Finance Presentation - Sample Ppt 6x1j3n
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Your Logo Here
Understanding Basics of Financial Statements Client Company’s Name
Trainer’s Name Qualifications
Objectives of the Presentation Your Logo Here
2
Understanding the basic concepts and used in the Financial Statements.
Understanding the ratios used for analyzing the Financial Statements.
Discussing valuations.
factors
that
drive
corporate
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Contents
3
Objectives of Financial Statements
Basic ing Concepts
Structure of Profit & Loss Statement
Structure of Balance Sheet & Cash flow Statement
Q&A Brianna Knowledge Resources Pvt. Ltd.
Your Logo Which Company will you choose to invest in? Here
Name of Company: Wise Co. Prudent Co. Sales Rs. Crore 1000 800 Net Profit 120 200 Profit Margin 12% 25% Equity Capital 200 500 Debt Funds 200 100 Return on Equity 60% 40%
4
There are other financial / non-financial factors that would influence investment decisions.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Objectives of Financial Statements Here
To provide information to stakeholders about:
5
Performance of the company during a given period: Financial health of the company as on a specified date.
To furnish information useful in making decisions relating to investment and lending.
Brianna Knowledge Resources Pvt. Ltd.
Basic Financial Statements
6
Your Logo Here
Profit and Loss Statement.
Balance Sheet.
Cash Flow Statement.
Statement of ing Policies and Notes to s.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Dual Impact of Financial Transactions Here
7
INCOME
EXPENDITURE
ASSETS
LIABILITIES
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Examples of Financial Transactions Here
8
Salary Receipt
Rent payment
Purchase of House
Taking of Housing Loan
Buying MF Units
Loan EMI Brianna Knowledge Resources Pvt. Ltd.
Your own P & L & Balance SheetYour Logo Here
Personal P & L A/C (Monthly) Income Rs. Salary 15,000 Interest 1,000 Total Income 16,000 Expenditure Utilities 3,000 Groceries 3,000 Education 2,000 Maintenance 2,000 Total Exps. 10,000
9
Net Income Loan EMI Net Savings
6,000 3,000 3,000
Personal Balance Sheet Assets Rs. Lakhs House Property 11 Bank balances 2 Shares 1 Mutual Funds 1 Total assets 15
Liabilities Housing Loan Personal Loan Total Liabilities
4 1 5
Net wealth
10
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Fundamental ing Concepts Here
10
Business Entity: An Enterprise is different from the persons who own it.
Going Concern: Enterprise will continue to exist in a foreseeable future.
Accrual: Revenue and expenses are recognised as they are incurred and not as money is received or paid.
Substance over form: Substance of a transaction takes precedence over legal form. Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Fundamental ing Concepts
Prudence: Recognise all known expenses and losses. Do not recognise revenue and profits unless you are sure of realisation of the same.
Capital Expenditure: Expenditure which brings into existence asset or benefit of a long term nature. e.g. Building, computers, furniture, equipment.
Revenue Expenditure: Expenses which are incurred to earn revenue and which are written off over a normal ing period. e.g. salary, rent, stationery, electricity.
11
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Profit and Loss (P&L) Here
A statement showing revenues and expenditure over a defined period of time. It shows results of business operations for a defined duration.
Profit =Total Income – Total Expenditure.
It is a measure of financial performance.
Income and Expenditure are recognised in accordance with Generally Accepted ing Principles (GAAP).
12
Brianna Knowledge Resources Pvt. Ltd.
Structure of a P & L
Your Logo Here
Revenue Cost of Material Employee Costs Selling, General & n (SGA) Operating Profit (EBIDTA) Depreciation Interest Tax Profit After Tax
13
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Revenue
Total Revenue = Sales + other income.
Sales is usually the amount invoiced during the period for product and services.
Some of the amounts invoiced may not have been collected at the year end.
Other income would include dividend, interest etc.
14
Brianna Knowledge Resources Pvt. Ltd.
