financial intelligence ppt babasba patil
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Financial intelligence ppt babasba patilTRANSCRIPT
Financial Intelligence
Meaning
Skill sets
Understanding the foundation
Understanding the art
Understanding analysis
Understanding the big picture
Speak the language – Finance is the language of the business, common denominator across the organisation.
Use the language to be taken seriously and to communicate effectively.
Ask questions
Look at financial reports with a questioning eye
Use the information
- to improve cash flow
- assess the company’s results
Benefits of financial literacy
Increased ability to critically evaluate companies
Better decision making- ROI / Accounts receivable
Can I spend more money since my company is profitable
Strength and balance throughout the organisation – HR / Mktg/ IT
Analysis of Financial Statements
Business AnalysisTypes of Business Analysis
Credit Analysis
Equity Analysis
Business Environment and strategy Analysis
Financial Analysis
Prospective Analysis
Valuation
Roadmap to Financial AnalysisBusiness Analysis
Business Environment Analysis – Company’s economic & industry circumstances, SWOT Analysis , industry analysis
Business strategy Analysis – Company’s business decisions leading to a competitive advantage , its product mix , cost structure
Company profile and significant events
Company shareholding pattern
Company Analysis
Financial performanceRevenuesProfitabilityAsset UtilisationCash flowsWorking capital Management
Stock performance
Users of financial statements
Contents of annual report
Tools for financial analysis
- Ratios- Percentage calculations – CAGR / YOY - Indexation of numbers- Comparison with relevant data
Road map for financial analysis of a company
Business of the company
Shareholding pattern
Profit & Loss Account
- Installed capacity & utilisation
- Sales
- Profitability Analysis
- Interest costs
- Changes in accounting policies
Balance Sheet
- Share capital
- Reserves
- Tangible net worth
- Contingent liabilities
- Debt composition
- Movement in fixed assets, capital work in progress & investments
Cash flows
- Operating cash flows
- Investing cash flows
1. RPAT
2. ROGNW
3. ROCE
4. ROE
5. Earning per share
6. Price Dividend per share
7. NAV per share
8. OPBDIT
9. OPBDT
10. OPBT
Venus Music corner provides is in the business of providing audio CDs to customers. During March the accounts were maintained by a professional accountant On March 31 , the records showed a balance of Rs.21140 in his capital account. Since he could not afford an accountant, he starts maintaining the accounting records himself. He prepared the statements for the month of April 2010 and was shocked to find that his business had not fared well. He wants you to review his statements.
Profit & Loss A/c for the month ended April’10
Expenses Revenues
Salaries 5600 Investments by owner in business 3000
Electricity 410 Unearned service revenue 600
Advertisement 130
Rent 300
Drawings 4000 Loss for the month 6840
10440 10440
Balance Sheet as on April 30
Liabilities Assets
Creditors 2510 Recording equipment 25500
Service revenue Supplies 2190
earned 12660 Debtors 1210
Capital 14300 Cash 570
29470 29470