fixed asste managment

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.

SUMMER PROJECT ON

FIXEDASSET MANAGEMENT

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE COURSE

MASTER OF MANAGEMENT STUDIES

UNIVERSITYOF MUMBAI

SUBMITTED BY

ROHIT VIKRAM GUJAR

ROLL NO -201131

BATCH- 2011-13

SPECIALIZATION

FINANCE

UNDER THE GUIDANCE OF

Prof. AMOL NADGAONKAR

VISHWESHWAR EDUCATION SOCIETYS

INDIRA INSTITUTE OF BUSINESS MANAGEMENT

SANPADA, NAVI MUMBAI


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[The manager/ authority under whom the project has been conducted will

give the following certificate on company/ organization letter head.]

I Mr./Ms------------------------ certify that Mr. Rohit Vikram Gujar studentof Indira Institute of Business Management (IIBM) Sanpada, has worked

under my guidance for the project titled Fixed Asset Management from 5th

May to 30th

July and has successfully completed the project work in

partial fulfillment of requirement for the completion of MMS course as

prescribed by University of Mumbai.

This project report is a record of authentic work carried out by him. I have

gone through the project and it is to my satisfaction.

Name of the guide Date

Designation

Company/organization


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CERTIFICATE

It is hereby certified that the Project Report on FIXED ASSET

MANAGEMENT has been successfully completed in MMS semester II,

Batch 2011-13, for the academic year by Mr. ROHIT VIKRAM GUJAR

under the guidance of Prof. AMOL NADGAOKAR.

Prof. AMOL NADGAONKAR RITU BHATTACHARYA

(Project Guide) Director IIBM


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AKNOWLEDGEMENT

I express my profound sense of gratitude and sincere thanks to the

management of S.L.RAHEJA HOSPITAL (A FORTIS ASSOCIATE) for

having offered me an opportunity to work as a summer intern, on this

project in their esteemed organization.

I extend my special thanks to MR SUNIL KHANNA who gave me a

wonderful opportunity to select and work on the topic and understand the

challenges which was face in our career path while dealing with the people

and the complexities of the job.

I would also express my sincere thanks to our Director Ritu Bhattacharya,

and Deputy Director Corporate Relations Prof. Vidhya Srinivas for

enabling me to undertake such excellent project, and to work under such

eminent person in the S.L.Raheja Hospital ( A Fortis Associate )

organization.

I would like to express my gratitude to my Mentor / Guide Prof AMOL

NADGAOKAR for giving his/her valuable guidance and inputs which

help me in successful completion of the project.

Mr.__________________

MMS (specialization)


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DECLARATION

I wish to state that the work embodied in this Project titled

____________________________________________________________

____________ forms my own contribution to Management. Wherever

references have been made to intellectual properties of any individual /

Institution / Government / Private / Public Bodies / Universities, research

paper, text books, reference books, research monographs, archives of

newspapers, corporate, individuals, business / Government and any other

source of intellectual properties viz., speeches, quotations, conference

proceedings, extracts from the website, working paper, seminal work et al,

they have been clearly indicated, duly acknowledged and included in

the Bibliography.

_________________________

Signature of candidate


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ABSTRACT

The project Fixed Assets Management is defined as the selling of the assets

which are Idle or which are not in the production use. It refers to removing of the

assets from the Fixed Asset Register which are not in use or which are costing

high on repairs and maintenance cost. It mainly focuses on financial saving

through discarding the obsolete and used assets.

PURPOSE OF THE PROJECT

To study the accounting of Fixed Assets as per AS- 10, Accounting of theDepreciation on Fixed Assets AS- 6.

To check whether the method of depreciation for the FIXED ASSETS isappropriate as per the Companies Act, 1956.

To review the Fixed Asset Register and to check for any errors in the register. To review the assets which can be physically disposed off in the fiscal year 2012-

13

To provide the information regarding the procedure of disposal of particular fixedassets and give information about the different methods through which disposal

can be done. For Example: sale by public tender, sale though company agent,

donating, etc


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A

PROJECT REPORT

ON

FIXED ASSETS MANAGEMENTUNDERTAKEN

AT Fortis (S.L.Raheja) Hospital)

Table of content

Sr. no Chapter no: Particular Page no:

1 1 Executive Summary

2 2

2.1

2.2

Overview and Company Profile

Background of the Company

Company Profile

A) Values of S .L Raheja

B)Vision and mission of Raheja

C)Hierarchy

D)Branches

3 3

3.1

Introduction of the topic

A]Objectives of the study

B]Scope of the study

C]Salient contribution of the study

4 4 Research Methodology

5 5 Concepts related to Fixed Assets

6 6

6.1

Overview of Process

Overview of Department


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7 7 Fixed Assets Register

A]Objectives

B]Identification of fixed assetsC]Key responsibilities of fixed assets

manager/officer

8 8

8.1

Planning for fixed assets

Service life of fixed asset

9 9

9.1

Depreciation

i]Characteristics

ii]Causes

iii]Objectives of making provision for fixedassets

iv]Basis of charges

Methods of Depreciation

10 10 Advantages of Fixed Assets Management

11 11

11.1

Legal aspects of purchasing Fixed Assets

International Purchasingi] Bill of lading

ii] Letter of credit

iii] Documents required for payment

12 12 Data Analysis and Interpretation

13 13 Conclusions

14 14 Limitations

15 15 Suggestions and Recommendations

16 16 Bibliography


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CHAPTER 1 EXECUTIVE SUMMARY

This project has been a great learning experience for me; at the same time

it gave me enough scope to implement my analytical ability. The analysis

and advice presented in this Project Report entitled as

Fixed Assets Management is based on the research analysis done andalso having a survey of the fixed asset in the hospital premises.

This project as a whole can be divided into two parts:

Good fixed asset management procedures can greatly enhance the

efficiency with which a department produces outputs.

The first part gives an insight about the fixed asset management,

depreciation, depreciation methods and its various aspects. It is purely

based on whatever I learned at S.L.Raheja (A Fortis Associate). One can

have a brief knowledge about fixed assets and all its basics through the

project. Depreciation has become inseparable part of financial

management which ensures that a change has been made to the revenue to

represent the service rendered by fixed assets, and presents a true & fair

view of the state of affairs of the company as required by law for the time

being in force.

All the topics have been covered in a very systematic way. The language

has been kept simple so that even a layman could understand. All the data

have been well analyzed with the help of charts and graphs.

The second part consists of data and their analysis. The data collected has

been well organized and presented. Hope the research findings and

conclusions will be of use.


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CHAPTER 2

OVERVIEW AND COMPANY PROFILE


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CHAPTER 2.1 BACKGROUND OF THE COMPANY

S. L. Raheja (A Fortis Associate) Hospital is a 140 bedded, multi-

specialty facility that provides comprehensive & affordable care to

patients suffering from various ailments. Known widely as a leadinghospital for advanced management in Diabetes & Oncology, thehospital is poised to develop as a centre of excellence in Diabetes,

Oncology, Trauma, Cardiac Sciences, Emergency Services and

critical care under the professional management of Fortis healthcare.

Fortis group acquired S L Raheja hospital, after it signed an

operation and management (O&M) agreement with the 140-bed

multi-specialty hospital at Mahim on April 06 2009.

