Overview

of
Finance & Accounts

29th July 2010

Vishal Gupta
F&A-Vadodara
What is F&A all about?
Why should I know about it?
 We all are Business People.. ..
All business decisions are made in accordance with their
effect on the organizations
Financial performance
Future financial health

All business people need financial knowledge and skills

to really understand the organizations
Decision making
Financials
Overall management processes
F&A - Key link in the value addition chain
Informed decisions
Timely Feedback
Corrective actions
Statutory Compliance
Constructive team work
Performance Measurement
Setting up Systems
 Introduction To

F & A Functions

Financial Statements

Financial Terms/ Concepts

Financial Parameters Ratios

Finance & Accounts
Functions
 F&A Core Functions
Financial Accounting
Management Reporting
Treasury & Forex Management
Supplier Payments
Project Site Management
Taxation
Risk Management
Employee related payments ( SSC Mumbai)
 F&A MISSION
CONTRIBUTE TO THE VALUE CREATION GOALS OF THE
COMPANY

CUSTODIANS OF ECONOMIC RESOURCES

ENSURE STATUTORY COMPLIANCES

PARTNERING WITH THE BUSINESS

PROVIDE VALUE ADDED SERVICES

 F&A MISSION

ENHANCE DECISION SUPPORT SYSTEM

TO BECOME PROACTIVE, INNOVATIVE AND EMPOWERED

TEAM

EXCEL THROUGH INTEGRITY, PROFICIENCY, ACCOUNTABILITY

AND TRANSPARENCY

FOSTER A CULTURE OF CARING AND BONDING AMONGST

EMPLOYEES
 MAIN FUNCTIONS OF F&A
Partner with the Project Teams in identification and
mitigation of financial and business risks inherent in our
projects both Domestic and International

Provide effective support in the areas of International

Finance & Taxation to our international business initiatives

Optimum utilization of the State-of-the-Art IT Technology

(SAP) for continuous improvement and innovations
 MAIN FUNCTIONS OF F&A
Ensure financial discipline and internal controls

Continuously revamp the Internal Control Mechanism to

avoid fraud and ensure financial discipline

Ensure Statutory Compliance

Ensuring timely Vendor payment as per the PO terms with

due accuracy and commercial acumen
 MAIN FUNCTIONS OF F&A
Arrest profit leakage through immaculate document
discipline and by ensuring timely and effective completion of
Indirect Tax Assessments and Appeal proceedings

To provide effective support in day to day operations

Provide adequate support for the Treasury Function Fund

Management, LC, BG facility

Provide support for contracting with vendors & customers

 MAIN FUNCTIONS OF F&A
Preparation of Accounts in accordance with the Accounting
Standards

Submission of periodic Management Reports by Projects

Providing effective support to the Project Teams for

monitoring Foreign Exchange Variation

Regular review of the Project Sites to ensure effective

internal control, statutory compliances and material
management
Financial Statements
 Financial Statements
Objectives
Information on Performance of Business Operations
Changes in Financial Position
Profit & Loss Account
Balance Sheet
Notes to Accounts
Cash Flow Statement
 Users of Financial Statements
Owners/ Shareholders
Potential Investors
Managers/ Employees
Financial Institutions
Customers
Vendors
Government
Society
Generally Accepted Accounting Practices
Fiscal period
Going concern
Historical
Monetary Unit
Conservatism ( Provisions )
Quantifiable items / transactions
Consistency
Full disclosure
Materiality
Accrual
 Balance Sheet
BALANCE SHEET ITEMS:
ASSETS: What you have?
LIABILITIES: How you have?
ASSETS:
Fixed Assets
Investments
Current Assets e. g. cash, bank balance, inventory,
debtors, etc.
LIABILITIES:
Equity Capital
Reserves & Surplus
Debt or Borrowed funds
Current Liabilities e.g. creditors, Liab. For expenses
 Profit & Loss Account
PROFIT & LOSS ACCOUNT ITEMS:
INCOMES:
Sales
Other Income
EXPENSES:
Manufacturing
Other Indirect Expenses
Interest
Depreciation
PBT
Less: Tax
PAT
 Cash Flow Statement
INFLOW
INFLOW OUTFLOW
OUTFLOW

Advance Payment from Advances to Vendors

Customers
Progress Payments to
Progress Payment from Vendors
Customers
Purchase of Investments
Sale Proceeds of and Fixed Assets
Investments and Fixed
Assets Payment of expenses like
travel advance, site
Equity subscription expenses, insurance, power,
salaries, etc.
Difference between Cash Out Flow and Cost

Outflows Cost
Vendor Advances Nil

Progress Payments Vendor Bills

(Against Bills)
Travel Settlement/
Travel Advances/ Insurance/
Insurance/ Site Expenses
Site Expenses
Depreciation / Other
Nil Non Cash Charges
Do YOU still have Questions?
Ratios
 Financial Parameters - Ratios

Liquidity Ratios

Profitability Ratios

Ownership Ratios

Turnover Ratios
 Liquidity Ratios
Liquidity A firms ability to pay its debts in the short run

Current Ratio
Current Assets / Current Liabilities

Quick Ratio
Quick Assets / Current Liabilities
Quick Assets : Current Assets Inventory

Average Debt Collection Period

Average Debtors / (Sales/360)

Inventory % of Sales
Average Inventory / Sales
 Profitability Ratios

To measure a firms efficiency and ability to generate

profits.

Operating Profit margin

Operating Profit (PBDIT)/ Sales

Net Profit Margin

Net Profit (PAT)/ Sales
 Ownership Ratios
To analyse the present & future investments in a firm
Compare the investments with factors such as Debt, Earnings,
Dividends & Stock Price

Return on Equity (RONW)

Net Profit (PAT) / Avg. Equity
Earnings Per Share(EPS)
Net Profit (PAT) / No. of Shares Outstanding
Price Earnings Ratio (P/E)
Market Price / EPS
Debt Equity Ratio
Total Debt / Total Equity
 Turnover Ratios

NWC
Net Working Capital (%age to Sales) =
Sales (LTM)

Sundry Debtors
Sundry Debtors (No of days' sales) =
Avg. Sales per day (LTM)
Thank you