Expenditur e
Your Logo Here
Material Cost - Raw Materials and Consumables.
Employee Related Expenses (ERE) - Salary & allowances, bonus, staff welfare and benefits.
Selling, General & istration Expenses (SGA) - Bizdev., ments, Commission, Travel, Marketing office expenses, Rent, Electricity, Maintenance, Insurance, Housekeeping, Telephones, Internet link etc.
15
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Depreciation
Depreciation is a charge for use of capital assets.
Non – cash charge to the P&L.
Depreciation method ensures that the original cost of an assets less its salvage value is spread over estimated useful life of an asset.
Depreciation methods: Reducing Balance.
16
Straight Line /
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Interest cost
Interest is an amount payable to the lenders, e.g. Banks, Financial Institution, etc.
The interest will arise in relation to
17
Working capital loans Term Loans
Brianna Knowledge Resources Pvt. Ltd.
Provision for Tax
Your Logo Here
Provision for tax relates to income tax payable on the company profit.
It is a notional Figure arrived at by using the provisions of Income Tax Law, but the Final tax liability is assessed by the assessing officer of the Income tax Dept and the difference is settled accordingly
18
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Profit & Loss Revenue:100 Material Cost 45 Employee Cost 5 G & A Exp 15 OPG Profit 35
Depreciation 10 Interest 2 PBIT 25 PBT 23
Tax 0.5 PAT 22.5
19
Brianna Knowledge Resources Pvt. Ltd.
Dividend
Your Logo Here
Dividend: A portion of profit which is paid to the share holders.
Lenders are paid fixed rate of interest, whereas shareholders are paid dividend depending upon the profits and the policy of the company.
20
The Board of the Company recommends the rate of dividend based on the profitability and policy of the Company.
In India, currently there is no tax on dividend received by the shareholder as the company pays dividend tax.
Brianna Knowledge Resources Pvt. Ltd.
Retained Earnings (RE)
Your Logo Here
Profit After Tax 22.5
Dividend 2.5
Retained Earnings 20
21
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Profitability Ratios Operating Profit Margin or EBIDTA Margin = Operating Profit / Sales = 35 / 100 = 35% Operating Profit shows intrinsic profitability of a business.
22
P & L Revenue
Amount Rs. Cr. 100
Emp. Costs
45
SGA
20
Operating Profit
35
Depreciation
10
PBIT
25
Interest
2
PBT
23
Tax
0.5
PAT
22.5
Brianna Knowledge Resources Pvt. Ltd.
Profitability Ratios PBIT Ratio = PBIT / Sales % = 25 / 100 = 25% PBIT Ratio shows profitability of a business after ing for depreciation.
23
P & L Revenue
Your Logo Here Amount Rs. Cr. 100
Emp. Costs
45
SGA
20
Operating Profit
35
Depreciation
10
PBIT
25
Interest
2
PBT
23
Tax
0.5
PAT
22.5 Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Profitability Ratios Net Profit (PAT) Ratio = PAT / Sales % = 22.5 / 100 = 22.5% Net Profit Ratio shows profitability of a business after ing for all expenses including depreciation, interest & tax.
24
P & L Revenue
Amount Rs. Cr. 100
Emp. Costs
45
SGA
20
Operating Profit
35
Depreciation
10
PBIT
25
Interest
2
PBT
23
Tax
0.5
PAT
22.5
Brianna Knowledge Resources Pvt. Ltd.
Drivers of Profitability in Business Segment
Revenue side
Actual Drivers of your business segment
Expenditure Side
25
Your Logo Here
Actual Drivers of your business segment
Brianna Knowledge Resources Pvt. Ltd.
Industry Comparison – P&L Particulars
YOUR CO
%
Your Logo Here
PEER CO %
(Rs. Crs.)
Net Sales
100
100
Other Income Total Expenditure Operating Profit Depreciation
Latest Actual Income Statements
PBIT Interest (Net) PBT & EI Tax & Other Adj. Net Profit (PAT) 26
Brianna Knowledge Resources Pvt. Ltd.
