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RECENT TRENDS IN PRESENTATION OF
FINANCIAL STATEMENT
Presented by:-
Heli Modi
Juhi AgrawalKrishna Iyer
Sagar Parmar
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3
Financial Statements
Financial statements provide information aboutthe financial activities and position of a firm.
Important financial statements are:-
Balance sheet
Profit & Loss statement
Funds flow statement
Cash flow statement
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Purpose And Status
Assist prepares of financial statements in
applying accounting standards,
Assist the accounting standards Board in the
development of future accounting standards,
Assist auditors in forming an opinion
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To show the results of the stewardship or the
accountability of management for the resources
entrusted into it.
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Main matter is printed in Black ink, but
coloured ink are also used by many companies.
Typography is applied most carefully, many
titles of balance sheet and profit n loss a/c are
given in bold types.
Many companies use Logos on top of everypage.
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E.g.
96th ANNUAL REPORT 2002-2003 TATA
STEEL
OR
HINDUSTAN LEVER LIMITED
REPORT AND ACCOUNTS,2002
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Index or contents
Most of companies at start give index of index
of details inside the reports.
E.g.,
Tata Iron and Steel company Ltd.,
I.T.C. Ltd.,
Bata India Ltd.,Hindustan Lever Ltd., on first page give
only an index.
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Whereas,
Reliance Industries Ltd.,
Indian Aluminum Co. Ltd. &
Tata Press Ltd. give no index.
Raymond Ltd.,
Ashok Leyland ltd. & others
In half a page give an index & in the other half
give names of directors, auditors & address of itsregistered office.
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Name of Directors or Management
Team
Companies mostly on the first and second inside
page give-
names of directors, solicitors, names of
bankers, details of head office, registered office,
transfer agents and others.
Many companies give names and coloured
photographs of management team or directors.
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Financial Highlights or Facts at a
glance
In order to draw the attention of shareholders and public,
highlights of years working or financial review are
given.
Some companies present financial review or progressunder following headings:
1) Facts at a Glance
2) The Year in Review
3) Facts in Nutshell
4) Digests of Results. E.g. Raymond Ltd.
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Notice of Annual General Meeting
Companys annual report is to be presented inthis meeting.
Every company adopt different methods.
E.g :-
Century Textile and Industries Ltd.,
Bata India Ltd., etc,
printed their notice along with their annual
report itself.
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Britannia India Ltd.,
ITC Ltd.,
Spic Ltd.,
Tata Iron and Steel Company Ltd.,
Steel Authority of India, have printed
notice separately.
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Chairmans Statement
Statements or speech is included by most
companies in their annual reports.
They also print it as a part of the report.
Various activities of a company are describedin details in these speech.
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Directors Report
According to Section 217 of companys act
director should include details
Some of them are:-i. Financial Results,
ii.Appropriation of profit to Reserves,
iii.Recommendation of Dividend,
iv.Production and Sales
v. Troubles encountered ,etc
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Acc. to Sec. (22A)
Boards report shall include DirectorsResponsibility Statement indicating:-
I. Proper explanation relating to materialdepartures.
II. Selecting such accounting policies andapply them so that to give true and fair view
of the state of affairs
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III. Proper and sufficient care for the
maintenance of adequate accounting records
in accordance with the provisions of this act
for the safeguard of the assets of thecompany.
IV. Prepare the annual accounts on a goingconcern basis.
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Auditors Report
Acc. sec 227(2) of Companies Act, the auditor
of a company has to make a report on balance
sheet and p&l a/c.,for shareholders.
It should be stated that has obtained all the
information and explanations.
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Under powers obtained from companies act,
the central govt.promulgated manufacturing
and other companies(auditors report) order in1988.
The order should state that certain mattersshould be mentioned in it manufacturing and
other specified companies.
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Balance sheet
According to law:-
A company has to present previous years
figures in it.
Many companies print current years figure in
bold letters or vertical light coloured screen stripe
and some in different coloured ink.