According to the press release This is the second hospital to be

taken over by Fortis Group in Mumbai. Earlier, it had taken over theHiranandani hospital in Navi Mumbai. Fortis had acquired this

tertiary care hospital for Rs 25 crore in 2007. The Mumbai projectsare part of the groups plans to have a total capacity of 6,000 beds by

2012.

S. L. Raheja (A Fortis Associate) Hospital is committed in

improving the health of the society, in general. The hospital provides

home care facility for chronic/terminally ill patients. For every case,

concerted effort is made by each employee, not only to treat

diseases, but also prevent them.

By frequently conducting various health check-up camps &awareness sessions, the hospital aims to educate the public on

various health hazards & their treatment.

Director for the Mumbai Zone for Fortis Healthcare Ltd and CEO

of S.L.Raheja (Fortis Associate) Hospital, Mumbai since March 2009 is

Mr.Manpreet Sohal.

CHAPTER: 2.2 COMPANY PROFILE


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Name of the company: S.L.RAJEHA (A FORTIS ASSOCIATE)

Address of Registered Office: Raheja Rugnalaya Marg, Mahim, Mumbai,

400016

Location and Address: Raheja Rugnalaya Marg, Mahim, Mumbai, 400016

Tel No: 022 - 66529624, 66529999, 66529683

Fax No: 022 - 24449418, 24443893

Year of Establishment at Mahim: 1982

Board of Directors:

Executive Chairman - Malvinder Mohan SinghMr. Shivinder Mohan Singh - Executive Vice Chairman

Mr. Sunil Godhwani - Non-Executive Director

Mr. Balinder Singh Dhillon - Executive Director

Mr. Harpal Singh - Non-Executive Director

Justice S. S. Sodhi - Non-Executive Independent Director

Mr. Gurcharan Das - Non-Executive Independent Director

Bankers:

(1) HDFC Bank Limited

(2) AXIS Bank

Stock listed: Bombay Stock Exchange Ltd &National Stock Exchange ofIndia

Auditors: K.N. Gandhi & Co

Website: www.fortishealthcare.com

A] VALUES
http://www.fortishealthcare.com/http://www.fortishealthcare.com/http://www.fortishealthcare.com/


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Cutting edge technology, international standard treatment, affordable cost

all delivered with a liberal dose of care & concern. The perfect

prescription for faster cure.

1. Offer international standard of quality at a reasonable cost.

2. Care with human touch.3. Maintain a high standard of awareness towards social issues,

environment and ecology and contribute towards the quality of

life of the present as well as the future generations.

4. Maintain mutually beneficial relationships with other agenciesinvolved in healthcare and related areas, both governmental.

5. Support healthcare research.

B] VISION & MISSION

We at S.L. Raheja Hospital believe in the motto, care in tune withtomorrow. To this end we attempt to provide more than just the best

possible medical treatment to our patients. Our faith lies in the miraculous

power of the human touch. In keeping with this faith, our patients aretreated with plenty of personal care along with medical expertise.

Our motto, care in tune with tomorrow, makes us invest equally in

technology as well as healing techniques.

Our aim is to combine expertise, state-of-the-art equipment and care toprovide our patients with the best cure possible.

VISION - To be a leader in healthcare services.

MISSIONTo provide quality care in key specialties exploiting the full

potential of technology with medical and managerial expertise.

. Care in tune with tomorrow.

C] HIERARCHY


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D] BRANCHES OF S.L.RAHEJA:

The Fortis hospital (India) network is central to the mission of makingquality healthcare services widely available to the community at large.

Hierarchy of Finance Department

Chief Executive Officer

Financial Controller

Finance Manager

Assistant Mana er

Senior Executive

Executive

Officer

Clerk


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Within a little over 8 years, Fortis Healthcare (India) has grown as one of

the largest and internationally recognized healthcare chain. Following the

recent acquisition of the Escorts Healthcare system, the Fortis-Escorts

Cardiac System today ranks among the largest cardiac networks in the

world.

The Fortis Healthcare (India) network encompasses 48 running hospitals

(including 13 satellite/heart command centers) with several more already

in the pipeline. All part of grand plan to deliver world-class medical care with

compassion across India.

FORTIS HOSPITAL - GURGAON

Fortis Hospital Gurgaon

Set on a sprawling 11 acre plot in the heart of Gurgaon, Fortis Hospital isa multi super-specialty hospital and a perfect wellness destination under a

single roof.


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Fortis Hospital, Shalimar Bagh, New Delhi

Fortis Hospital, Shalimar Bagh, is a leading hospital providing wide-

ranging healthcare services encompassing clinical excellence and focused

patient care, together with training of health professionals.

Fortis Hospital & Kidney Institute - KolkataFortis Hospital and Kidney Institute is the only hospital in Eastern India

which is dedicated to kidney care. Over the years, it has matured as a

super specialty hospital devoted to nephrology and urology.


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Fortis Hospital Mulund - Mumbai At Fortis Hospitals technology

blends with clinical expertise, personalized care and an innovative

approach towards solving complex medical issues, which form the

cornerstones of our patient centric services.

Fortis Hospital Mohali

The Fortis Hospital at Mohali in Punjab currently has 7 operation theaters

and 215 operational in-patient beds, with installed capacity for up to 300

beds was the first facility of its kind in the region. It is one of the

internationally recognized hospitals in India and amongst other specialties;

it runs the largest Cardiac Program in North-West India.


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Fortis Escorts HospitalNEW DELHI

The Escorts Heart Centre, New Delhi is a 45-bed super-speciality cardiac

centre. The hospital has 45 operational inpatient beds, with installed

capacity for up to 50 beds. The hospital also provides cardiac emergencyservices.

Fortis Hospital kalyan

At Fortis Hospitals technology blends with clinical expertise, personalized

care and an innovative approach towards solving complex medical issues,

which form the cornerstones of our patient centric services.

Fortis Hiranandani Hospital, Navi Mumbai

At Hiranandani Fortis Hospital, the medical team comprises of highly

experienced consultants in all major specialties. The skilled doctors,

nurses and paramedics are supported by modern facilities to ensure that

each patient receives the best medical care round the clock


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CHAPTER: 3

INTRODUCTION OF THE PROJECT

Fixed Assets (Definition)Fixed asset is an asset held with the intention of being used for thepurpose of producing or providing goods or services and is not held for

sale in the normal course of business.

Fixed assets often comprise a significant portion of the total assets of anenterprise, and therefore are important in the presentation of financial

position. Furthermore, the determination of whether expenditure

represents an asset or an expense can have a material effect on an

enterprise's reported results of operations.

What is a fixed asset?

A fixed asset is an asset which possesses a physical form and which is

intended to be used in the business on a long term basis in order to earn

income or to produce outputs.

A fixed asset should have the following characteristics:

(i) It should be able to provide services or benefits to the entity that uses it;(ii) It should have an estimated useful life of greater than one year;(iii) It should be used by the entity in pursuit of its objectives; and(iv) It should be under the control of the entity so that the entity benefits from

it.

There is a risk in value of fixed assets because of their long life. Fixed assetscan be divided into two parts that is:-

Tangible Assets Buildin g, Plan ts, Machineries etc.Intangible AssetsGoodwill, Patents etc.

Fixed Asset Classifications-

Fixed Assets are classified according to the following major categories:

Land & buildings, plant & machinery, transport, office equipment,

furniture & fittings, computer equipment, non-technical equipment, bio-

medical equipment.

