Liabilities20042005Assets20042005Share capital150000180000Land and building8500085000Profit and loss a/c Loans3500042000Plant and machinery5400070000Loans200015000stock3050050000Creditors1700023000Debtors2550045000Bills payable30001000Bills receivable50002000Cash70009000207000261000207000261000SOLUTIONThe solution is as follows −                    Working capital= current assets – current liabilitiesChanges in working capitalParticulars2004 (Rs.)2005 (Rs.)Incharge (Rs.)Decharge (Rs.)Current AssetsStock305005000019500Debtors255004500019500Bills Receivable500010002000Cash700090002000Total (X)68000106000Current liabilitiesCreditors17000230006000Bills payable300010002000Total (Y)2000024000430008000X-Y480008200035000Increase in W.C.34000340004300043000FUNDS FLOW STATEMENTSourceRs.ApplicationRs.Issued share capital30000Purchase of plant and machinery16000Loan13000Increase in working capital34000Funds from operations70005000050000Funds from operations = 42000-35000 = 7000 (profit and loss a/c)Increase in working capital = 82000-48000 = 34000

Liabilities2003 (Rs)2004 (Rs.)Assets2003 (Rs.)2004 (Rs.)Capital54825482Cash and balance with RBI67058025543697Reserve and surplus69963008406754Balance with banks and money at call short notice37816115349090Deposits7354078879299033Investments4226011046435410Borrowings672177262960Advances5794769962502390other liabilities and provisions15147661632769Fixed assets369499401240Other assets408108640325228272951389606998115145807124264349solutionThe solution is as follows−PARTICULARS2003 (Rs.)Percentage2004 (Rs.)PercentageAssetsTotal current assetsCash and balance with RBI67058025.8255436974.46Balance with banks and money at call and short notice37816113.2853490904.30Total current assets104874139.10108927878.86Fixed assetsInvestments4226011036.704643541037.37Advances5794769950.336250239050.29Fixed Assets36949900.324012400.32Other Assets408108603.5540325223.25Total Fixed Assets10465839490.9011337156291.23Total Assets (TA)115145807100.00124264349100.0Current liabilitiesBorrowings6721770.812629600.29Other liabilities and provisions15147661.8316327691.82Total Current Liabilities21869432.6418957292.11Fixed liability capital54820.00754820.006Reserves surplus69963008.4684067549.38Deposits7354078888.897929903388.50Total Fixed Liabilities8054257097.368771126997.89Total liability82729513100.0089606998100.00

YearDepositsAdvancesProfit199929585549782917751301120003834587510115298594580200146005530128007097382252002536681881428825076951620035878649015799280933680200463372248170362901181468SOLUTIONThe solution is as follows −For DepositsMake Base year as 1990 => 29585549 (100%)YearDepositsCTrend percentage (C*100)199929585549(D1)(D1/D1) = 1100200038345875(D2)(D2/D1) = 1.296129.6200146005530(D3)(D3/D1) = 1.555155.5200253668188(D4)(D4/D1) = 1.814181.4200358786490(D5)(D5/D1) = 1.987198.7200463372248(D6)(D6/D1) = 2.142214.2For Advances − Make Base year as 1990 => 7829177 (100%)YearAdvancesCTrend percentage (C*100)19997829177 (A1)(A1/A1)=1100200010115298 (A2)(A2/A1)= 1.292129.2200112800709 (A3)(A3/A1)= 1.635163.5200214288250 (A4)(A4/A1)= 1.825182.5200315799280 (A5)(A5/A1)= 2.018201.8200417036290 (A6)(A6/A1)= 2.176217.6For profits − Make base year as 1990 => 513011 (100%)YearProfitsCTrend percentage (C*100)1999513011 (P1)(P1/P1)= 11002000594580 (P2)(P2/P1)= 1.159115.92001738225 (P3)(P3/P1)= 1.439143.92002769516 (P4)(P4/P1)= 1.500150.02003933680 (P5)(P5/P1)= 1.820182.020041181468 (P6)(P6/P1)= 2.303230.3

