Financial Accounts

Semester I :: Part Time :: NLDIMSR

Who ?
   

Prof. Abhishek Patodia - Abhishek MBA NLDIMSR Equity Research Analyst 3 yrs Current occupation: Homemaker

When ?


1st Sem: Financial Accounts

MFM

Contact:
Level of Emergency Level I Basic Hows my son doing? Level II Intermediate My review on Delhi Belly Level III Advanced What do we have for quiz this weekend? Level Z Off the Roof Do we really have a quiz tomorrow morning? Contact details Session Day After-Class abhishekpatodia@gmail.com (Expect a reply by EO next day) +91-98201 74447 (09:00 AM to 09:00 PM) +91-98201 74447 +91-93240 74447 (24 x 7)

What?


Primary Objectives
Share knowledge/experience REDISCOVER/Learn/understand the preparation of financial accounts Build upon this understanding for further analytical purpose

What My Objective?


My objective is not to make your life miserable My objective is not to overload you with irrelevant assignments or make-work tasks My objective is to make this class relevant, useful, stimulating, fun and enjoyable.
You may have many commitmentsbut, the lowest cost, lowest effort approach to benefit from and cruise through this class is to attend class!!

Why?


 

Getting acquainted with the financial reports of the company Significance, limitations of financial accounts How are they prepared? How to read between-the-lines? Forms basis for advanced analysis next semester Useful for your career as:
Analyst, RMs, Personal

How?


Lecture Notes
Already given. Contains brief description and selected problems on each topic. Material should suffice under normal circumstances

A Quiz
Comprehensive list of various accounts used in financial reports

Grading
    

2 short tests Attendance Total Internal Term-end exam Total

2 x 10

100 x 70%

20 pts 10 pts 30 pts 70 pts 100 pts

Financial Statements


Used extensively by internal users

Management
   

Performance evaluation Competitive analysis Investment decision Evaluation of targets Is this company going to meet its payroll and will the stock options be worth anything?

Current & future employees



Financial Statements


Used primarily by external users

Lenders
 

Loan decisions Monitoring Stock recommendations Valuation for M&A and IPOs Tax collection Policy framework

Financial Intermediaries (Analysts)



Investment Bankers


Government
 

Financial Statements - Components



Income Statement (P&L Statement)

Income, expenses, profits, losses during a period

Balance Sheet
Assets (owns) and liabilities (owes) as of a date

Cash Flow Statement

Movement of cash during a period

Financial Statements - Analysis



Funds Flow Statements

Where are the funds coming from Where are the funds applied to

 

Cash Flow Statement Ratio Analysis

Trend analysis Cross-sectional analysis

What the course is NOT about?

 

Journals and ledgers Extreme details of financial reporting rules and financial statement preparations

Accounting Concepts
  

Accrual concept Matching revenue-cost concept Conservatism

Profit & Loss Account for the year ending ___________________ Rs. Gross Sales Less: Sales Return Less: Excise Duty Net Sales Less: Cost of Goods Sold Raw material consumed Wages Direct overhead expenses Gross Profit Less: Selling & Admin exp. Salaries Distribution expenses Audit fees Operating Profit Add: Other Income/gains Less: Other expenses/loss EBITDA Less: Depreciaition & Amortisation EBIT Less: Interest expenses PBT Less: Provision for taxation Net Profit for the year Rs. 1000000 (10000) (100000) Rs.

890000

150000 200000 120000

(470000) 420000

75000 100000 10000

(185000) 235000

10000 (12000)

(2000) 233000 (33000) 200000 (50000) 150000 (49500) 100500

Balance Sheet as at 31 Macrh 2010 Liabilities Shareholders' Funds Share Capital Reserves & Surplus Secured Loans 10% Bank loan 12% Debenture Unsecured Loans Fixed Deposits Current Liabilities & Provisions Current Liabilities Sundry Creditors Bills Payable Expenses Outstanding Provisions Provision for taxation Provision for Dividend

Rs. 10000 1800

Rs.

Assets Fixed Assets Land 11800 Plant & Machinery Vehicles Furniture 32000 Investments

Rs. 10000 20000 5000 2000

Rs.

37000 10000

12000 20000

5000 1000 1500 1200 1000

Current Assets, Loans & Advances 10000 Inventories 5000 Sundry Debtors 7000 Cash/Bank 1500 Prepaid Expenses 500 Advance to employees 1500 15500 Misc. Expenditures (to the extent not w/off) Deferred expenditure 1000 9700 63500

63500