Balance Sheet
Your Logo Here
A statement of Assets and Liabilities of the Company.
A snapshot view of a business at a defined point of time.
Balance Sheet is a measure of financial resources or wealth of a company whereas Profit and Loss is an indicator of performance of a company,
Balance Sheet is always balanced. Assets are equal to liabilities.
27
Brianna Knowledge Resources Pvt. Ltd.
Assets and Liabilities
28
Your Logo Here
Liabilities: Amounts owed by the Company to parties external to the Company – sources of funds.
Assets: Resources owned by the company – Application of funds.
It could be presented in either a Horizontal or vertical format.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Balance Sheet: Horizontal Structure Here
Liabilities
Assets
Equity Capital (10) & Reserves (60)
Fixed Assets (70) (e.g. Land & building, Plant & machinery , Computers, DG set)
Loan Funds (30) Current Liabilities (10)
29
Current Assets(40)
(e.g. creditors, provision)
(e.g. cash, inventories, Debtors)
Total (110)
Total (110) Brianna Knowledge Resources Pvt. Ltd.
Your Logo Balance Sheet: Vertical Structure Here Liabilities (owed) Sources
Equity Capital (10) Reserves (60) Loan Funds (30)
Assets (owned) Application
30
Fixed Assets (70) Net Current Assets (30) [Current Assets (40) less: Current Liabilities (10)] Brianna Knowledge Resources Pvt. Ltd.
Your Logo Find the items in the wrong heading Here
Fixed Assets
31
Land Building Finished products Machinery Computers Furniture and fixtures
Current Assets
Cash receivables Raw material Motor vehicles Loans and advances
Brianna Knowledge Resources Pvt. Ltd.
Your Logo How do they relate to each other? Here
Profit & Loss
Balance Sheet 31 March 2009
Balance Sheet 31 March 2008
Cash Flow
32
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Net Worth Balance Sheet
Net worth = Share Capital +Reserves = Rs. 10 +Rs. 60 = Rs. 70 Cr.
OR Net worth = Total Assets – Loan Funds = Rs.100 – Rs.30 = Rs. 70 Cr
Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
33
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Working Capital Balance Sheet
Working Capital = Current Assets – Current Liabilities = Rs. 40 - Rs.10 = Rs. 30 Cr.
Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
34
Amount Rs. Cr.
100 Brianna Knowledge Resources Pvt. Ltd.
Balance Sheet Ratios: Debt to Your Logo Equity Here Balance Sheet
= = = =
Debt to Equity Ratio Long Term Debt / (Equity + Reserves) Rs. 30 / (Rs.10+60) Rs. 30 / Rs. 70 0.42:1
Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
35
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Balance Sheet Ratios: Current Ratio Here Current Ratio = Current Assets / Current Liabilities = Rs. 40 / Rs.10 = 4:1
Balance Sheet Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
36
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Mixed Ratio: Return on Equity Here
=
= = =
Return on Equity Profit After Tax / Average Equity Cap. and Reserves Rs. 22.5 / ((Rs. 70 + Rs. 50) / 2) Rs. 22.5 / 60 37.5%
P & L Sales
100
80
PBIT
25
20
PAT
22.5
18
Balance Sheet
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Share Capital
10
10
Reserves
60
40
Net Worth
70
50
Loan funds
30
20
100
70
Total Capital Employed
37
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Mixed Ratio: Return on Capital Employed Here
ROCE = Profit before Interest & Tax (PBIT) / Avg. Capital Employed. = Rs. 25 / ((100+70) / 2) = 29.4%
P & L Sales
100
80
PBIT
25
20
PAT
22.5
18
Balance Sheet
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Share Capital
10
10
Reserves
60
40
Net Worth
70
50
Loan funds
30
20
100
70
Total Capital Employed
38
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
ROCE ROCE = PBIT / Average Capital employed = (PBIT
/ Sales) X (Sales / Avg.Capital Empl.)