FIXED ASSETS MANAGEMENT

Fixed Asset Management is commonly defined as the full life-cycle

management of fixed asset in order to maximize their contribution and

value add, i.e. from the initial planning stages right through until assetsneed to be disposed off/replaced.


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It is therefore involves process of planning & monitoring of physical

assets during their useful lives. It requires an appropriate level of

management interest & concern & accountability that is maintained well

beyond the ribbon cutting stage or acquisition.

The main objective of fixed asset management is to achieve the bestpossible match of assets with service delivery strategies & for assets madeavailable to be given due care in order to maximize their service potential.

The project topic FIXED ASSETS MANAGEMENT clearly mentions

the deduction in the expenditure costs, which are in connection with those

fixed assets, which are not used in the operational process.

Thus disposal of such assets which are idle or not used in the production

process can save money as they can deduct the expenditures such as

Repairs and Maintenance to these assets, Depreciation on these assets,Interest charges in case the assets are acquired by borrowed capital, etc.

The project on Fixed Asset Management mainly focuses on discarding

or removing of those Fixed Assets, which are not used in the current

operational process or which are idle. The project also concentrates on

those assets, which are high on the maintenance cost.

It mainly focuses on identification and then disposal of the assets which

are idle or which are frequently under repairs eventually increasing the

operating cost for production. It also provides information about the

procedure of disposal or transfer of fixed assets.

IMPORTANCE OF FIXED ASSET MANAGEMENT

(1) Eases the burden of the company management on asset tracking.(2) One time exercise of uploading and coding the existing assets brings better

control.

(3) Perpetual updations of asset movements and additions into the assetmanagement system help keep the asset records online.

(4) Real time reporting and asset tracking.(5) Depreciation calculation made easier.(6) Provision to measure effective usage of IT assets through special tools.(7) Excellent costbenefit ratio


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CHAPTER3.1

A] OBJECTIVES OF THE STUDY:

The objective of this present exercise is to study & analyze policies and

practices in relation to depreciation in company sector of our country withspecific reference to Hospital industry.

More specifically, the study focuses the following questions:

To find out the growth rate of fixed assets over the period of study; To analyze the impact of fixed assets on sales and profit margin; To determine the efficiency with which fixed assets are utilized in

a business;

To know the adequacy of depreciated funds and depreciation; To find out the Hospital in our country follows uniform basis for

charging depreciation.

To check whether the method and the rates of depreciation for theFixed Assets is appropriate

To ensure Fixed Assets availability where and when needed. To track fixed assets for the purposes of financial accounting,

preventive maintenance, and theft deterrence.

The study is conducted to evaluate Fixed assets performance ofS.L.Raheja.

The study is evaluate is giving adequate return to the company.

B] SCOPE OF THE PROJECT:

The survey on the Project Topic fixed asset management is done byinvestigating about the different Fixed Assets in S.L.Raheja Hospital

situated at Mahim.

The study ofFixed Asset Management will help to know which fixedassets are is not in active use or idle or which are stated at the lower of

their net book value. Also it helps to know which assets are having morerepairs and maintenance costs and Disposal of such Fixed Assets.

This project report may help the company to make further planning andstrategy.

The scope of present study is defined below in terms of units covered,concepts used and period under study. S.L.RAHEJA HOSPITAL (A

FORTIS ASSOCIATE) has been selected for my research.


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Assigning proper values to fixed assets and controlled items is critical tomaintaining accurate accounting records. Depending upon the

classification of the asset (land, buildings, improvements, equipment,

vehicles, or infrastructure), the information required to establish and

properly record asset values will come from various organizations or

departments.

Therefore, there will be shared responsibilities. While other Cityorganizations may provide supporting information, it remains the ultimate

responsibility of each Department Fixed Asset Coordinator (DFAC) to

ensure that the proper and complete valuation has been recorded for each

asset in the departments Fixed Asset Management System (FAMS).

This procedure applies to all City departments and City employees,regardless of classification or function. All City managers and employees

shall exercise the utmost care and diligence in the use, maintenance, and

protection of all assets.

Also it helps to know the accounting of the fixed asset in case ofacquisition, retirement or replacement of the Fixed Assets. It also provides

the information regarding the impairment of the long-lived fixed assets.

The project has also reviewed the procedure for disposal or replacement

of Fixed Assets.

This project report may help the company to make further planning andstrategy.

C] SALIENT CONTRIBUTION OF THE PROJECT:

The salient contribution of the project on Financial savings through fixed

asset management to the company is as follows:

It will provide the knowledge regarding the current scenario of thecompany as well as provides a competitor analysis of the fixed assets of

the company.

It will provide information to the management of the company to makestrategies and planning regarding the disposal of the fixed assets.

It will help the management to get idea about those Fixed Assets that areobsolete or kept idle.

It will also provide information regarding those fixed assets, which arecosting heavy on the maintenance.


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CHAPTER: 4

METHODOLOGY

This project is the desk study done through primary research and

secondary sources.. Extensive library research and spanning through

many books, journals, magazines, hand books on the subject of Fixed

Asset Management, has made my project complete.

Information is gathered through asking some questions to the

Financial Controller, and referring to various books and websites

mentioned in bibliography and webliography.

ACCUMULATED DATA

SECONDARY

DATA

PRIMARY

DATA

WEBSITESBOOKS COMPANYFILES

HOSPITAL-FINANCE

DEPARTMENT


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CHAPTER 5

CONCEPTS RELATED TO FIXED ASSETS

(1)Asset-Any physical object (tangible) or right (intangible) having a money value

an item is sources of wealth, expressed in terms of it a cost or less

frequently some other value; hence any cost benefiting a future period.

(2)Fixed Assets-Fixed assets imply properties of permanent nature by means of which the

concern is carried on & which are held for the purpose of earning income

& not for the purpose of resale. In other words Fixed Assets are thoseproperties, tangible or intangible ( i.e. Fixed tangible assets means these

properties perceptible to the senses as having physical substance like land,

building, plant & machinery, equipments, furniture & fixtures, drawings

etc. And assets is intangible if its value besides not in physical properties

of the assets itself, but in the right which its possession confers upon the

owners like goodwill, patents) which business has acquired for use in

producing goods or services & which are not for resale so long as they are

serviceable.

(3)Current Assets-Current Assets mean items of value, including cash, which, where not

cash, can be immediately or in the relatively short term, certainly within

the accounting period (year), accessed & turned into cash.

(4)Investment-Investment refers to disbursement of cash in order to acquire a fixed asset;

as the purchase of fixed asset is an investment not a cost.


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(5)Asset Manager/Officer-It is the officer who is responsible for managing the electronic fixed asset

register & associated management system.

(6)Custodian-Anyone who is responsible for the proper care, use & day-to-day

maintenance of a fixed asset.

(7)Depreciation-Depreciation is nothing but difference between the original cost and the

probable break-up value would represent the loss to be suffered by the

business organisation on account of use of such assets. Depreciation is an

accruing loss of value which begins with cost now and ends with scrap

value at the end of Fixed Assets useful life.


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CHAPTER: 6

OVERVIEW OF THE PROCESS

The basic phases of the fixed asset management process are:

Determine fixed asset needs; create a plan to fill those needs. Establish the nature, scope, and location of fixed asset management in the

organization structure.

Identify, document, and implement the policies, procedures, and controlsneeded to implement the plan.

Purchase the assets.

Receive, inspect, inventory, store, and distribute the assets Repair and maintain the assets.

