Every human being must know about these 3 financial statements in order to stay safe from the financial crisis. it also helps create more wealth in passive modes.
- PL (Profit & Loss Account) also Known as (Annual Income Statment)
- Balance sheet (Details about Assets-liabilities)
- Cash flow (Its simple to understand is your cash flowing to liabilities or assets from PL salary, business etc)
Robert Kiyosaki Model (author of rich dad poor dad)
From the above image: You can understand is your monthly income flowing to asset or liability. (Earn>>save>> spend).
Balance sheet example
Mar 2019
Mar 2018
Total Share Capital
6,339.00
6,335.00
Equity Share Capital
6,339.00
6,335.00
Share Application Money
0.00
15.00
Preference Share Capital
0.00
0.00
Reserves
398,983.00
308,297.00
Revaluation Reserves
0.00
0.00
Networth
405,322.00
314,647.00
Secured Loans
157,195.00
2,153.00
Unsecured Loans
0.00
94,682.00
Total Debt
157,195.00
96,835.00
Total Liabilities
562,517.00
411,482.00
Gross Block
314,745.00
313,666.00
Less: Accum. Depreciation
0.00
112,702.00
Net Block
314,745.00
200,964.00
Capital Work in Progress
0.00
99,483.00
Investments
331,536.00
225,222.00
Inventories
44,144.00
39,568.00
Sundry Debtors
12,110.00
10,460.00
Cash and Bank Balance
3,768.00
2,731.00
Total Current Assets
60,022.00
52,759.00
Loans and Advances
69,442.00
39,097.00
Fixed Deposits
0.00
0.00
Total CA, Loans and Advances
129,464.00
91,856.00
Deffered Credit
0.00
0.00
Current Liabilities
209,962.00
202,920.00
Provisions
3,266.00
3,123.00
Total CL and Provisions
213,228.00
206,043.00
Net Current Assets
-83,764.00
-114,187.00
Miscellaneous Expenses
0.00
0.00
Total Assets
562,517.00
411,482.00
Contingent Liabilities
0.00
66,970.00
Book Value (Rs)
639.41
496.68
Profit & Loss Account Example
March 2019
March 2018
Sales Turnover
371,019.00
315,357.00
Excise Duty
0.00
25,315.00
Net Sales
371,019.00
290,042.00
Other Income
9,419.00
8,220.00
Stock Adjustments
3,294.00
3,232.00
Total Income
383,732.00
301,494.00
Raw Materials
273,577.00
210,673.00
Power and Fuel Cost
0.00
13,565.00
Employee Cost
5,834.00
4,740.00
Other Manufacturing Expenses
0.00
0.00
Selling and Admin Expenses
0.00
0.00
Miscellaneous Expenses
36,645.00
12,555.00
Preoperative Exp Capitalised
0.00
0.00
Total Expenses
316,056.00
241,533.00
Operating Profit
58,257.00
51,741.00
PBDIT
67,676.00
59,961.00
Interest
9,751.00
4,656.00
PBDT
57,925.00
55,305.00
Depreciation
10,558.00
9,580.00
Other Written Off
0.00
0.00
Profit Before Tax
47,367.00
45,725.00
Extra-ordinary items
0.00
0.00
PBT (Post Extra-ord Items)
47,367.00
45,725.00
Tax
12,204.00
12,113.00
Reported Net Profit
35,163.00
33,612.00
Total Value Addition
42,479.00
30,860.00
Preference Dividend
0.00
0.00
Equity Dividend
0.00
3,255.00
Corporate Dividend Tax
0.00
661.00
Shares in issue (lakhs)
63,390.00
63,346.51
Earning Per Share (Rs)
55.47
53.06
Equity Dividend (%)
0.00
60.00
Book Value (Rs)
639.41
496.68
Cash Flow Statment Example
Cash Flow of Reliance Industries
——————- in Rs. Cr. ——————-
Mar ’18
Mar ’17
Mar ’16
Mar ’15
Mar ’14
12 mths
12 mths
12 mths
12 mths
12 mths
Net Profit Before Tax
45725.00
40777.00
35701.00
29468.00
27818.00
Net Cash From Operating Activities
62000.00
51450.00
0.00
35285.00
42160.00
Net Cash (used in)/from
Investing Activities
-59109.00
-54949.00
0.00
-55998.00
-64013.00
Net Cash (used in)/from Financing Activities
-1914.00
-1639.00
0.00
-940.00
5530.00
Net (decrease)/increase In Cash and Cash Equivalents
977.00
-5138.00
-4679.00
-21653.00
-16323.00
Opening Cash & Cash Equivalents
1754.00
6892.00
11571.00
33224.00
49547.00
Closing Cash & Cash Equivalents
2731.00
1754.00
6892.00
11571.00
33224.00
For fundamental analysis of companies /stock market
balance sheet
Human
Company
Assets
share capital
Income
Reserves
loans,
debt
Rule:
- Company does;t need to sell its share capital (no dilution)
- reserves (income keep growing
- debt (need to decrease)
Metrics
Growing company
Avg company
The poor performance of the company
Share Capital
increase
increase
no change
Reserves
increase
no change
low constant
Debt
Decrease
no change
increase
Profit Loss Account / PL / Income Statment
- interest paying to loan decrease
- PBIT (Profit Before Tax) (also has to be high)
- employee cost (increase)
- consumption of raw materials (increase indicates higher production)
- net profit (should increase)
Cash Flow Statment
- From financial Activities >> To pay the loan (It’s a negative cash Flow)
- from investment Activities >> ROI Maybe Positive
- From Operating Activities >> operating income also a positive flow.
