Issues for Discussion

Preparing Financial Statements

CFO and PAT: Why is CFO not same

Business Decisions and Financial St

Financing Decisions and Balance sh

Take home work

cussion
Statements

s CFO not same PAT?

and Financial Statements

s and Balance sheet

 Business Transactions of M Ltd Balance Sheet Income Statement
Sold 20% goods on credit 125,000 opening Closing Incomes
Took 10% Loan on 1st April 200,000 Sources Sales
Collection from old debtors 10,000 Capital (FV = 5) 150,000 150,000 Divdend
Payment to the creditors 80% Retained Profit 75,000 68,000
Salaries Due 24,000 8% Loan 100,000 100,000
Salary paid 20,000 Creditors 25,000 5,000 Expenses
Rent paid (for two years) 48,000 10% Loan 200,000 COGS
Salary Payable 4,000 Saalry
X declared and distributed dividend 1000% 350,000 527,000 Rent
Assets interest
Cash 25,000 129,000 8% loan
Plant (life 5 years) 250,000 250,000 10%Loan
FV 5 less Accu Dep -100,000 -150,000 Dep
Equity 225,000 Shares of X ( 100 shares of FV 10) 50,000 50,000
225,000 Stock of Goods 80,000 64,000 PBT
No of share 30,000 Debtors 45,000 160,000 Tax
Equity per share ( BV per share) 7.5 Adv Rent 24,000
MarketPrice per share (P) 30
350,000 527,000 PAT
Eqitu 225,000 218,000
no of shares 30,000 30,000
BV per share 7.5 7.3
MP 30
Income Statement CFS
open 25,000
125,000 Receipts
10,000 10% Loan 200,000
Collection 10,000
135,000 Divdend 10,000
245,000
16,000 Payments
24,000
24,000 creditors 20,000
Salary 20,000
8,000 Rent 48,000
20,000 Interest 28,000
50,000 116,000
142,000
-7,000
0

-7,000 CIH 129,000

 Transactions Balance Sheet of Altd
Sold 50% stock on credit 500,000 Sources Opening Closing
Salary for the period 750000 Capital (FV =5) 150,000
Collection from old debtors 60% Retained Profit 200,000
Issued 10000 new shares at 25 9% Bonds 25,000
Purchased stock for cash 25000 Creditors 10,000
purchased shares of X ltd 15000 385,000
Dep using RBM 50% Assets
Dividend Declared Cash 110,000
Cash Dividend 50% Debtors 25,000
Plant 100,000
Less Accu Dep -50,000
stock 200,000
385,000
Income Statement Cash Flow Statement
 Transactions Balance Sheet of Altd
Sold 50% stock on credit 500,000 Sources Opening Closing
Salary for the period 750000 Capital (FV =5) 150,000
Collection from old debtors 60% Retained Profit 200,000
Bad Debts 2000 9% Bonds 25,000
Purchased stock for cash 25000 Creditors 10,000
purchased shares of X ltd 15000 385,000
Dep using RBM 50% Assets
Dividend Declared Cash 110,000
Cash Dividend 20% Debtors 25,000
Stock dividend: 1 :1 Plant 100,000
Less Accu Dep -50,000
stock 200,000
385,000
Income Statement Cash Flow Statement CFS CFO
 Balance Sheet of X ltd Income Statement
opening Closing Incomes
Capital (10) 50000 100000 Sales 200000
Reserves 150000 154300 Discount 3000
12% convertible Bonds 50000 0 Dividend 5000
Creditors 30000 0 208000
Advance from customers 10000 Expenses
280000 264300 COGS 30000
Bad Debt 3000
Cash 55000 62300 interest 6000
Plant 100000 80000 Dep 20000
Shares of A ltd (1000 of Face Va 50000 50000 59000
stock 60000 30000
Debtors 15000 12000 PBT 149000
Bonds 30000 Tax 44700
280000 264300 PAT 104300
 CFS
opening

CFO

CFF

CFI
 Balance Sheet
A B C D E
Capital (10) 50000 50000 50000 50000 50000
Reserves 150000 20000 20000 20000 20000
10% convertible Bonds 50000 0 144300 0 0
Creditors 30000 194300 50000 50000 50000
Advance from customers 145000 0
Bank Overdraft (15%) 145000
280000 264300 264300 265000 265000

Cash 55000 62300 8000 63000 63000

Plant 100000 80000 50000 80000 80000
Shares of A ltd (1000 of Face Value 10) 50000 50000 134300 50000 50000
stock 60000 30000 30000 30000 30000
Debtors 15000 12000 12000 12000 12000
Bonds 30000 30000 30000 30000
280000 264300 264300 265000 265000
0
Examine the financing decisions of the above companies
Examine the investment decisions of the above companies
Examine the ways in which the Equity of the company can be changed
Examine the impact of change in the financing decision on the book value per shares
 Balance Sheet
A B C D E
Equity
Non Current Liabilities
Current Liabiliies
0 0 0 0 0
Non Current Assets
Current Assets
0 0 0 0 0
 Balance Sheet Income Statement CFS
opening Closing Incomes Opening
Capital 150,000 180,000 Sales 50,000 PAT
12% bonds 20,000 20,000 sale of inv 60,000
Creditors 30,000 30,000 Div 2,000
os interest 600 112,000
Reseves 16,620
200,000 247,220 COGS 6,000
Cash 25,000 35,220 BD 2,000
Plant 100,000 120,000 cost of inv 15,000
investments 50,000 35,000 Dep 10,000
stock 10,000 4,000 OPEX 10,000 CFO
receivables 15,000 53,000 interes 2,400
200,000 247,220 45,400
PBT 66,600
Tax 19,980
PAT 46,620 CFF

CFI

Closing
CFS
 Balance Sheet Income Statement CFS
Sources 2010 2011 Incomes
Capital 50,000 50,000 Sales 100,000
Reserves 80,000 95,000 Dividend 8,000
10% Loans 25,000 20,000 108,000
Creditors 10,000 3,500 Expenses
165,000 168,500 COGS 22,000
Salary 10,000
Cash 60,000 73,500 Depreciation 5,000
Debtors 25,000 30,000 Interest 2,500
Plant 50,000 45,000 39,500
stock 30,000 20,000 PBT 68,500
Tax 20,550
165,000 168,500 PAT 47,950
CFO Indirect Method
 Business Transactions Balance Sheet
Sold 60% goods on credit 50000 opening Closing
Collection from old debtors 10000 Sources
Bad Debt 2000 Capital 150,000
Payment to the creditors 80% 12% bonds 20,000
Sold 30% of investments for cash 60000 Creditors 30,000
Dividend received 2000 os interest
bonus shares 30000 Reseves
200,000
Assets
Cash 25,000
Plant 100,000
investments 50,000
stock 10,000
receivables 15,000
200,000
 Income Statement CFS
Incomes open 25,000
Receipts

0
Expenses
Payments
Select an Indian Company. Go to the Money Control or ICICI Direct
Observe the balance sheet and do the following
Prepare the condensed Balance Sheet as shown in Class Q3_BD andBS Sheet