

APPLICATION OF FUNDS

FIXED ASSETS

Gross Block 18,526.93 20,847.04

Less: Amortization 100.41 100.47

Less: Depreciation 7,385.96 8,123.01

Net Block 11,040.56 12,623.56

Capital Work in Progress

11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19

CURRENT ASSETS, LOANS & ADVANCES

Inventories: Stores and Spare Parts 505.44 557.67

Inventories: Stock-in-Trade 1,827.54 2,047.31

Sundry Debtors 631.63 543.48

Cash in Hand and at Bank 7,681.35 465.04

Loans and Advances 3,055.73 33,348.74

Interest Accrued on Investments 0.20 0.20

13,701.89 36,962.44

Less: CURRENT LIABILITIES & PROVISIONS

Current Liabilities 3,523.20 3,855.26

Provisions 1,930.46 2,913.52

5,453.66 6,768.78

Net Current Assets 8,248.23 30,193.66

Miscellaneous Expenses (to the extent not written off or adjusted) 202.53 155.11

TOTAL 25,597.50 47,075.52



16/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52



17/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52



18/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52



19/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52



20/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52



21/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52



22/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52



23/46


(Rs. in Crores)



FIXED ASSETS

Gross Block 18,526.93 20,847.04



Net Block 11,040.56 12,623.56


11,040.56 12,623.56

INVESTMENTS 6,106.18 4,103.19








13,701.89 36,962.44



Provisions 1,930.46 2,913.52

5,453.66 6,768.78



TOTAL 25,597.50 47,075.52

N l dN l d


24/46

Now, lets move towardsNow, lets move towardsunderstanding of understanding of

PROFIT AND LOSS ACCOUNTPROFIT AND LOSS ACCOUNT


25/46

TOP LINE OF TATA STEEL

PROFIT AYEAR EN


26/46

BOTTO

ML

INE

OFTA

TASTEEL

Particulars

PROFIT AND L

YEAR ENDING


27/46

APPROPRIATION OF PROFIT

OF TATA STEEL

Particulars

PROFIT AND

YEAR ENDIN


28/46

Now, we move to Now, we move to

CASH FLOW STATEMENT

C


29/46A)CASHFLOWF

CASH FLOW S

YEAR ENDING

CASH

FR

OM

OP

ER

ATIO

N

S

OFTA

TAST

EEL


30/46

C A S H F

Y E A R E N

CASH

USE

D

IN

INV

ESTI N

G

OF

TA

TAS

TE

EL


31/46

C A SH FL

Y E A R E N

CAS

HF

RO

M

FIN

ANCING

TAT

ASTEE

L



32/46


All this is our story aboutunderstanding financial statements


33/46

WHAT NEXT IN OURWHAT NEXT IN OUR

AGENDA?AGENDA?



34/46


Share Warrants

The preferential issue of equity shares/ Fully ConvertibleDebentures (FCDs)/ Partly Convertible Debentures (PCDs) orany other financial instruments which would be converted intoor exchanged with equity shares at a later date, by listedcompanies whose equity share capital is listed on any stockexchange, to any select group of persons under Section 81(1A)of the Companies Act 1956 on private placement basis shall begoverned by these guidelines.

An amount equivalent to at least ten percent of the price fixed

as per Chapter-XIII of DISCLOSURE AND INVESTORPROTECTION GUIDELINES, SEBI shall become payable for thewarrants on the date of their allotment.



35/46


Security Premium Account The Securities Premium Account may be applied by the company-

(a) in paying up unissued shares of the company to be issued tomembers of the company as fully paid bonus shares;

(b) in writing off the preliminary expenses of the company;

(c) in writing off the expenses of, or commission paid or discount allowedon, any issue of shares or debentures of the company; or

(d) in providing for the premium payable on the redemption of anyredeemable preference shares or of any debentures of the company.



36/46


Deferred Tax Assets/Deferred Tax Liabilities

ACCOUNTING STANDARD 22 or IAS-12:

The differences between taxable income and accounting income can beclassified into PERMANENT DIFFERENCES and TIMINGDIFFERENCES.

Permanent differences are those differences between taxable income andPermanent differences are those differences between taxable income andaccounting income which originate in one period and do not reverseaccounting income which originate in one period and do not reversesubsequently.subsequently.

Timing differences are those differences between taxable income andTiming differences are those differences between taxable income andaccounting income for a period that originate in one period and are capableaccounting income for a period that originate in one period and are capable

of reversal in one or more subsequent periods.of reversal in one or more subsequent periods. The tax effects of timing differences are included in the tax The tax effects of timing differences are included in the tax

expense in the statement of profit and loss; and as deferred taxexpense in the statement of profit and loss; and as deferred tax

assets or as deferred tax liabilities, in the balance sheet.assets or as deferred tax liabilities, in the balance sheet.



37/46


Look at the following information and suggest whatshould be the cost of plant and machinerypurchased!!!!!

Suggest at what cost the

asset will be shown in

the Balance Sheet.



38/46


What is the difference between

Depreciation

Amortization

Depletion

Impairment



39/46

FINANCIAL STATEMENT ANALYSIS

All assets are subject todepreciation except

freehold land.


40/46



41/46

Accounting for Investments(AS 13)Accounting for Investments(AS 13)

InvestmentsInvestments are assets held by an enterprise for earning income by way of

dividends, interest, and rentals, for capital appreciation, or for other benefits to

the investing enterprise. Assets held as stock-in-trade are not 'investments'.

A Current InvestmentCurrent Investmentis an investment that is by its nature readily realizableand is intended to be held for not more than one year from the date on which

such investment is made.

ALong Term Investmentis an investment other than a current investment.

An Investment Propertyis an investment in land or buildings that are not

intended to be occupied substantially for use by, or in the operations of, the

investing enterprise.



42/46

Types of Investments(AS 13)Types of Investments(AS 13)

CurrentInvestments

Long TermInvestments



43/46

Current Investments A current investment is an investment that is by its

nature readily realizable and is intended to be held fornot more than one year from the date on which suchinvestment is made.

The carrying amount for current investments is thelower of cost and fair value. In respect of investmentsfor which an active market exists, market valuegenerally provides the best evidence of fair value.

For current investments, any reduction to fair valueand any reversals of such reductions are included inthe profit and loss account.



44/46

Long-Term Investment

A long term investment is an investment otherthan a current investment.

Long-term investments are usually carried at cost.However, when there is a decline, other thantemporary, in the value of a long term investment, thecarrying amount is reduced to recognize the decline.

Where there is a decline, other than temporary, in thecarrying amounts of long term investments, theresultant reduction in the carrying amount is chargedis chargedto the profit and loss statement.to the profit and loss statement.



45/46

Disclosure AS 13

Investments should be disclosed in

financial statements as the aggregate

amount of quoted and unquotedquoted and unquoted

investmentsinvestments, giving the aggregate

market value of quoted investments.



46/46

Whats the difference betweenReserve and Provision?

Provisionis charged to Profit andLoss Accountwhere asReserveis anappropriation of profit.

Provision is charged to Profit andLoss Account before calculating thenet profit or loss, but Reserve can bemade only when there is profit.

Provision is created for specificpurpose, while ReserveReserve may becreated for general purpose as well.

Provision are not invested in outsidesecurities.ReservesReserves reducesdivisible profit can be invested inoutside securities.

financial statement analysis2 1222943155866672 8

Documents