Dispose of damaged, obsolete, or unneeded fixed assets. Record and report fixed asset transactions.

Monitor and evaluate the fixed asset management process.


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6.1 OVERVIEW OF DEPARTMENTS

Departmental Study of SLRH Purchase Department

Ownership:Hospital Purchase department run by hospital. It has not been out sourced

to any external agency.

Scope of Hospital Purchase department:

Studies have estimated that materials in larger hospitals accounted for

more than 40 per cent of total hospital budget. Material managementencompasses acquisition, shipping, receiving, evaluation, warehousing and

distribution of all goods, supplies and equipment for an organization. In

SLRH nursing units, laboratory, X-ray and other department make theirown purchases, negotiate prices and maintain their own inventory.

Purchasing is decentralized in SLRH

Activities for placement of orders Purchase records Purchase reports Maintenance of vendor relationship Forecasting and planning Checking invoices and Inspection


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PROCEDURE IN PURCHASE DEPARTMENT

Requirement from user department

Purchase De artment

Send ENQUIRY to the Vendors

Get QUOTATION from Vendors

Study and compare the uotation with our cost

Negotiate the uotation to fix the price

Place the ORDER to the Right

Follow up with the vendor

Get the Material

Inspectthe material

Stores Credit the material

GRN

Challan

Invoice

Payment to

Vendors

Finance

Department


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PURCHASE CYCLE

Other User

Department

P Request

Supplier

Purchase

Department

Stores Accounts

Department

Follow up

PO Acceptance

PO

Enquiry

uotation

Goods

POIR

PO

Inspection Report

Payment


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GENERAL STORE DEPARTMENT

Functions

Raw materials that are required in the production are store in stores.

Indent is made for the material required by the department. Purchase

Requisition is received from the department and the demand is send topurchase department. The purchase department will give the order for thematerial. The material will be received in the general stores and the

verification of quantity is done by general stores and quality is verified by

respective department.

If the material is not according to the demand or the requirement than

it is rejected and for that purpose rejection note is prepared and

material will be returned to the supplier.

GRN (Goods Received Note) - A record is also kept for stock and thenon-stock items. For the stock & non-stock items, it is directly delivered to

the concerned department requiring those goods.

For the stock items, a GRN (Goods Receipt Note) is prepared whichstates the name of supplier, the date on which is prepared, the GRN

Number, the description of the items as mentioned in the supplier bill

along with its quantity ordered, the P.O (Purchase Order) number & nameof department to which it will be forwarded. However, a separate GRN is

maintained for stock & non-stock items.

The original GRN clipped with the PTS (Purchase TransmittalSlip) & material requisition note, while the duplicate copy is kept with

receiving office.

ACCOUNTS DEPARTMENT

INTRODUCTION:

This company has finance cum account department which is mainly deal

with all transactions like wages, salary, expenditure, making Challan andinvoice, all receipt and payments etc. all this activity is done in TALLY

system and through this system all accounting report access at all locationsof S.L.RAHEJA.

OBJECTIVES

To reduce cash transactions

To record and maintain all monetary transactions of unit in SAP


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To provide required schedule for fund

To provide necessary information to all internal and external customers.

To provide MIS report monthly to management for accurate decision

making

To prepare annual revenue budget for proper control

To create cost control awareness by providing training.

FUNCTIONS

1. Accounts payable management

Invoice Verification

Payment scheduling

Disclosure

Bank reconciliation

Vendor reconciliation

Budget

2. Cash Management

Cash reconciliation IOU reconciliation

Fund Management

Statutory Payment

1. Accounts Payable Management

Invoice verificationInvoices are verified against the purchase orders made. The quantity andquality of the materials received as per the purchase order or not is seen. If

materials are not according to the purchase order made then amount is

deducted and then payment is made. Invoices are also verified for the

duties charged or whether CENVAT credit is received or not or whetherthat material is excise able or not. Payment is only made after the detail

verification of invoice. If the material sent is rejected then quantity

rejected is deducted from the actual quantity and payment is made for theapproved material.

Payment Section & preparation of ChequePayment is made to the vendors as per the auto scheduling of

Overdue invoices. As the name suggests, this section of the finance

department makes the payment of all. In case of stock & non-stock items

payable section received GRN (Goods Received Note)

On the basis of GRN received, the purchaser scarched and clippedwith the respective GRN & the same is forwarded to manager for his

signature & cheque is then accordingly printed & sent to the respective

head of the department. Separate files are maintained for open purchaseorders, one time purchase orders.


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Vendor ReconciliationIf any payment is due even after the due date then the ledger balances

is reconciled if money is not received by the vendors.

DisclosureAcknowledgement from the vendors is received by the accounts

Department. Accounts department verify about the payment made whetherit is received by the vendors or not through this acknowledgement.

Bank Reconciliation

Bank book and pass book is maintained is by the accounts department.

Difference in bank charges is reconciled by the accounts.

Budget

The expenses which are incurred for production, the estimation of these

expenses is sent by various plants to the accounts department. Aftergetting estimation from the entire plants budget is prepared by the

accounts department and sent to the head office for approval.

2. Cash management

A certain level of cash is maintained for working capital requirement. The

amount of cash maintained in the company should be neither too high nor

too low. If its too low then day to day activities can be hampered and if

its too high there is a risk.

Cash reconciliation

Cash balance is matched daily against the amount disbursed.Person to whom amount is disbursed submits a voucher as a proof of the

expenses made.

IOU reconciliationAny employee takes IOU for the office use or personal use. That

employee submits a voucher for the amount spent and left money is

returned. This amount is also reconciled against the voucher received.

Fund Management

Every department estimates the expense to be incurred in the comingmonth and gives this estimate to the accounts department. Some statutory

payments like electricity bills, water bills also included in these. Accounts

department intimate this to head office and ask for funds for theseexpenses.At the end of every month stock shown in SAP should be matched with

the physical stock. Audit for that is conducted on any day in a month.

Statutory PaymentsStatutory payments like GEB bills, water bills, and ETP bills are also

made by the accounts department.


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CHAPTER: 7

ACCOUNTING STANDARD 10 By ICAI

ACCOUNTING FOR FIXED ASSETS

The standard deals with the disclosure of the status of the fixed assets in

terms of value. The standard does not take into consideration the

specialised aspect of accounting for fixed assets reflected with the effects

of price escalations but applies to financial statements on historical cost

basis. It is important to note that from the date of AS 26 on Intangible

Assets, becoming applicable, the relevant paragraphs of this standard ( AS

10) dealing with patents and know-how have been withdrawn. An entity

should disclose the following infornmation relating to (i) the gross and the

net book values of fixed assets at beginning and end of an accounting

period showing additions, disposals, acquisitions and the other

movements, (ii) expenditure incurred on account of fixed assets in the

course of construction or acquistion, and (iii) revalued amounts substituted

for historical costs of fixed assets with the method applied in computing

the revalued amount in the financial statements.

FIXED ASSET REGISTER-

For the purposes of recording the fixed assets the proper register is

maintained is called Fixed Asset Register. An adequate fixed asset

register; manual or electronic, is integral to effective fixed asset

management. It is the basis of a fixed asset management information

system & should contain relevant data beyond that required for financial

reporting.