= Profit Margin X Capital Turnover Ratio = Operating Efficiency x Efficiency in utilising capital.
39
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Mixed Ratio: Earnings Per Share (EPS) Here EPS = Profit After Tax / No. of shares outstanding = Rs. 22.5 Cr. / 1 Crore Shares = Rs. 22.5
P & L Sales
100
PBIT
25
PAT
22.5
Balance Sheet
Amount Rs. Cr.
Share Capital (1 Crore shares)
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
40
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Asset Turnover Ratios Fixed Asset Turnover Ratio = Sales / Avg. Fixed Assets = Rs. 100 Cr / ((70+50)/2) = 1.67
P & L
31.3.06 Rs. Cr.
Sales
100
80
PBIT
25
20
PAT
22.5
18
Balance Sheet
31.3.06 Rs. Cr.
31.3.05 Rs. Cr
Net Fixed Assets
70
50
Net Current Assets
30
20
100
70
Total Assets
41
31.3.05 Rs. Cr
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Asset Turnover Ratios
Inventory Turnover Ratio Sales / Avg. Inventory
=
Debtors Turnover Ratio Sales / Avg. Debtors
=
Capital Turnover Ratio = Sales / Avg. Capital Employed
42
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Industry Comparison – Balance Sheet Here Particulars (Rs. Crs.)
YOUR CO
%
PEER CO
%
Equity Reserves Shareholder Funds Loan Funds
Latest Actual BalanceSheets
Deferred Tax Liability Total Liabilities
100
100
100
100
Net Fixed Assets Investments Current Assets Less: Current Liabilities Net Current Assets Misc. exp not W/Off. Total Assets
43
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Concept of Valuation of Equity Shares Here
44
Face Value
Book Value
Market Value
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Valuation of Equity Shares: Face/Book Value Here
Face Value is par value of the share appearing on the face of share certificate = Rs. 10 per share. Book Value is the net worth divided by a no. of outstanding shares. = (Share Capital + Reserves) / No. of outstanding shares. = Rs. 70 Cr. / 1 Cr. = Rs. 70 per share.
Balance Sheet Share Capital (1 Cr. Shares of Rs.10 each)
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
45
Amount Rs. Cr.
100 Brianna Knowledge Resources Pvt. Ltd.
Your Logo Valuation of Equity Shares: Market Value Here
46
Market Value (MV) of a listed share is the price of the share quoted on a recognized stock exchange.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Current Valuations of select Auto Companies
Name of the Face Value Company (Rs.)
YOUR CO
Book Value (Rs.)
Market Value (Rs.)*
Actual Data
PEER CO 1 PEER CO 2
* As on DATE 47
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Price Earning Ratio
PE = MV / EPS
PE is driven by a no. of subjective and objective factors associated with the company and the industry it belongs to:
48
100 / 10 = 10
Projected Growth of sales, profit,cash flow and EPS. Company brand equity, management practices, corporate governance. Market sentiment
MV = EPS x Price Earnings (PE) Ratio
EPS = PAT / No. of outstanding shares
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Current PE Ratios of select Auto Companies
Name of the Company YOUR CO
EPS (Rs.)
PE
MV Rs.*
Actual Data
PEER CO 1 PEER CO 2
* As on DATE 49
Brianna Knowledge Resources Pvt. Ltd.
Market Value of a Company
Your Logo Here
Market Value of a company or Market Capitalization is the price you will pay to buy all the shares of a company at a given point of time. = No. of shares outstanding x Market value of a share.
For Example, market capitalization of M & M is as follows: No. of Shares = Actual no. of Shares Price of a share = Rs. 0.00 per share Market Cap. = Rs. Actual Crs
50
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Q&A
51
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Thank you!! Sooner or Later, those who win are those who think they can -Anonymous 52
Brianna Knowledge Resources Pvt. Ltd.
Understanding Basics of Financial Statements Client Company’s Name
Trainer’s Name Qualifications
Objectives of the Presentation Your Logo Here
2
Understanding the basic concepts and used in the Financial Statements.
