Financial Statements What are they? Which are important Financial - PowerPoint PPT Presentation

Financial Statements  What are they?  Which are important Financial Statements?  What purposes do they serve? Financial Accounting - Dr. Varadraj Bapat

Company or Organisation PROVIDERS RESOURCES OF FOR MONEY BUSINESS These two are always equal Financial Accounting - Dr. Varadraj Bapat

Basic Business Model Infrastructure Business Money Cycle Collection Procurement Billing Value Consumption Addition Deliv ery Cycle People Financial Accounting - Dr. Varadraj Bapat

Infrastructure Money Collection Costs Procurement Billing Consumption Delivery To be profitable, revenue should be more than cost ! This would make the organisation stronger, healthy and long-lasting. Financial Accounting - Dr. Varadraj Bapat

Profit & Loss Account Balance Sheet Liabilities Assets Infrastructure Revenue Capital Costs Fixed Assets Money Borrowings from Collection Banks / FIs Current Assets Procurement or Working Outstanding & Inventory Current Capital Liabilities Profit/ Loss Consumption Delivery & & WIP Billing Human Assets People Balance Sheet shows the financial position of organisation, while Profit & loss Account shows the profitability of organisation. Financial Accounting - Dr. Varadraj Bapat

Balance Sheet shows the cumulative position of resources (assets) and sources of funds (liabilities) at the end of the year. Profit & Loss Account shows ‘Revenue & Cost’ performance during a quarter/ year. Financial Accounting - Dr. Varadraj Bapat

Balance Sheet Profit & Loss Account Assets Liabilities Infrastructure Revenue Capital Costs Fixed Assets Reserves Money Borrowings Collection Current Assets (eg.from Banks) or Working Procurement Outstanding Capital & Inventory Current Liabilities Profit Consumption Delivery & & WIP Human Assets Billing People Profits build up reserves & enable an enterprise to acquire new assets without borrowing money. Exactly the way we can acquire assets for our use without borrowing. Financial Accounting - Dr. Varadraj Bapat

Balance Sheet  Owners Funds  Fixed Assets  Non Current  Non Current liabilities Investments  Current  Other non liabilities current assets  Current Assets Financial Accounting - Dr. Varadraj Bapat

The Annual Report Usually Contains ... – Financial statements which consist of • Balance sheet, Profit & Loss A/c • Cash Flow Statements • notes to the financial statements • disclosure of accounting policies Financial Accounting - Dr. Varadraj Bapat

The Annual Report Usually Contains ... - Chairman’s Statement - Board of Directors & Committees - Directors Report - Directors Responsibility Statement - Auditors Report - Report on Corporate Governance Financial Accounting - Dr. Varadraj Bapat

The Annual Report Usually Contains ... - Consolidated Financial Statements - Subsidiaries Financial Statements - Management Discussion and Analysis - Annual General Meeting Notice Financial Accounting - Dr. Varadraj Bapat