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INTRODUCTION:FINANCIAL
ANALYSIS TOOLS
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SOCIETY
BUSINESS GOVERNMENT
CONSUMERS
ISSUES
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BUSINESS ACTIVITIES
FORMS OF BUSINESS• Sole Proprietorship• Partnership• Company
– Private Limited Company– Public Limited Company
• NGOs
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Why some companies are ‘good’ and some are ‘bad’?
“Forbes100” from 1917 to 1987: 39 members of the 1917 were alive in 1987; 18 in 1987 F100; these 18
F100 “survivors” underperformed the
market by 20%; just 2 (2%), GE & Kodak, outperformed the market 1917 to 1987.
Source: Dick Foster & Sarah Kaplan, Creative Destruction: Why Companies That Are Built to Last Underperform the Market
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DEFINITION OF ACCOUNTING
• “Accounting is the process of –identifying, –measuring and–Communicatingeconomic information to permit
informed judgements and decisions by users of the information.”
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Definition of A/c (contd…)
• “Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, and about economic activities, that is intended to be useful in making economic decisions.”
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FINANCIAL STATEMENTS
• Statement of Financial Position (balance sheet) Assets = Shareholders’ Capital + Outside
Liabilities.
• Statement of Comprehensive Income (profit & loss)
• Statement of Cash Flows • Statement of Changes in Equity
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OBJECTIVE OF FS
USERS’ INFORMATION NEEDS
• 1) Liquidity
• 2) Profitability
• 3) Solvency
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USERS OF FIN. ST.
• PRESENT & POTENTIAL SHAREHOLDERS / TRUSTEES / MEMBERS
• EMPLOYEES• LENDERS• SUPPLIERS & OTHER CREDITORS• CUSTOMERS• GOVERNMENT & ITS AGENCIES• PUBLIC
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Relationships
elect
report
electreview
account
Shareholders
Auditors
Directors
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TYPES OF ACCOUNTING
• Financial accounting
• Income-tax accounting
• Cost accounting
• Management Accounting (Management Control Systems)
• Management Reporting
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Annual Report Discussion
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Thank you
The two most beautiful words in the English language are 'cheque enclosed‘.(Dorothy Parker)