Understanding the ratios used for analyzing the Financial Statements.
Discussing valuations.
factors
that
drive
corporate
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Contents
3
Objectives of Financial Statements
Basic ing Concepts
Structure of Profit & Loss Statement
Structure of Balance Sheet & Cash flow Statement
Q&A Brianna Knowledge Resources Pvt. Ltd.
Your Logo Which Company will you choose to invest in? Here
Name of Company: Wise Co. Prudent Co. Sales Rs. Crore 1000 800 Net Profit 120 200 Profit Margin 12% 25% Equity Capital 200 500 Debt Funds 200 100 Return on Equity 60% 40%
4
There are other financial / non-financial factors that would influence investment decisions.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Objectives of Financial Statements Here
To provide information to stakeholders about:
5
Performance of the company during a given period: Financial health of the company as on a specified date.
To furnish information useful in making decisions relating to investment and lending.
Brianna Knowledge Resources Pvt. Ltd.
Basic Financial Statements
6
Your Logo Here
Profit and Loss Statement.
Balance Sheet.
Cash Flow Statement.
Statement of ing Policies and Notes to s.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Dual Impact of Financial Transactions Here
7
INCOME
EXPENDITURE
ASSETS
LIABILITIES
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Examples of Financial Transactions Here
8
Salary Receipt
Rent payment
Purchase of House
Taking of Housing Loan
Buying MF Units
Loan EMI Brianna Knowledge Resources Pvt. Ltd.
Your own P & L & Balance SheetYour Logo Here
Personal P & L A/C (Monthly) Income Rs. Salary 15,000 Interest 1,000 Total Income 16,000 Expenditure Utilities 3,000 Groceries 3,000 Education 2,000 Maintenance 2,000 Total Exps. 10,000
9
Net Income Loan EMI Net Savings
6,000 3,000 3,000
Personal Balance Sheet Assets Rs. Lakhs House Property 11 Bank balances 2 Shares 1 Mutual Funds 1 Total assets 15
Liabilities Housing Loan Personal Loan Total Liabilities
4 1 5
Net wealth
10
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Fundamental ing Concepts Here
10
Business Entity: An Enterprise is different from the persons who own it.
Going Concern: Enterprise will continue to exist in a foreseeable future.
Accrual: Revenue and expenses are recognised as they are incurred and not as money is received or paid.
Substance over form: Substance of a transaction takes precedence over legal form. Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Fundamental ing Concepts
Prudence: Recognise all known expenses and losses. Do not recognise revenue and profits unless you are sure of realisation of the same.
Capital Expenditure: Expenditure which brings into existence asset or benefit of a long term nature. e.g. Building, computers, furniture, equipment.
Revenue Expenditure: Expenses which are incurred to earn revenue and which are written off over a normal ing period. e.g. salary, rent, stationery, electricity.
11
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Profit and Loss (P&L) Here
A statement showing revenues and expenditure over a defined period of time. It shows results of business operations for a defined duration.
Profit =Total Income – Total Expenditure.
It is a measure of financial performance.
Income and Expenditure are recognised in accordance with Generally Accepted ing Principles (GAAP).
12
Brianna Knowledge Resources Pvt. Ltd.
Structure of a P & L
Your Logo Here
Revenue Cost of Material Employee Costs Selling, General & n (SGA) Operating Profit (EBIDTA) Depreciation Interest Tax Profit After Tax
13
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Revenue
Total Revenue = Sales + other income.
Sales is usually the amount invoiced during the period for product and services.
Some of the amounts invoiced may not have been collected at the year end.
Other income would include dividend, interest etc.
14
Brianna Knowledge Resources Pvt. Ltd.
Expenditur e
Your Logo Here
Material Cost - Raw Materials and Consumables.
Employee Related Expenses (ERE) - Salary & allowances, bonus, staff welfare and benefits.