ISPAT INDUSTRIES LIMITED
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BALANCE SHEET
AS AT 31ST MARCH, 2001 Rs crore
2001 2000
SOURCES OF FUNDS
1. Shareholders' Funds
Share Capital 978.07 901.55
Advances against Share Capital 244.3 96.46
Reserves & Surplus 746.77 874.08
1969.14 1872.09 2. Loan Funds
Secured Loans 4989.26 3582.6
Unsecured Loans 630.09 1088.29
5619.35 4670.89
TOTAL 7588.49 6542.98
APPLICATION OF FUNDS
1. Fixed Assets
Gross Block 3470.36 1640.28
Less: Depreciation 704.01 498.14
Net Block 2766.35 1142.14
Capital Work -in-Progress 2093.31 2740.66
Pre-operative exp. etc. 1715.74 2231.85
6575.4 6114.65
2. Investments 130.87 135.79
3. Current Assets, Loans & Advances
Inventories 257.37 259.48
Sundry Debtors 389.69 250.4
Cash & Bank Balances 53.9 77.7
Loans, Advances & Deposits 1018.31 907.611719.27 1495.19
Less: Current Liabilities & Provisions
Liabilities 1150.7 1185.39
Provisions 18.86 18.61
1169.56 1204
Net Current Assets 549.71 291.19
4. Miscellaneous Expenditure 134.37 1.35
(To the extent not written off or adjusted)
5. Profit and Loss Account Debit balance 198.14 _ TOTAL 7588.49 6542.98
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Profit and loss account
A for of balance sheet is given in schedule VI
of companies act 1956,but not of a profit and
loss a\c.
It has been made compulsory to present certain
details which the companies can present intheir own way.
ISPAT INDUSTRIES LIMITED
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ISPAT INDUSTRIES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31ST MARCH
2001 2000
INCOME
Sales & Job Work (Net) 2238.89 1425.48
Other Income 25.18 11.65TOTAL (A) 2264.07 1437.13
EXPENDITURE 3.95 33.7
Decrease in stocks 3.95 33.7
Raw Materials Consumed 823.04 778.15
Purchases of Finished Goods 7.77 9.32
Payments to & Provisions for Employees 43.99 21.79
Excise Duty 269.94 118.83
Mfg., Dist., Sell. & Admin. Expenses 890.84 306.72Interest & Finance Charges 345.96 100.13
Depreciation 206.33 79.89
Less: Transfer from Revaluation Reserve 15.32 15.32
TOTAL (B) 2576.5 1433.21
Profit/(Loss) before Taxation (A+B) 312.43 3.92
Less: Provision for Taxation 0.03 0.32
Add: Provision for Taxation written back 0.07
Profit/(Loss) after taxation 312.46 3.67
Less: Balance brought forward from Previous Year 100.52 106.59
Transfer from Debenture Redemption Reserve 8.09
Transfer from Taxation Reserve 0.73
Transfer from General Reserve 13.07 _
Profit/(Loss) available for appropriation -198.14 118.35
APPROPRIATIONS:
Transfer to Debenture Redemption Reserve _ 17.83
Balance carried to Balance Sheet -198.14 100.52
TOTAL -198.14 118.35
(Rs. crores)
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Fund flow statement
A statement is prepared showing the sources aswell as the application of funds.
Most companies attach such statements with
annual reports
This statement is prepared to show fund changes
between two reports.
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NOTE :-
According to revised standar-3 every
Indian every company has to present its cash
flow statement in place of fund flow statement
.
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Cash flow statement
This is a statement showing cash received &
cash spent during an year.
Generally most companies present cash flow
statement with financial statements.
Indian C.A institute by modifying Accounting
standard 3 has made it compulsory to present
this statement with B/S & P & L a/c
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NOTE:-
Only changes in cash that has taken
place during the year are considered.
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Following are the companies which have
presented Cash Flow Statement in their annual
a/c Hindustan lever ltd
Reliance industries ltd
Raymond ltd Tata engineering & Locomotive Co. ltd
Tata Chemicals ltd
Philips India ltd
I.F.C.I LTD
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Sources and Uses of Funds and Cash
Flows
Sources of funds or cash flows:-
funds from operations
sale of fixed assets
issue of share capital
borrowings
Uses of funds:-
losses
purchase of fixed assets
repayment of borrowings
payment of dividends
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Accounting Ratios
Companies gives information on important
accounting ratios in annual reports.
Useful to prospective investors, shareholders,
creditors, govt. & others.
Companies profitabilty, liquidity, efficiency
can be known.
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These includes :-
1.Return on equity capital
2.Earning per share3.Dividend coverage
4.% of dividend
5.Book value of equity share6.Profitability
7.Capital turnover
8.Stock turnover9.Turnover of working capital
10.Current ratio
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Inflation Accounting
It is desirable that changes should be made
according to the changes in price level.
Fixed assets are shown at their original cost
lesss depreciation
Current assets like stock are shown at market
or cost whichever is less
All transactions which have taken place during
the year are shown at their price at that time.
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While preparing a.c changes in the prices are to
be considered to show a stable condition.
Depreciation is calculated on original cost of anasset.
To show changes in price level, a separate
statement is prepared. According to modern trends many companies
attach inflation accounts with financial statement.
E.g:- Bhel ltd
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Human resource accounting
Employees of the company being valuable assetsits is needed that their value should be presented
in accounts.
Following companies presented human resourceaccounting with their annual reports
A.C.C ltd
H.M.T ltd
The mineral & metal trading corporations
Project & equipment corp of India etc
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