1 / 50

Study of Financial Statements

Study of Financial Statements. Module B Financial Management CAIIB. Unit 10 Learning Objectives. Broad Scope and Coverage of Financial Management Objective of Financial Management Increasing Importance of Financial Management. Scope. Designing and Implementing Business Plans

sadie
Download Presentation

Study of Financial Statements

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Study of Financial Statements Module B Financial Management CAIIB

  2. Unit 10 Learning Objectives • Broad Scope and Coverage of Financial Management • Objective of Financial Management • Increasing Importance of Financial Management Akila Maheshwari

  3. Scope • Designing and Implementing Business Plans • Ensuring Effective Fund Utilisation • Resource Allocation • Investment decisions • Profit generation • Wealth creation Akila Maheshwari

  4. Objectives • Maximise the wealth of the firm • Maximise Shareholder value • Owner-Manager- Employee conflict • Profit Maximisation vs Wealth Maximisation • Risk and uncertainty Akila Maheshwari

  5. Important Decisions • Financing • Investment • Dividend Policy • Current Asset Management Akila Maheshwari

  6. Unit 11 Capital Expenditure • Learning Objectives • Capital Expenditure • Phases of Capital Budgeting • Levels of decision making • Facets of Project Analysis • Feasibility Study Akila Maheshwari

  7. Capital Expenditure- Importance • Long term Effects • Irreversibility • Substantial outlays Akila Maheshwari

  8. Capital Expenditure- Difficulties • Measurement Problems • Uncertainty • Temporal Spread Akila Maheshwari

  9. Capital Budgeting Phases Planning Analysis Selection Implementation Review Akila Maheshwari

  10. Planning • Planning is concerned with the articulation of a broad Investment Strategy and the generation and preliminary screening of project proposals. • The investment Strategy of a firm delineates the broad areas or types of investments the firm plans to undertake. Akila Maheshwari

  11. Analysis • A detailed anlaysis of the marketing, technical, financial, economic and ecological aspects is undertaken. • At this pint the focus is on gathering information, preapring and summarising information about various proposal being considered for inclusion in the capital budget. • Based on this the projections may be made. Akila Maheshwari

  12. Selection Akila Maheshwari

  13. Implementation • Stages • Project & Engineering Design • Negotiations and Contracting • Construction • Training • Plant commissioning Akila Maheshwari

  14. Tools for expeditious Implementation • Adequate formulation of projects • Responsibility Accounting • Network Techniques • Profit Centre Concepts Akila Maheshwari

  15. Decision making levels Akila Maheshwari

  16. Profitability Analysis • Market • Technical • Financial • Economic • Ecological Akila Maheshwari

  17. Key Issues in Project Analysid Akila Maheshwari

  18. Preliminary Work Idea Generation Initial Screening Prima Facie analysis NO YES Feasibility Analysis Terminate Akila Maheshwari

  19. Analysis Market Analysis Technical Analysis Financial Analysis Akila Maheshwari

  20. Evaluation Economic & Ecological Analysis Is it Worthwhile? NO YES Funding Proposal Terminate Akila Maheshwari

  21. Decisions, Return, Risk, Market Value Return Market Value Investment Decisions Risk Financing Decisions Akila Maheshwari

  22. UNIT 12- Sources of Finance • Learning Objective • Sources of Finance- Long term & Short Term • Advantages and Disadvantages • Various Types of Funding Akila Maheshwari

  23. Sources of Company Finance Akila Maheshwari

  24. Matching Sources to Uses Akila Maheshwari

  25. Equity Financing • Nature • Advantages • Disadvantages Akila Maheshwari

  26. Retained Profits • Nature • Advantages • Disadvantages Akila Maheshwari

  27. Preference Shares • Nature • Advantages • Disadvantages Akila Maheshwari

  28. Debentures and Bonds • Nature • Advantages • Disadvantages Akila Maheshwari

  29. Term loans • Nature • Advantages • Disadvantages Akila Maheshwari

  30. Term Loans • Maturity • Security • Repayment • Interest Rate Akila Maheshwari

  31. Seed Capital • Venture Capital • Seed Capital Assistance Schemes of IDBI Akila Maheshwari

  32. Medium Term Sources • Loans • Deferred Credit Bill Discounting Scheme of IDBI • Fixed Deposits • Working Capital Term Loan Akila Maheshwari

  33. Short Term Sources • Bank loans • Trade Credit • Cash Credit and Overdraft • Bill discounting • Commercial Paper • Lease Akila Maheshwari

  34. Cost of Capital • Minimum return • Weighted average cost of projected sources of finance Akila Maheshwari

  35. Unit 13 Financial Statements • Learning Objectives • Understand the meaning of Financial Statements • Uses of Financial Statements for decision making • Financial Analysis • Interpretation of Statements • Meaning of Fund Flows Akila Maheshwari

  36. Key Financial Statements • Balance Sheet • Profit & Loss or Income Statement • Sources & Uses of Funds Statement Akila Maheshwari

  37. Balance Sheet Akila Maheshwari

  38. Balance Sheet Akila Maheshwari

  39. Income Statement Akila Maheshwari

  40. Balance Sheet-Financial Management Akila Maheshwari

  41. Income Statement- Financial Management Akila Maheshwari

  42. Funds Flow Statement- Working Capital Basis Operations Dividend Payment Issue of Share Capital Repayment of long term borrowing Working Capital Pool Long Term Borrowing Purchase of non current assets Sale of non current assets Akila Maheshwari

  43. Funds Flow- (WC basis) Akila Maheshwari

  44. Funds Flow- Cash Flow Statement • Sources of Cash • Operations • Net Income • Depreciation • Issue of Share Capital • Long term borrowings • Sale of non current liabilities • Decrease in current assets other than cash Akila Maheshwari

  45. Funds Flow Statement- Cash Flow • Uses of Cash • Payment of Dividends • Purchase of non current assets • Repayment of long term borrowings • Decrease in current liabilities • Increases in current assets other than cash Akila Maheshwari

  46. Financial Statement Analysis • Assessment of Past Performance and current Position • Protection of Net Income and growth prospects • Prediction of Bankruptcy and failure • Loan decisions by FIs and banks Akila Maheshwari

  47. Techniques • Horizontal analysis • Vertical Analysis • Trend Analysis • Ratio Analysis • Common size Analysis Akila Maheshwari

  48. Focus of Financial Statements Analysis • Liquidity or short term solvency anlysis • Profitability Analysis • Capital Structure or gearing analysis • Market strength or Investor analysis • Growth and stability analysis Akila Maheshwari

  49. Projected Statements • Projected Balance Sheet • Projected Income Statements • Projected cash flows Akila Maheshwari

  50. Thanks You • Indian Institute of Banking and Finance Akila Maheshwari

More Related