Selling, General & istration Expenses (SGA) - Bizdev., ments, Commission, Travel, Marketing office expenses, Rent, Electricity, Maintenance, Insurance, Housekeeping, Telephones, Internet link etc.
15
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Depreciation
Depreciation is a charge for use of capital assets.
Non – cash charge to the P&L.
Depreciation method ensures that the original cost of an assets less its salvage value is spread over estimated useful life of an asset.
Depreciation methods: Reducing Balance.
16
Straight Line /
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Interest cost
Interest is an amount payable to the lenders, e.g. Banks, Financial Institution, etc.
The interest will arise in relation to
17
Working capital loans Term Loans
Brianna Knowledge Resources Pvt. Ltd.
Provision for Tax
Your Logo Here
Provision for tax relates to income tax payable on the company profit.
It is a notional Figure arrived at by using the provisions of Income Tax Law, but the Final tax liability is assessed by the assessing officer of the Income tax Dept and the difference is settled accordingly
18
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Profit & Loss Revenue:100 Material Cost 45 Employee Cost 5 G & A Exp 15 OPG Profit 35
Depreciation 10 Interest 2 PBIT 25 PBT 23
Tax 0.5 PAT 22.5
19
Brianna Knowledge Resources Pvt. Ltd.
Dividend
Your Logo Here
Dividend: A portion of profit which is paid to the share holders.
Lenders are paid fixed rate of interest, whereas shareholders are paid dividend depending upon the profits and the policy of the company.
20
The Board of the Company recommends the rate of dividend based on the profitability and policy of the Company.
In India, currently there is no tax on dividend received by the shareholder as the company pays dividend tax.
Brianna Knowledge Resources Pvt. Ltd.
Retained Earnings (RE)
Your Logo Here
Profit After Tax 22.5
Dividend 2.5
Retained Earnings 20
21
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Profitability Ratios Operating Profit Margin or EBIDTA Margin = Operating Profit / Sales = 35 / 100 = 35% Operating Profit shows intrinsic profitability of a business.
22
P & L Revenue
Amount Rs. Cr. 100
Emp. Costs
45
SGA
20
Operating Profit
35
Depreciation
10
PBIT
25
Interest
2
PBT
23
Tax
0.5
PAT
22.5
Brianna Knowledge Resources Pvt. Ltd.
Profitability Ratios PBIT Ratio = PBIT / Sales % = 25 / 100 = 25% PBIT Ratio shows profitability of a business after ing for depreciation.
23
P & L Revenue
Your Logo Here Amount Rs. Cr. 100
Emp. Costs
45
SGA
20
Operating Profit
35
Depreciation
10
PBIT
25
Interest
2
PBT
23
Tax
0.5
PAT
22.5 Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Profitability Ratios Net Profit (PAT) Ratio = PAT / Sales % = 22.5 / 100 = 22.5% Net Profit Ratio shows profitability of a business after ing for all expenses including depreciation, interest & tax.
24
P & L Revenue
Amount Rs. Cr. 100
Emp. Costs
45
SGA
20
Operating Profit
35
Depreciation
10
PBIT
25
Interest
2
PBT
23
Tax
0.5
PAT
22.5
Brianna Knowledge Resources Pvt. Ltd.
Drivers of Profitability in Business Segment
Revenue side
Actual Drivers of your business segment
Expenditure Side
25
Your Logo Here
Actual Drivers of your business segment
Brianna Knowledge Resources Pvt. Ltd.
Industry Comparison – P&L Particulars
YOUR CO
%
Your Logo Here
PEER CO %
(Rs. Crs.)
Net Sales
100
100
Other Income Total Expenditure Operating Profit Depreciation
Latest Actual Income Statements
PBIT Interest (Net) PBT & EI Tax & Other Adj. Net Profit (PAT) 26
Brianna Knowledge Resources Pvt. Ltd.
Balance Sheet
Your Logo Here
A statement of Assets and Liabilities of the Company.
A snapshot view of a business at a defined point of time.
