Financial statements and analysis

Table of Content
1. FINANCIAL STATEMENTS: AN OVERVIEW

1.1. Introduction

1.2. Financial Accounting

1.3. Financial Accounting Regulations

1.4. Fundamental Accounting Terms

1.5. Financial Statements

1.6. Preparing Financial Statements

1.7. Annual Report

1.8. Financial Statements and Information Gap

1.9. Users of Financial Statements

1.10. Summary

Problems

Case 1-1: Maruti Suzuki Ltd.

Case 1-2: Unitech Ltd.

Case 1-3: Suzlon Energy Ltd.



2. THE BALANCE SHEET

2.1. Introduction

2.2. Balance Sheet Format

2.3. Consolidation

2.4. Balance Sheet Date

2.5. Funds Employed

2.6. Shareholders’ Funds

2.7. Share Capital

2.8. Reserves and Surplus

2.9. Deferred Tax Liabilities

2.10. Loan Funds

2.11. Assets

2.12. Investments

2.13. Current Assets, Loans and Advances

2.14. Current Liabilities and Provisions

2.15. Net Current Assets

2.16. Deferred Revenue Expenditure

2.17. Contingent Liabilities

2.18. Summary

Problems

Case 2-1: Reliance Industries Ltd.

Case 2-2: Tata Motors Ltd.

Case 2-3: Tata Steel vs. Steel Authority of India



3. INCOME STATEMENT

3.1. Introduction

3.2. Accounting Period

3.3. Profit and Loss Account Format

3.4. The Matching and Accrual Concepts

3.5. Income

3.6. Other Income

3.7. Change in Stocks

3.8. Expenditure

3.9. Material Consumed

3.10. Employees Remuneration and Benefits

3.11. Other Expenses

3.12. Research and Development Expenditure

3.13. Interest

3.14. Depreciation

3.15. Extraordinary or Exceptional Item

3.16. Provision for Current Tax and Deferred Tax

3.17. Prior Period Items or Adjustment

3.18. Balance Brought Forward from Previous Year

3.19. Disposal Profit

3.20. Earnings Per Share (EPS) and Diluted EPS

3.21. Summary

Problems

Case 3-1: JK Papers Ltd.

Case 3-2: Gammon India Ltd.

Case 3-3: Ceat Ltd. and Apollo Tyres Ltd.



4. STATEMENT OF CASH FLOW

4.1. Introduction

4.2. Need for Cash Flow Statement

4.3. Cash Flow and Other Financial Statements

4.4. Regulations Relating to Cash Flow Statement

4.5. Cash Flow Statement Formats

4.6. Cash Flow from Operating Activities

4.7. Cash Flow from Investing Activities

4.8. Cash Flow from Financing Activities

4.9. Preparation of Cash Flow Statement

4.10. Analyzing Cash Flow Statement

4.11. Summary

Problems

Case 4-1: Jet Airways (India) Ltd.

Case 4-2: REI Agro Ltd.

Case 4-3: Creative Accounting and due Diligence



5. ANALYSIS OF FINANCIAL STATEMENTS

5.1. Introduction

5.2. Techniques of Financial Analysis

5.3. Common-size Statement Analysis

5.4. Trend Analysis

5.5. Ratio Analysis

5.6. Profitability Ratios

5.7. Impact of Tax on Profitability

5.8. Profitability Drivers

5.9. Asset Management

5.10. Cost or Profit Management

5.11. Leverage Management

5.12. Interfirm Comparison

5.13. Summary

Financial Statements and Analysis is written in a non-technical language and provides explanation and insight to each and every figure that appears in financial statements. The unique feature of the book is that all the three principal financial statements, namely, Balance Sheet, Statement of Profit, and Cash Flow Statement are thoroughly explained using the financial statements of Asian Paints Ltd. The last part of the book presents a framework through which the readers can view the financial health of any business. The book shows interconnection between the four drivers of profitability—asset management, cost management, leverage management, and tax management—and how they jointly improve the profitability of the company.

The book is intended to provide a feeling of completeness to the readers in their understanding of financial statements. Even for those from a non-accounting background, this simple and easily readable text helps to read and understand financial statements and to be able to evaluate the financial health of a company. The book is relevant for non-financial managers, entrepreneurs, and the students of accounting courses from different backgrounds. It is also relevant for those pursuing courses on valuation, mergers and acquisition, and specialized course on Financial Statement Analysis.
(https://www.cengage.co.in/category/higher-education/business-economics/finance/financial-statement-analysis/financial-statements-and-analysis-eh)