Fixed Asset Register (FAR ) is an accounting method used for major

resources of a business. Fixed Assets are assets such as land, machines;

office equipments, buildings, patents, trademarks, copyrights, etc. held for

the purpose of production of goods or rendering of services and are not

held for the purpose of sale in the ordinary course of business. Fixed assets

constitute a major chunk of the total assets in the case of all manufacturing

entities.

Even in the case of service entities such as hotels, banks, financial

institutions, insurers, mobile /telephone service providers etc. it has

become imperative to invest heavily in furnishing, equipment, and


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technology to attract, and retain customers. Just as it is important for a

person investing on the NASDAQ to know those investments, so it is

important for a business entity to have a list of its fixed assets. A Fixed

Asset Register is that list of assets.

A typical fixed asset register should include the following information:

Asset Definition Asset Number Asset Category Manufacturer Model Serial Number Location Department Purchase Date Purchase Price ( Cost at acquisition ) Accountable Manager Replacement Date Rate Of Depreciation Maintenance Costs

Therefore all fixed asset purchased or constructed must be recorded in the

fixed asset register, maintained by the Asset Manager /Officer & will be

subject to the requirements of that office with regard to item identification

& other relevant details. The fixed asset register shall serve as an

information system that provides reliable, relevant & timely data with

which to make informed asset management decisions. The fixed asset

register is linked to the accounting system using a fixed asset control

account.


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A] OBJECTIVES IN MAINTAINING A FIXED ASSET

REGISTER (FAR):

A FAR must be kept in order to be in compliance with legislation

governing corporations, companies, etc. It allows a company to keep track

of details of each fixed asset, ensuring control and preventing

misappropriation of assets. It also keeps track of the correct value of

assets, which allows for computation of depreciation and for tax and

insurance purposes. The FAR generates accurate, complete, and

customized reports that suit the needs of management.

A FAR also allows a company to keep track of fixed assets that are not

under simple, direct control of the company. This means owned and leased

assets, assets under construction, and imported assets. The FAR can also

be used to aid in capital budgeting and to keep track of amount provided

for Asset Retirement Obligation (ARO) in respect of each asset.

B] IDENTIFICATION OF A FIXED ASSET:

In a large corporation, the task of identifying and locating a specific fixed

asset can be difficult unless numbering is scientific, systematic, and up-to-

date. A common problem in most companies is the improper maintenance

of the FAR. Physical verification of fixed assets becomes a futile exercise

unless the FAR is properly maintained.

It would be advisable to use a scientific numbering technique to identify

fixed assets. The process of numbering fixed assets is called tagging. An

identification number (combination of alphabets, and numbers) is written

on the asset. Engraving the identification number on the asset is advisable

in the case of Plant & Machinery where there is heavy wear and tear.

A tag verifies the existence of assets and their location, aids in

maintenance, provides a common ground for communication between the

Accounts Department and the end-users and recording the net book value

of asset in case of sale / scrapping. It is not necessary to tag all fixed


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assets. Land, buildings and vehicles all have independent systems of

tracking in registration papers and survey numbers.

FORMAT OF FAR

Business

Group

Financial

Year

Asset

Group

code

Asset

Description

Own/Contract

ID

Analysis

Asset

Sub

Group

Quantity Invoice

No.

Invoice

Date

Month/Year WDV as of 31.03.2011

Opening

Balanceas on

01.04.2011

Additions

DuringApr-Sep 2011

Additions

DuringOct-Mar 2012

Total Additions

Apr2011-2012

Deductions

duringApr2011-

Mar2012

Total Block

before

Depreciation

Depreciation

%

Depreciation

on Opening

Block

Depreciation

on Additions

Depreciation

on

Deductions

Total

Depreciation

for 2011-2012

WDV

as on

31.03.2012


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C] Key Responsibilities of Fixed Asset Manager/ Officer-

1. Manage the Fixed Asset Register & ensure it is accurate, complete &reconciled to the general ledger through the fixed asset control account.

2. When triggered as a fixed asset purchase through the accounting system,ensure that the acquisition of each fixed asset is recorded with all relevant

details in the fixed asset register & that the relevant accounting entries,

including the fixed asset control/ clearing account , are correct.

3. Provide custodians with data from the fixed asset register on a regularbasis, seeking their endorsement of the accuracy of the register for fixed

assets under their control.

4. Action request for changes to fixed asset details in the fixed asset register.5. Preside over boards of survey procedures, stock-takes & inspections ofassets.

6. Arrange for tagging of fixed assets immediately after recording iscompleted.

7. Provide regular reports on the Ministrys fixed asset portfolio.8. Participate in planning forums to match fixed asset requirements with

program & service delivery standards & strategies.

9. Provide a meaningful description of the fixed asset to enable correctrecording of the fixed asset in the fixed asset register & ensure all relevant

fields are completed in the Fixed Asset Register for each asset.

10.Supervise fixed asset disposal action upon on receipt of approval.11.Contribute to the updating of the Strategic Fixed Asset Replacement Plan.


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CHAPTER 8

PLANNING FOR FIXED ASSETS-

Planning for Fixed Assets is a must in modern hospital set-up of our

country that each & every function is performed with the help of

machines. The area of planning is not only limited up to purchase of fixedassets, but is also cover area of use as well as disposal & replacement of

fixed assets. It was found in present study that planning for fixed assets

covers relating to:

1. Purchase of Fixed Assets2. Use of Fixed Assets3. Financing of Fixed Assets4. Repair & Maintenance of Fixed Assets5. Replacement Policy6. Insurance Policy7. Disposal of Fixed Assets

The following persons must participate in planning for fixed assets:

1. Managing Director2. CEO3. Secretary4. Chief Engineer5. Chief Accountant6. Purchase Manager7. Nominee of workers8. Financial Controller9. Head of Department

8.1 SERVICE LIFE OF FIXED ASSETS


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The Fixed Assets depends to a large extent on the estimated life of fixed

assets. For some fixed assets two types of lives are estimated, i.e.

(1)Legal life or physical life,(2)Commercial life.

The following points are also taken into consideration while estimating the

service life of Fixed Assets in Hospitals or any other industry of ourcountry.

(1)Conditions under which it is used-The date to which a fixed asset is put to use effect its service life. Many

fixed assets can be put to alternative uses & are used under varying

conditions. Usually continuous operation of a fixed asset at a high will

shorter its service life.

(2)The General Maintenance Policy-If a fixed asset is kept in constant repair by granting attention to small

repairs & replacement of part from time to time, it will enjoy a longer lifethan the one which is constantly neglected.

(3)Salvage Value of Fixed Assets-Consideration is also given to salvage value of fixed of that portion of the

service life already expired & also of that portion of the cost previously

recorded.

(4) Engineering Investigation of Fixed Assets-Investigations of past service life & salvage affect engineering, accounting

& statistical methods. The best possible forecast of the life of a fixed asset

is made with the help of engineering investigations of condition covering

the design & employment of such plant in the past & the extent to which

such conditions still prevail in that Hospital plant.

(5)Past Experience & Future Expectation-The experience of the past so faras it is still pertinent, and the expectation of the future so far as it is

presently determinant of a current rate of depreciation, is not lost sight of.


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CHAPTER: 9

DEPRECIATION (DEFINITION AND ITS METHODS):

Except land, all fixed assets have a limited life. During such period, due tocontinuous use and/or lapse of time, the value of some assets starts

decreasing. Such a gradual decrement of value of assets is called

Depreciation. Hence, depreciation can be defined as a decline in the value

of an asset due to constant use.