Liabilities2003 (Rs.)2004 (Rs.)Assets2003 (Rs.)2004 (Rs.)Capital54825482Cash and balance with RBI67058025543697Reserve and surplus69963008406754Balance with banks and money at call short notice37816115349090Deposits7354078879299033Investments4226011046435410Borrowings672177262960Advances5794769962502390Other liabilities and provisions15147661632769Fixed assets369499401240Other assets408108640325228272951389606998115145807124264349SOLUTIONThe solution is as follows −ParticularsYear ending 31st marchIncreased/ DecreasedIncreased/ Decreased (%)2003 (Rs.)2004 (Rs.)Amount (Rs)Amount (Rs)AssetsTotal current assetsABA-B=C(C/A)*100Cash and balance with RBI670580255436971162410517.33Balance with banks and money at call and short notice37816115349090-1567479-41.45Total current assets10487413 (X)10892787 (Y)405374 (Y-X=Z)3.86 (Z/X*100)Fixed assetsAB(A-B=C)(A-B=C)Investments4226011046435410-4175300-9.88Advances5794769957947699-4554691-7.86Fixed Assets369499401240-31741-8.59Other Assets408108640325224856411.90Total Fixed Assets104658394 (X’)113371562 (Y’)8713168 (Y’-X’=Z’)8.33 (Z’/X’*100)Total Assets115145807 (x+x’)124264349 (y+y’)91185427.92Current liabilitiesABA-B=C(C/A)*100Borrowings67217726296040921760.88Other liabilities and provisions15147661632769-1180037.79Total Current Liabilities2186943 (X)1895729(Y)29121413.32ABB-A=C(C/A)*100Fixed liability capital54825482--------------------------------------------Reserves surplus69963008406754141045420.16Deposits735407887929903357582457.83Total Fixed Liabilities80542570 (X’)87711269 (Y’)71686998.90X+X’Y+Y’(Y+Y’)-(X+X’)=C’(C’/(X+X’))*100Total liability827295138960699868774858.31Read More

Financial statement analysis is interpreted mainly to determine the financial operational performances of the business concern. Following are the common techniques that are widely used −Comparative statement analysis − These statements help to understand the comparative position of financial and operational period at different period of time. It is again classified into 2 types −Comparative balance sheet analysis − As the name suggests, it only concentrates on balance sheet at different period of time. This type of analysis helps to understand the real financial position over the years and how well the organisation utilises its assets, liabilities and capitals during ... Read More

Financial statements provide summary of the accounting of an organisation. The balance sheet reflects the assets and liabilities and capital as on certain data and the income statements tells about the results of operation in a certain period.Financial statements consist of the following −Income statements or Profit and loss accountIt provides entire operational of the concern like total revenue generated and expenses incurred for earning that revenue. Income statement helps to understand the gross profit and net profit of the concern.Balance sheet or the position statementIt helps to ascertain and understand the total assets, liabilities and capital of the firm. ... Read More

Decision making helps to utilise the available resources for achieving the objectives of the organisation, unless minimum financial performance levels are achieved. Financial management provides both conceptual and analytical framework for financial decision making. The key aspects of financial decision making relate to financing, investment, dividends and working capital management.The top three financial decisions along with the factors affecting the respective decisions are mentioned below −Investment decisionsInvestment decisions tells about total amount of assets to be held in the firm. Since, funds involve cost are available in limited quantity proper utilisation is required for achieving the goal of wealth maximisation.Investment ... Read More

Let us first understand the nature of financial management and then study about its scope.Nature of financial managementThe nature of financial management includes the following −Estimates capital requirementsFinancial management helps in anticipation of funds by estimating working capital and fixed capital requirements for carrying business activities.Decides capital structureProper balance between debt and equity should be attained, which minimizes the cost of capital.Financial management decides proper portion of different securities (common equity, preferred equity and debt).Select source of funSource of fund is one crucial decision in every organisation. Every organisation should properly analyse various source of funds (shares, bonds, debentures etc.) ... Read More

Financial management provides pathways to attain goals and objectives in an organisation. The main duty of a financial manager is to measure organisational efficiency through proper allocation, acquisition and management.The importance of financial management is explained below −It provides guidance in financial planning.It assists in acquiring funds from different sources.It helps in investing an appropriate amount of funds.It increases organisational efficiency.It reduces delay production.It cut down financial costs.It reduces cost of fund.It ensures proper use of fund.It helps business firm to take financial decisions.It prepares guideline for earning maximum profits with minimum cost.It increases shareholders’ wealth.It can control the financial ... Read More

Financial management is the set of activities concerned with planning, organising, directing and controlling the financial activities. Financial management accepts the general management principles for financial performances. Financial management acts like a guidance, where more investment opportunities are available.Scope of financial managementThe scope of financial management is given below −Estimating the requirement of funds.Determining the capital structure.Investment fund.Maximise profits.Maintain core value of organisation.Dividend for shareholders.Retain profits.Objectives of financial managementThe objectives of financial management include −Profit maximisation.Wealth maximisation.Optimum funds utilisation.Ensure safety on investment.Sound capital structure.Functions of financial managementThe functions of financial management are as follows −Estimation of capital requirements.Determination of capital ... Read More