Tuesday, May 25, 2021

Introduction To Cash Flow Statements ?

Cash flows are inflows and outflows of cash and cash equivalents
Oppo physics strong pnl chicken legs low cash flow statement
there are three types of cash flow statements cash flow from operation cash flow from investing in cash flow from financing.

What Are Depreciation And Amortization ?

Depreciation depreciation is for tangible Assets and amortization is for non tangible assets.

Land and cw IPR to things for depreciation doesn't apply.

there are three types of depreciation method straight line depreciation method written down depreciation and expected pattern of consumption

Link Between Income Statement And Balance Sheet ?

there is a perfect linkage between income statement and balance sheet whatever happens in the income statement reflects in the balances and vice versa.

Sales trade receivable and cash of assets
Cogs cost of material for change in inventory inventory assets
 trade payable current liabilities finance cost borrowings liabilities depreciation tangible assets asset amortisation intangible assets assets as DNA or other expense trade payables reliability prepaid expenses assets or other income investments mutual funds equity net profits retained earnings other equity deferred revenue other current liabilities liabilities Mahindra holidays exceptional items goodwill Al

What Are Expenses In An Income Statement ?

Expenses are of two types one is cost of goods sold and selling general and administrative 
Material consumed cost incurred by
Raw material consumed warrants income in the production process formula of learning stock + purchase - closing stock change in inventory of finished goods work in progress cost included in manufacturing of finished goods excise duty on self employee benefit expenses expenses include on KMP directors and employees of the companies it includes was forbidden phones director remuneration common commission is a staff welfare expenses
Finance cost it is the interest payment of the borrowings of the company
Depreciation and amortization expenses
 impairment of PPE
Other expenses cost audit fees rent for marketing spend etc.

What Is Total Income In An Income Statement ?

Total income equals to revenue from operation + other income
Revenue is sales earned by the core business activities plus non core business other income includes income from investment interest income insurance claim provisions. Kwality dairy
Other income i x vst industries nesco

What Is Income Statement Or P&L Account

Income statement is prepared on the basis of accrual principle of accounting.
Revenues and expenses are recorded when their transaction accours rather than when payment is made.
Suppose it seem made a cell of 10 crore to its distributor but the distributor has not had any money still it sikhen so 10 crore as revenue and same goes with the expense this is the measured drawback of pnl that is why many invested prefer balance sheet and cash flow statement over pnl.
Line item in income statement
Total income expenses profit before tax profit before tax tax expense profit after tax earnings per share EPS

What Are Related Party Transactions (RPT) ?

It is an off the balance sheet item accompany those with parties related to it. Incentive caused by whose bread it is song I sync as outside does we don't know are the transaction are on arms length basis or not.
Who is a related party this is a long list of persons and entity which include directors KMP any person or entity that can give rise to vested interest risk for the company associated subsidiary company.
What is the risk
Salary given to KMP goods and services sold for purchases from related party rent from related party forces officers from related party loans given or taken from related parties or corporate guarantee

goods and services sold to related party Bharat rasayan purchases from related party Olympic former rent paid to related party ngl fine chem Indigo remedies legal / consultancy fee Parag milk foods loans / deposite given to related party brittanya Balaji amines loans taken from related party knr construction leel electricals

What Are Non-Current Investments With Example ?

Investments held by the company for more than 1 year are known as  non-current investment.
Example : Long Term Debt, Equity holding of other company, Long term bonds or debentures

Holding Companies

What is Goodwill ? How it is Created ?

Goodwill is an intangible asset, it is created when when a business acquire another business. It is the excess ammount paid by the company over the fair market value of identifiable assets and liabilities.
The value of a company’s brand, trade marks, trade secret, patents, proprietary technology, customer base, good customer / employee relations represent goodwill.

How to calculate Goodwill ??
Goodwill = P - ( A+L)
where,
P = Purchase price of the company
A = Fair market value of all identifiable assets
L = Fair market value of all identifiable liabilities

Generally IT companies will have lot of Goodwill.
Example : Quess Corp

What are Assets ? What are Types of Assets ?

Assets are resources owned or controlled by a company, which will be utilized to generate future cash flows.
Assets are application of funds in the balance sheet. For 1 rupee spent on the sources of fund side there will be 1 rupee on the application of fund side (Assets).

Assets can be classified as different types on the basis of their characteristics.

//Based On Physical Existence

1. Tangible Assets: Assets with physical existence (we can touch, feel, and see them). 
Examples : Land, PPE, Cash, Inventory, Marketable securities
 
2. Intangible Assets : Assets with no physical existence. 
Examples : Goodwill, Patents, Brand, Copyrights, Trademarks, Trade secrets, Licenses and permits, IP
 
// On The Basis Of Usage

1. Operating Assets : Assets required for daily operation. These assets generate revenue for company’s core business activities ( total sales of a company). 
Examples : Cash, Accounts receivable, Inventory, PPE, Patents, Copyrights, Goodwill
 
2. Non-Operating Assets : Assets that are not required for daily business operations but can still generate revenue ( other income of a company ).
Examples : Short-term investments, Marketable securities, Vacant land, Interest income

// Based On Convertibility Into Cash

1. Current Assets Or Liquid Assets : Assets that can be easily converted into cash and cash equivalents (typically within a year).
Example : Cash, Cash equivalents, Short-term deposits, Accounts receivables, Inventory
 
2. Fixed Assets or Non-Current Assets or Hard Assets : Assets that cannot be easily converted into cash and cash equivalents.
Example : Land, Building, Machinery, PPE

Thursday, May 20, 2021

What Are Non-Current Liabilities And It's Types ?

These are financial obligations, which company is liable to pay off in more than 12 months (more than 1 year). Also called as long term liabilities. Examples : deferred tax liability, mortgage loan etc.

What Are The Types of Non-Current Liabilities ?
Non-Current Liabilities constitutes of following line items..
1. Borrowings or Debt : These are long term bank borrowings, debt borrowings or borrowings from related party. These can be secured or unsecured.

2. Deferred Tax Liabilities (DTL) : It generally appears, when the tax obligations is in one financial year, but it will be paid in next year. It is generally created when the company pay less tax than obligations.

3. Other Non-Current Liabilities : These are residual non-current liabilities (generally of small amount) that do not meet the criteria of being classified separately.

4. Provisions : It is the money kept aside for the probable contingency ( chances of converting in Liabilities is very high) in future.

What Are Current Liabilities And It's Types ?

These are financial obligations, which have to be settled within 12 months (with in 1 year). Also called as short-term liabilities. Examples : Short term borrowings, Rent etc.

What Are The Types of Current Liabilities ?
Current Liabilities constitutes of five line items. As follows..
1. Short-Term Borrowings : These are generally bank borrowings or debt borrowings.It can be secured or unsecured.

2. Accounts Payable or A/P : Money owed by the company to it's suppliers or other entity.It is opposite of accounts receivable.
It increases when the company receives a product or service, but choose to pay later.

3. Current Tax Liabilities : These are short term tax obligations that the company have to pay off within 1 year (12 months).

4. Other Current Liabilities (OCL) : These are residual current liabilities (generally of small amount) that do not meet the criteria of being classified separately.
It generally includes,
• advances from customers
• unpaid services and materials 
• Expenses payable
• Statutory dues