Since these assets have limited life, sooner or later they have to be

replaced. At the time of replacement, the business incurs heavy cash

outflow, which can create liquidity problem in that year. In order to avoid

such problem, a fixed amount out of profit is set aside as depreciation

account. By the time the fixed asset expires, sufficient amount of fund willbe accumulated in depreciation account, which, then can be used to buy

new asset. Hence, the process of setting aside a fixed amount as expense

in depreciation account is called Depreciation.

I. Characteristics of DepreciationThe following are some of the features of depreciation:

Depreciation may be physical and functional. Depreciation is a gradual/permanent and continuous decrease in the utility

value of a fixed asset and it continues till the end of useful life of an asset.

Depreciation arises due to the use of assets in productive activities. The primary object of depreciation is to allocate expired cost of fixed

assets against a number of accounting periods.

Depreciation is charged in respect of fixed assets only i.e., building,machinery, equipment and furniture etc.

Depreciation is a charge against profit. Total depreciation of an asset cannot exceed its depreciable value (cost

less scrap value).

II. Causes of DepreciationDepreciation is a measure of reduction in the use-value of an asset. It can

be physical deterioration or decrease in the market value. The primary

causes of depreciation are as follows:


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Wear and Tear: Due to constant use, assets get worn or torn out.

Exhaustion: Exhaustion is the depletion of some assets due to continuoususe and lapse of time. In case of mines and oil wells, the continuous

extraction of minerals or oil, a stage comes when the mine or well getscompletely exhausted and nothing is left.

Obsolescence: Some assets are discarded before they are completely wornout because of changed conditions. This is the case when an asset becomes

usefulness because of technological advancement, new invention, change

in style etc. in that asset.

Efflux of time: Certain assets get decreased in their value with the passageof time. This is true in case of assets like leasehold properties, patents and

copyrights etc.

Accidents: Accidents can cause depreciation in the value of the asset.

III. Objectives of making provision for depreciationDepreciation accounting is a must for every business for attaining the

following objectives:

To ascertain net profit: Depreciation is the expense for the business.Hence to ascertain the net profit, it must be included in the total cost of

sales.

To depict the true financial position of the business: The balance sheet depictstrue financial position of a business at a point of time. To depict the true

financial position of the business the assets should be shown in balance

sheet not in its original cost but at the depreciated cost. That is all fixed

assets should be shown at cost less the amount of depreciation suffered by

them till the date of the balance sheet.


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To ascertain cost of production: Depreciation is an expense. Hence it isnecessary to charge depreciation in the total cost of production to fix true

sales price of the goods and service.

Replacement of assets: One of the primary objectives of depreciation is theprovision for the replacement cost on the retirement of original assets.

To ascertain income tax: If depreciation is not charged, the operation willshow more profit. As a result, the taxable income will be higher. Hence,

depreciation is charged for the correct ascertainment of total taxable

income.

To follow the company act: According to company act, it is compulsory tocharge depreciation on fixed assets. The depreciation rates as per

companies act 1956 is as follows:

Accounting Standard 6 by ICAIDepreciation AccountingThis standard requires that the depreciable amount of a depreciable asset

should be allocated on a systematic basis to each accounting period during

the useful life of the asset and the depreciation method selected should be

applied consistently from period to period.

If there is a change in the method of providing depreciation, such a change

should be treated as a change in accounting policy and its effecr

(deficiency or surplus arising from retrospective recomputation of

dereciation as per new method) should be quantified and disclosed.

In case any depreciable asset is diposed off, discarded or demolished, the

net surplus/deficiency, if material, should be disclosed separately. Thedepreciation method used and depreciation rates are also required to be

disclosed in the financial statements.

IV] BASIS OF CHARGE


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Every company charges depreciation on different basis & no any unit is

bound to adopt a particular method for charging depreciation. In this

regard, the actual practises by Hospital of our country is determined.

Name Of Assets Depreciation Rate (%)

1.Residential Flat for doctors 5

2.Research & Hospital Building 5

3.Land -

4.Research & Hospital Equipment 20

5.Vehicles 25.89

6.Laundry 13.91

7.Office Equipments 13.91

8.Fire Fighting Equipments 13.91

9.Electrical Installation 20

10.Computers 4011.Furniture & Fixtures 18.10

12.Kitchen Equipments 13.91


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CHAPTER9.1

Introduction

In our introduction to accounting for fixed assets, we described howbusinesses need to account for the consumption of fixed assets over time

in a way that reflects their reducing value. The term given to this

consumption is depreciation. This revision note explains the various

methods available to calculate depreciation and highlights how subjectivethis calculation can be. Other revision notes provide worked example of

each depreciation method.

METHODS OF DEPRECIATION CHARGES

There are several methods for calculating depreciation, generally based on

either the passage of time or the level of activity (or use) of the

asset..Several methods are available for computing depreciation, each of

which under the appropriate circumstances achieves a proper matching of

the cost of service capacity used up in the period with the revenue earned

in that period. The most common methods are usually adopted by business

houses for charging depreciation are:1. Straight Line Method2. Written Down Method

1. In straight line depreciation method, depreciation is chargeduniformly over the life of the assets. In this method residual value of

the asset is subtracted from its cost to get the depreciable amount. The

depreciable amount is than divided by the useful life of the asset in

number of periods to get the depreciation expense per period. Due to

the simplicity of the straight line method of depreciation, it is most

commonly used depreciation method.

Formula to calculated Straight Line Method:

Annual depreciation expense=Cost of fixed assets-residual value

____________________________

Useful life of assets (years)
http://tutor2u.net/business/accounts/assets_fixedassets_intro.asphttp://tutor2u.net/business/accounts/assets_fixedassets_intro.asp


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For example, a vehicle that depreciates over 5 years, is purchased at acost ofRs17,000, and will have a salvage value ofRs2000, will depreciate

at Rs3,000 per year: (Rs17,000 Rs2,000)/ 5 years = Rs 3,000 annual

straight-line depreciation expense. In other words, it is the depreciable

cost of the asset divided by the number of years of its useful life.

This table illustrates the straight-line method of depreciation. Book valueat the beginning of the first year of depreciation is the original cost of theasset. At any time book value equals original cost minus accumulated

depreciation.

Book value = original cost accumulated depreciation .

Book value at the end of year becomes book value at the beginning of next

year. The asset is depreciated until the book value equals scrap value.

If the vehicle were to be sold and the sales price exceeded the depreciated

value (net book value) then the excess would be considered a gain and

subject to depreciation recapture. In addition, this gain above the

depreciated value would be recognized as ordinary income by the taxoffice. If the sales price is ever less than the book value, the resulting

Book value at

beginning of year

Depreciation

expense

Accumulated

depreciation

Book value at

end of year

Rs17,000(original cost) Rs 3,000 Rs 3,000 Rs 14,000

Rs 14,000 Rs 3,000 Rs 6,000 Rs 11,000

Rs 11,000 Rs 3,000 Rs 9,000 Rs 8,000

Rs 8,000 Rs 3,000 Rs 12,000 Rs 5,000

Rs 5,000 Rs3,000 Rs 15,000 Rs2,000(scrap value)
http://en.wikipedia.org/wiki/Depreciation_recapturehttp://en.wikipedia.org/wiki/Depreciation_recapture


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capital loss is tax deductible. If the sale price were ever more than theoriginal book value, then the gain above the original book value is

recognized as a capital gain.