financial ratios
Mar 2008
Mar 2007
Face Value
10.00
10.00
Dividend Per Share
13.00
11.00
Operating Profit Per Share (Rs)
154.32
146.44
Net Operating Profit Per Share (Rs)
920.48
801.57
Free Reserves Per Share (Rs)
520.59
416.90
Bonus in Equity Capital
33.14
34.57
Operating Profit Margin(%)
16.76
18.26
Profit Before Interest And Tax Margin(%)
13.06
13.90
Gross Profit Margin(%)
13.14
13.95
Cash Profit Margin(%)
13.73
15.13
Adjusted Cash Margin(%)
13.73
15.13
Net Profit Margin(%)
14.54
10.69
Adjusted Net Profit Margin(%)
14.45
10.64
Return On Capital Employed(%)
15.68
18.00
Return On Net Worth(%)
24.66
19.49
Adjusted Return on Net Worth(%)
17.28
19.85
Return on Assets Excluding Revaluations
542.74
439.57
Return on Assets Including Revaluations
548.73
458.61
Return on Long Term Funds(%)
17.18
19.83
Current Ratio
0.98
0.77
Quick Ratio
0.89
0.69
Debt Equity Ratio
0.46
0.45
Long Term Debt-Equity Ratio
0.35
0.32
Interest Cover
17.05
13.51
Total Debt to Owners Fund
0.46
0.45
Financial Charges Coverage Ratio
19.95
16.06
Financial Charges Coverage Ratio Post Tax
21.90
13.90
Inventory Turnover Ratio
10.57
10.65
Debtors Turnover Ratio
26.87
28.29
Investments Turnover Ratio
10.57
10.65
Fixed Assets Turnover Ratio
1.29
1.13
Total Assets Turnover Ratio
1.14
1.22
Asset Turnover Ratio
1.28
1.37
Average Raw Material Holding
33.46
20.91
Average Finished Goods Held
Number of Days In Working Capital
51.39
37.01
Material Cost Composition
73.86
72.32
Imported Composition of Raw Materials Consumed
93.96
94.04
Selling Distribution Cost Composition
2.41
3.27
Expenses as Composition of Total Sales
56.80
52.40
Dividend Payout Ratio Net Profit
8.38
12.06
Dividend Payout Ratio Cash Profit
6.71
8.59
Earning Retention Ratio
88.04
88.16
Cash Earning Retention Ratio
91.18
91.52
adjusted cash Flow Times
1.97
1.64
Earnings Per Share
133.86
85.71
Book Value
542.74
439.57
liquidity, profitability, debt, and asset management,
- debt-to-asset ratio (total liabilities / total assets),
- working capital ratio (current assets / current liabilities),
- quick ratio or acid test ((current assets – inventory) / liabilities),
- inventory turnover (cost of goods / average inventory)
- (PE Ratio) price-to-earnings ratio (stock price/earnings per share),
- EPS earning per share
the intrinsic value of a stock (refers to the actual value of company stock rather trading on the stock exchange)
Book Value / Share = (Total Assets – Total Debt) / No. of shares
Face value is the Equity Share Capital / No. of Shares
EPS=net profit/no of shares
Earnings per share=Net income – preferred dividends/End – of – period common shares outstanding
To Know Company stock Undervalued/ lower valued
P/E Ratio= Market value per share/Earnings per share overvalued or undervalued, the P/E
E in P/E refers to EPS (premium trading higher than actual company value & discount trading low value than the intrinsic value.
P/E ratio = X times if company 1000cr then pe ration 12x then u have to buy it at 12000cr (because of dividends, earning growth=premium)
if it lower than industry pe then it is undervalued
PEG Ratio=Price/EPS growth // low is better
the expected growth rate for the stock (3 -5 years avg earnings)*
and much 10+ analysis there in the market.
Current Ratio = Current Assets/Current Liabilities.
Quick Ratio = Current Assets-Inventory/Current Liabilities.
short-term debt without selling inventory
Net Working Capital = Current Assets – Current Liabilities
ROE (Return on Equity)= Net income/shareholders equity (available in financial ratios of the company).
book value or shareholders equity = Net worth (Assets-liabilities)
ROI (Returns on investment)
ROA >> Return on Asset.
Faqs
1.what is the difference between Gross Block and Net Block?
Gross block: all assets of the company.
Netblock is the gross block –accumulated depreciation.