Balance Sheet is a measure of financial resources or wealth of a company whereas Profit and Loss is an indicator of performance of a company,
Balance Sheet is always balanced. Assets are equal to liabilities.
27
Brianna Knowledge Resources Pvt. Ltd.
Assets and Liabilities
28
Your Logo Here
Liabilities: Amounts owed by the Company to parties external to the Company – sources of funds.
Assets: Resources owned by the company – Application of funds.
It could be presented in either a Horizontal or vertical format.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Balance Sheet: Horizontal Structure Here
Liabilities
Assets
Equity Capital (10) & Reserves (60)
Fixed Assets (70) (e.g. Land & building, Plant & machinery , Computers, DG set)
Loan Funds (30) Current Liabilities (10)
29
Current Assets(40)
(e.g. creditors, provision)
(e.g. cash, inventories, Debtors)
Total (110)
Total (110) Brianna Knowledge Resources Pvt. Ltd.
Your Logo Balance Sheet: Vertical Structure Here Liabilities (owed) Sources
Equity Capital (10) Reserves (60) Loan Funds (30)
Assets (owned) Application
30
Fixed Assets (70) Net Current Assets (30) [Current Assets (40) less: Current Liabilities (10)] Brianna Knowledge Resources Pvt. Ltd.
Your Logo Find the items in the wrong heading Here
Fixed Assets
31
Land Building Finished products Machinery Computers Furniture and fixtures
Current Assets
Cash receivables Raw material Motor vehicles Loans and advances
Brianna Knowledge Resources Pvt. Ltd.
Your Logo How do they relate to each other? Here
Profit & Loss
Balance Sheet 31 March 2009
Balance Sheet 31 March 2008
Cash Flow
32
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Net Worth Balance Sheet
Net worth = Share Capital +Reserves = Rs. 10 +Rs. 60 = Rs. 70 Cr.
OR Net worth = Total Assets – Loan Funds = Rs.100 – Rs.30 = Rs. 70 Cr
Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
33
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Working Capital Balance Sheet
Working Capital = Current Assets – Current Liabilities = Rs. 40 - Rs.10 = Rs. 30 Cr.
Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
34
Amount Rs. Cr.
100 Brianna Knowledge Resources Pvt. Ltd.
Balance Sheet Ratios: Debt to Your Logo Equity Here Balance Sheet
= = = =
Debt to Equity Ratio Long Term Debt / (Equity + Reserves) Rs. 30 / (Rs.10+60) Rs. 30 / Rs. 70 0.42:1
Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
35
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Balance Sheet Ratios: Current Ratio Here Current Ratio = Current Assets / Current Liabilities = Rs. 40 / Rs.10 = 4:1
Balance Sheet Share Capital
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
36
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Mixed Ratio: Return on Equity Here
=
= = =
Return on Equity Profit After Tax / Average Equity Cap. and Reserves Rs. 22.5 / ((Rs. 70 + Rs. 50) / 2) Rs. 22.5 / 60 37.5%
P & L Sales
100
80
PBIT
25
20
PAT
22.5
18
Balance Sheet
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Share Capital
10
10
Reserves
60
40
Net Worth
70
50
Loan funds
30
20
100
70
Total Capital Employed
37
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Mixed Ratio: Return on Capital Employed Here
ROCE = Profit before Interest & Tax (PBIT) / Avg. Capital Employed. = Rs. 25 / ((100+70) / 2) = 29.4%
P & L Sales
100
80
PBIT
25
20
PAT
22.5
18
Balance Sheet
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Share Capital
10
10
Reserves
60
40
Net Worth
70
50
Loan funds
30
20
100
70
Total Capital Employed
38
31.3.06 31.3.05 Rs. Cr. Rs. Cr.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
ROCE ROCE = PBIT / Average Capital employed = (PBIT
/ Sales) X (Sales / Avg.Capital Empl.)
= Profit Margin X Capital Turnover Ratio = Operating Efficiency x Efficiency in utilising capital.