2. Written Down Value (W.D.V) OR Reducing balance methodDepreciation methods that provide for a higher depreciation charge in the

first year of an asset's life and gradually decreasing charges in subsequent

years are called accelerated depreciation methods. This may be a more

realistic reflection of an asset's actual expected benefit from the use of the

asset: many assets are most useful when they are new. One popularaccelerated method is the W.D.V. method. Under this method the book

value is multiplied by a fixed rate.

Annual Depreciation = Depreciation Rate * Book Value at Beginning

of Year

Single declining balance method:

Dn = Depreciation charge during year n I = Cost of the asset, including installation expenses

a = multiplier

Single Declining Balance Method* For single declining balance method a=1/N.

* N is the useful life of the asset.

*Ex: For a Rs10,000 car (a 5 year asset)

Year Depreciation Book Value

1 Rs10,000*1/5 = Rs 2,000 Rs 8,000

2 Rs 8,000 * 1/5 = Rs 1,600 Rs 6,400

3 Rs 6,400 * 1/5 = Rs 1,280 Rs 5,120

4 Rs 5,120 * 1/5 = Rs 1,024 Rs 4,096

5 Rs 4,096 * 1/5 = Rs 819.20 Rs 3,276.80


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CHAPTER 10

ADVANTAGES OF FIXED ASSET MANAGEMENT

Fixed assets management is an accounting process that seeks to track fixed

assets for the purposes of financial accounting, preventive maintenance,

and theft deterrence.

Many organizations face a significant challenge to track the location,

quantity, condition, and maintenance and depreciation status of their fixed

assets. A popular approach to tracking fixed assets utilizes serial

numbered Asset Tags, often with bar codes for easy and accurate reading.Periodically, the owner of the assets can take inventory with a mobile

barcode reader and then produce a report.

Lifecycle Management means asset decisions should be made with cost

consideration over the asset life from planning through the disposal.. So

the entire practice of acquiring, using, and getting rid of Fixed Assets is

known as Fixed Assets Life Cycle Management

The specific activities and goals involved in life cycle management

differs among different kinds of FIXED Assets, but generally FIXED

ASSETS life cycle management makes use of best practice methods for

planning, accounting, deployment, usage, and maintenance, in order to

reach these objectives for the organization's collection of FIXED Assets:

Ensure FIXED ASSETS availability where and when needed.

Minimize the risk of FIXED ASSETS failure or breakdown before the endof FIXED ASSETS economic life.


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Maximize the return (gains) from the FIXED ASSETS.

Ensure that FIXED Assets are used productively throughout the FIXEDAssets economic life, and they are not wasted or idle. This may involveworking with other management to improve or re-design processes that

impact FIXED ASSETS utilization and FIXED ASSETS productivity.

Sell or otherwise divest the FIXED Assets that are idle or unproductive.

Set priorities for FIXED Assets acquisition and replacement and planfuture expansion or reduction of the FIXED Asset base.

Reaching these objectives requires good knowledge of: Expected gains or returns from the FIXED ASSETS.

FIXED Assets lifecycle, total cost of ownership, including maintenancecosts and operating costs.

Advancements and the current state of technology for the FIXED ASSETSclass. This is obviously true for computing FIXED Assets, of course, but

is also important for,

Any major FIXED Asset class based on constantly improvingtechnologies, such as medical or laboratory equipment.

FIXED Assets subject to changing requirements for fuel efficiency oremissions.

FIXED ASSETS reliability and or/risks to FIXED ASSETS availability

Available choices in FIXED ASSETS leasing vs. buying, and theimplications of each approach in terms of upgrade/replacement flexibility,

responsibility for maintenance, position either on or off the balance sheet,and potential tax liabilities and tax savings.


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The FIXED Assets depreciable life and its economic life.

CHAPTER: 11

LEGAL ASPECTS OF PURCHASING OF FIXED ASSETS

The materials manager must know the legal aspects that are relevant to his

profession. The Indian Contract Act, 1872 and the Sales of Goods Act,

1930 cover some of the important legal aspects. It may not be possible that

the materials manager is well conversant will all the branches of law,

which are essential for his profession-namely.

11. 1 INTERNATIONAL PURCHASING

The stages involved to accomplish the purchases are discussed below:

(1)Most of the countries impose restrictions on the import of goods. Animporter is not free to import goods of his choice. An importer cannot

import goods without a valid import licence. Importers have to obtain the

licence from the Government. In India, the import trade is controlled

under the Imports & Exports (Control) Act, 1947.


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(2) After obtaining the licence, the importer has to arrange for obtaining therequired amount of foreign exchange. In India, foreign exchange is

controlled by R.B.I.

(3)Now the importer will be involved with foreign source of supply,manufacturing unit of his company, engineering department &

Government Institutions such as MMTC, DGTD, and STD etc.

(4)Special documents are required in foreign trade. The commonly useddocuments are as follows :

(a)Bill of lading(b)Certificate of origin(c) Invoice(d)Insurance policy(e)Marking of packages, etc.

I] Bill of Lading

It is the most important document which accompanies bill of exchange

drawn under letters of credit. Having received the mates receipt, the

forwarding agent will present this mates receipt at the office of shopping

company and in exchange will get a document called Bill of Lading. In

bill of Lading the exporter fills in the following particulars:

(1)Name of the exporter ;(2)Particulars of the goods;(3)Marks, number of packages;(4)

The port of destination;

(5)Name of the ship;(6)Place of loading;(7)Freight;(8)Name of the consignee;(9)Date


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The bill of Lading is a document in which the shipping company officially

acknowledges the receipt of goods acceptable to be carried in one of its

ships to the port of destination specified therein in return for the payment

of freight. Thus, the B/L (Bill of Lading) is both receipt and the written

contract for goods to be shipped. It is very important document of foreign

trade.

Importance of Bill of Lading

The importance of B/L may be summarized in the following manner:

(i) Bill of lading is a semi-negotiable instrument being a document of title tothe goods.

(ii) Bill of lading is an acknowledgement of receipt of goods on board theship.

(iii) Bill of lading is an evidence of agreement between the shipping companyand the exporter, which covers all, terms & conditions.

II] Letter of Credit

Letter of Credit (L/C) is a document issued by a banker authorizing

another banker to whom it is addressed to honour the cheques of the

person named therein to the extent of a specified amount. It is used in

foreign trade as the most convenient mode of securing payment from the

importer against the goods shipped to him.

A letter of credit is open letter of request by one person, usually a

merchant or banker requesting some other person or persons to advance

money or give credit to a third party named therein for certain and promise

that he will repay the same to the persons advancing the same or acceptbills drawn upon himself for the like amount.

Importance of Letter of Credit

Letter of credit (L/C) plays a most important role both in external and

internal trade. The reason is that exporters & importers rarely know each

because of long distance. This is the most widely used method of

remittance in export trade because the exporter may require assurance of

the credit worthiness of the importer. For this purpose, a bank in the

importing country issues letter of credit to the foreign dealer.

Advantages-

(1)To provide absolute assurance-The letter of credit gives absolute assurance and certainty in payment by

avoiding the risk, as the bills of exchange drawn under the L/C will be


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(b)(D/A) Documents against Acceptance: In this case, the banker isinstructed to handover the shipping documents to the importer when he

gives requisite acceptance on the bill of acceptance.

