Illustration 2.

Financial Accounting for Management

 Illustration 2.2

Financial Accounting for Management

Financial Accounting for Management

 Horizontal Analysis of Bajaj Auto Ltd.

An analysis now follows.

Financial Accounting for Management

Financial Accounting for Management

 Common-sized Analysis The Tool

Case 3

Financial Accounting for Management

 Illustration 3.1

Financial Accounting for Management

Financial Accounting for Management

 Illustration 3.2

Financial Accounting for Management

Financial Accounting for Management

 Common-sized Analysis of Bajaj Auto Ltd. and TVS Motor Company Ltd.
An analysis now follows.

Financial Accounting for Management

Financial Accounting for Management

Financial Accounting for Management

 Trend Analysis The Tool Trend Analysis of Liberty Shoes

Financial Accounting for Management

 Case 4

Financial Accounting for Management

Financial Accounting for Management

An analysis now follows.

Results for the tear

Consistent rise in sales but declined from 2.80 times to 2.42 times in the latest year. PBT growth always much lower than the sales growth. Even went lower in 200102 than the base year despite 2.42 times growth in sales. Heavy pressure on margins. The same applies to PAT. In this case even 200001 figure lower than the base year, though the company has provided Note 1 to explain this. Consistent rise in dividend payout despite negative growth in PAT except 200102. One reason is a small capital base of just Rs. 5.07 crores all through. It needs to be noted that 199900 dividend is actually 75% but annualised. Likewise the 200001 dividend is 45% but annualised. Consistent rise in production except 199900 and 200001. Though explained by the company by way of Note 2 for 200001. Positive volume-value growth in all the years except the latest one and 199899. During these two years rise in quantity sold is more than the value of sales. Pressure on margins confirmed.

Quantitative details

Financial Accounting for Management

Position at the year end

Growth in gross block and sales neck-to-neck. Sales growth even down in the latest year. Low fixed asset efficiency. Net current assets shot up in the last three years despite no significant sales growth. Large amounts locked up in working capital. Net worth growth never in line with the growth in gross block. High leverage. High dividend distribution. Margins under pressure. Low fixed asset efficiency. Large amounts locked up in working capital. Need to set these areas of concern right. High dividend only due to small capital base and no bonus issue. Growth in the number of employees 3.30 times, but sales, PAT and net worth per employee down from Rs. 9.94 lakh, Rs. 2.05 lakh and Rs. 7.54 lakh respectively, in the base year to Rs. 7.29 lakhs, Rs. 0.61 lakh and Rs. 4.71 lakh respectively, in the latest year 200102. Very dismal performance. Stagnant growth outlook unless the company improves its efficiency or acquires new businesses.

Overall assessment

Financial Accounting for Management

 Analytical Balance Sheet The Tool Case 5

Financial Accounting for Management

 Illustration 5

Financial Accounting for Management

Financial Accounting for Management

 Review of Analytical Balance Sheet of Shoppers Stop Ltd.

The balance sheet is analytical in the sense that it:
1. 2. 3.
4.

Shows net assets at a glance. Provides an owners view. Proves the basic accounting equation: AssetsOutside Liabilities (Including Preference Capital) = Owners Funds. Shows that the equity shareholders are the residual claimants on the assets of their own company.

Concluding Remarks

Financial Accounting for Management