39
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Mixed Ratio: Earnings Per Share (EPS) Here EPS = Profit After Tax / No. of shares outstanding = Rs. 22.5 Cr. / 1 Crore Shares = Rs. 22.5
P & L Sales
100
PBIT
25
PAT
22.5
Balance Sheet
Amount Rs. Cr.
Share Capital (1 Crore shares)
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
40
Amount Rs. Cr.
100
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Asset Turnover Ratios Fixed Asset Turnover Ratio = Sales / Avg. Fixed Assets = Rs. 100 Cr / ((70+50)/2) = 1.67
P & L
31.3.06 Rs. Cr.
Sales
100
80
PBIT
25
20
PAT
22.5
18
Balance Sheet
31.3.06 Rs. Cr.
31.3.05 Rs. Cr
Net Fixed Assets
70
50
Net Current Assets
30
20
100
70
Total Assets
41
31.3.05 Rs. Cr
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Asset Turnover Ratios
Inventory Turnover Ratio Sales / Avg. Inventory
=
Debtors Turnover Ratio Sales / Avg. Debtors
=
Capital Turnover Ratio = Sales / Avg. Capital Employed
42
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Industry Comparison – Balance Sheet Here Particulars (Rs. Crs.)
YOUR CO
%
PEER CO
%
Equity Reserves Shareholder Funds Loan Funds
Latest Actual BalanceSheets
Deferred Tax Liability Total Liabilities
100
100
100
100
Net Fixed Assets Investments Current Assets Less: Current Liabilities Net Current Assets Misc. exp not W/Off. Total Assets
43
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Concept of Valuation of Equity Shares Here
44
Face Value
Book Value
Market Value
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Valuation of Equity Shares: Face/Book Value Here
Face Value is par value of the share appearing on the face of share certificate = Rs. 10 per share. Book Value is the net worth divided by a no. of outstanding shares. = (Share Capital + Reserves) / No. of outstanding shares. = Rs. 70 Cr. / 1 Cr. = Rs. 70 per share.
Balance Sheet Share Capital (1 Cr. Shares of Rs.10 each)
10
Reserves
60
Net Worth
70
Loan Funds
30
Total Liabilities
100
Net Fixed Assets
70
Current Assets
40
Current Liabilities
10
Net Current Assets
30
Total Assets
45
Amount Rs. Cr.
100 Brianna Knowledge Resources Pvt. Ltd.
Your Logo Valuation of Equity Shares: Market Value Here
46
Market Value (MV) of a listed share is the price of the share quoted on a recognized stock exchange.
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Current Valuations of select Auto Companies
Name of the Face Value Company (Rs.)
YOUR CO
Book Value (Rs.)
Market Value (Rs.)*
Actual Data
PEER CO 1 PEER CO 2
* As on DATE 47
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Price Earning Ratio
PE = MV / EPS
PE is driven by a no. of subjective and objective factors associated with the company and the industry it belongs to:
48
100 / 10 = 10
Projected Growth of sales, profit,cash flow and EPS. Company brand equity, management practices, corporate governance. Market sentiment
MV = EPS x Price Earnings (PE) Ratio
EPS = PAT / No. of outstanding shares
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Current PE Ratios of select Auto Companies
Name of the Company YOUR CO
EPS (Rs.)
PE
MV Rs.*
Actual Data
PEER CO 1 PEER CO 2
* As on DATE 49
Brianna Knowledge Resources Pvt. Ltd.
Market Value of a Company
Your Logo Here
Market Value of a company or Market Capitalization is the price you will pay to buy all the shares of a company at a given point of time. = No. of shares outstanding x Market value of a share.
For Example, market capitalization of M & M is as follows: No. of Shares = Actual no. of Shares Price of a share = Rs. 0.00 per share Market Cap. = Rs. Actual Crs
50
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Q&A
51
Brianna Knowledge Resources Pvt. Ltd.
Your Logo Here
Thank you!! Sooner or Later, those who win are those who think they can -Anonymous 52
Brianna Knowledge Resources Pvt. Ltd.
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