(2)Bank advances under Hypothecation of Shipping DocumentsIn this system, the exporter of the goods can get either the whole or an

agreed percentage of the value of a shipment by pledging or hypothecating

the documents with a banker having branches in the importing and

exporting countries. This arrangement amounts to advances made by the

banker who realizes the amount from the importer. To cover the risk of

non-payment on the part of importer, the banker, obtains a letter of

hypothecation, which gives power to the bank to sell the goods in the open

market, if required.

(3)Direct Draft or BankersIn this system, the banker accepts the bill, drawn by the exporter of goods,

on behalf of the importer. After acceptance the bill is returned to the

exporter who can discount the bill easily.

((((((9999kkkkkkklk

CHAPTER:12

ANALYSIS & INTERPRETATIONS

RATIO ANALYSIS:Ratio analysis is a powerful is a powerful tool of financial analysis. A ratiois defined as "The indicated quotient of two mathematical expression" and

as "The relationship between for evaluating the financial position and

performance of a firm.


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The absolute accounting figure reported in financial statement do notprivate a meaning full understanding of the performance and financial

position of a firm. An accounting figure conveys meaning when it is

related to some other relevant information.

Ratios help to summarize large quantities of financial data and to make

qualitative judgment about the firms financial performance.

1. Fixed Assets to Net worth Ratio:

This ratio establishes the relationship between Fixed Assets and Net

Worth.Net Worth = share capital + Reserves& surplus + Retained earnings.

Fixed Assets to Net Worth Ratio = Fixed asset

---------------------- X 100Net Worth

T h i s r a t i o o f " F i x e d A s s e t s ' " ' t o " N e t W o r t h "indicates the extent to which shareholder be f inanced byshareholders, equity including reserves surpluses and retained earnings.

If the ratio is less than 100% it implies that owners funds are

more than total Fixed Assets and a part of the working capital isprovided by the share holders. When the ratio is more than 100% it

implies that owners funds are not sufficient to finance the fixed assets and

the finance ahs to depend up on outsiders to finance the fixed assets. Thereis no "Rule of Thumb" to interpret this ratio but 60%to 65%is considered

to be ratio in ease of industrial undertaking.

2. Fixed Assets Ratio:-This ratio explained whether the firm has raised adequate long term funds

to meet its fixed assets requirements and is calculated as under

Fixed asset (after depreciation)_________________________

Capital Employed

This ratio gives an idea as to what part of the capital employed

has been used in purchasing the fixed assets for the concern. If

the rati o is less than one i t is good for the concern.

3. Fixed Assets as a Percentage to Current Liabilities:The ratio measures the relationship between fixed assets and the funded

debt and is a very useful so the long term erection. The ratio can becalculated as below.

Fixed assets as a percentage to current liabilities =

Fixed asset

--------------------


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6. Gross Capital Employed:The term "Gross Capital Employed" usually comprises the total

assets , fixed as well as current assets used in a business.

Gross Capital Employed = Fixed Assets + Current Assets

7. Return on Fixed Assets:Profit after Tax

------------------------ x 100

Fixed Assets

This ratio is calculated to measure the profit after tax against the amount

invested in total assets to ascertain whether assets are being

utilized properly or not, the higher the ratio the better it is for theconcern.

CHAPTER: 13

CONCLUSIONS

Good fixed asset management procedures can greatly enhance the

efficiency with which a department produces outputs. Regardless ofwhether a centralized or decentralized approach is taken, the basic

components of fixed asset management are the same. Procedures should

be established to evaluate and screen asset proposals.


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Those developing these procedures need to consider the budgeting andexpenditure control systems operated by the department. In particular,

clear financial investment criteria should be established.

As part of the evaluation process, financing options and lease or buyalternatives should be considered. Once the purchase or construction of an

asset has been approved, the acquisition needs to be carefully planned andmanaged. This includes detailed specifications and cost monitoring.

The attention paid to the ongoing use of fixed assets is another important

aspect of asset management. Responsibility for day-to-day asset

management should be assigned to those who are able to influence thelevel of usage. These responsibilities include training, asset maintenance

and servicing, and risk management.

Maintaining an appropriate management information system will helpminimize costs associated with this phase of an assets life.

Fixed Assets analysis involves calculating the earnings potential, use, anduseful life of Fixed Assets. Running a successful Hospital requires a well-

developed technology and well-maintained Equipment. After doing a

research on the fixed assets of S.L.RAHEJA HOSPITAL, I concluded that

the company is having a huge amount of Fixed Assets amounting to Gross

total of 13360.63 Cr. The company has invested huge amount in the Fixed

Assets, which are having a potential of high productivity and efficiency.

It is really difficult to manage such huge amount of Fixed Assets but the

company management has successfully able to manage these assets.

Also the Fixed Asset Register of the company does not provide

the precise information and has some errors, which are to be rectified to

manage the fixed assets of the company in a better way. It was also

observed that most of the assets are properly maintained and are working

at its maximum efficiency. There is some equipment which need to be


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disposed off or needs a replacement otherwise is well maintained. It is also

concluded that the employees in the plant are not having information

regarding the assets. They dont have the assets no. or the acquisition cost

or the year of acquisition, etc.

CHAPTER14

LIMITATIONS OF THE PROJECT

The Limitations that are faced during the project study are as follows:

Possibility of error in the Fixed Asset information as the Fixed Asset register of thecompany does not give a detailed information about the fixed assets for example the

quantity purchased, etc. and also there are spelling errors in the register.

Management generally not willing to reveal their internal strategies regarding the FixedAssets to combat with the competitor. So, the information, which was provided, wasbasic.

Also management not providing balance sheet & Profit & loss A/c.

CHAPTER: 15

SUGGESTIONS AND RECOMMENDATIONS


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I would like to suggest to management the suggestions and

recommendations are as follows:

Emphasis on Fixed Assets MGT:The company should give emphasis to Fixed Asset Management, which

will focuses on Acquisition of new Fixed Assets, depreciation on thecurrent Assets, Disposal of Fixed Assets and replacement of the obsoleteFixed Assets.

Giving Assets Number-Every Fixed Asset should be given an assets number, which is to be

written on that particular fixed asset as it is very difficult to physically

locate a particular asset present in the asset register.

Physical AuditThere should be a physical audit of all the fixed assets in order to know,which assets is to be disposed and which is to be replaced. The Asset

disposal / transfer request form should be used in case of any transfer ordisposal.

Giving regular reports-Every department should give a report of all the assets with the departmentto the personnel in the account department who looks after Fixed Asset

Management after every six months. The reporting from each department

should include information of the total assets available, the assets, whichare disposed off, and the assets newly acquired.

Income through landThe company has a surplus land available, which should be given to some

organization on lease. This will produce an income for the company.

GIS ( Geographic Information System)Company should have an integrated GIS (geographic information system)

to locate fixed assets.


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CHAPTER: 16

BIBLIOGRAPHY

Webliography:

www.fortishealthcare.com

www.wikipedia.org

www.indiainbusiness.nic.in

Referance Book:Fixed Asset Management- Mukesh Jainara
http://www.fortishealthcare.com/http://www.fortishealthcare.com/http://www.wikipedia.org/http://www.indiainbusiness.nic.in/http://www.indiainbusiness.nic.in/http://www.indiainbusiness.nic.in/http://www.wikipedia.org/http://www.fortishealthcare.com/