Finanacial Analysis

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This material is a part of our PGPSE programe. Our programme is available for any student after class 12th / graduation. AFTERSCHO☺OL conducts PGPSE, which is available free to all online students. There are no charges. PGPSE is a very rigorous programme, designed to give a comprehensive training in social entrepreneurship / spiritual entrepreneurship. This programme is aimed at those persons, who want to ultimately set up their own business enterprises which can benefit society substantially. PGPSE is a unique programme, as it combines industry consultancy, business solutions and case studies in addition to spirituality and social concerns. You can read the details at www.afterschoool.tk or at www.afterschool.tk

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Finanacial Analysis

  1. 1. FINANACIAL ANALYSIS AFTERSCHO ☻ OL – DEVELOPING CHANGE MAKERS CENTRE FOR SOCIAL ENTREPRENEURSHIP PGPSE PROGRAMME – World’ Most Comprehensive programme in social entrepreneurship & spiritual entrepreneurship OPEN FOR ALL FREE FOR ALL www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS
  2. 2. FINANACIAL ANALYSIS Dr. T.K. Jain. AFTERSCHO ☺ OL Centre for social entrepreneurship Bikaner M: 9414430763 [email_address] www.afterschool.tk , www.afterschoool.tk www.afterschoool.tk AFTERSCHO☺OL's MATERIAL FOR PGPSE PARTICIPANTS
  3. 3. Net profit after tax : 22500, interest: 2000, dep: 3000, tax rate: 50%, sinking fund appropriation: 7.5% of outstanding debt. , what is DSCR? <ul><li>Net profit before tax : 45000. </li></ul><ul><li>Add interest : 2000. </li></ul><ul><li>Add : depreciation: 3000 </li></ul><ul><li>Total amount : 50000 </li></ul><ul><li>DSCR = 50000/2000 = 25 answer. </li></ul>
  4. 4. Sales of a product amount to 200 units per month at Rs. 10 per unit. Fixed overhead is Rs. 400 per month and variable cost Rs 6 per unit. There is a proposal to reduce price by 10%. How many units must be sold to maintain profit? <ul><li>Present profit : 200*10 – (400 + 6*200) </li></ul><ul><li>=400 </li></ul><ul><li>BEP = (fixed cost + target profit) / contribution per unit. </li></ul><ul><li>= (400+400) / (9-6) = 800/3 = 267 per month. answer. </li></ul>
  5. 5. Selling price per unit : 25, direct material : 8, direct labour : 5, fixed overhead : 24000. Variable overhead : 60% on direct labour. Trade discount : 4%. What is the profit, if sales is 15% above the BEP level? <ul><li>BEP = Fixed cost / PV ratio </li></ul><ul><li>Net selling price : 25- 4% of 25 = 24 </li></ul><ul><li>Variable cost: 8+5+3 = 16 </li></ul><ul><li>Contribution: 24-16 =8, PV ratio=8/24*100 = 33% </li></ul><ul><li>BEP = 24000/33% = 72000 </li></ul><ul><li>Sales : 72000+10800=82800 </li></ul><ul><li>Profit : 27600-24000 = 3600 (answer. ) </li></ul>
  6. 6. NET PROFIT AFTER TAX=75000 INTEREST = 10000, I.T. RATE 50%, WHAT IS DSCR? <ul><li>Interest coverage ratio (DSCR) </li></ul><ul><li>= Profit before interest & taxes/ interest </li></ul><ul><li>Profit after tax = 75000, so profit before tax = 150000 </li></ul><ul><li>Add interest = 160000 </li></ul><ul><li>DSCR = 160000/10 = 16 (which seems to be comfortable one). </li></ul>
  7. 7. <ul><li>Goti Ltd. have two processes—Preparing and Finishing. The normal output per week is 7,500 units (completed) at a capacity of 75%. It had production problems in preparing and require 2,000 units per week of prepared material. </li></ul><ul><li>The existing cost structure of one prepared unit of Transferor Ltd. at existing capacity… </li></ul><ul><li>Material Rs. 2.00 (variable 100%) </li></ul><ul><li>Labour Rs. 2.00 (variable 50%) </li></ul><ul><li>Overhead Rs. 4.00 (variable 20%) </li></ul>
  8. 8. Continued…. <ul><li>The sale price of a completed unit is Rs. 16 with a profit of Re. 4 per unit. What will happen to its profitability for 6 months (25 weeks) with the following alternative transfer prices per unit: </li></ul><ul><li>(i) Marginal Cost; (ii) Marginal Cost + 25%; (iii) Marginal Cost + 15% Return on (assume capital employed Rs. 20 lakhs); (iv) Existing Cost; (v) At an agreed Market Price of Rs. 8.50 </li></ul>
  9. 9. Solution… <ul><li>Full capacity : 10000 units per week </li></ul><ul><li>If it gets goods at marginal cost, there is no impact on its profit – as it will continue to earn the same profit. </li></ul><ul><li>If it gets marginal cost + 25%, let us calculate the marginal cost first : </li></ul><ul><li>2000*3.8=7600 + 25% = 9500 </li></ul><ul><li>Thus its profits will reduce by 1900 per week. </li></ul>
  10. 10. <ul><li>Price : 16 * 7500 = 120000 </li></ul><ul><li>Less fixed cost : </li></ul><ul><li>Labour cost = 10000 </li></ul><ul><li>Overhead = 32000 </li></ul><ul><li>Less variable expenditure (as the different alternatives…) </li></ul><ul><li>Profit = 4 * 2000 = 8000 </li></ul><ul><li>Less increased cost 1900 = 6100 per week. </li></ul>
  11. 11. <ul><li>If 15% interest is charged then minimum profit by the supplier will be 5770, thus profit will reduce by 5770 per week. </li></ul><ul><li>If agreed market price is 8.5, then we have to calculate, profit accordingly. </li></ul>
  12. 12. About AFTERSCHO☺OL <ul><li>PGPSE - World’s most comprehensive programme on social entrepreneurship – after class 12 th </li></ul><ul><li>Flexible – fast changing to meet the requirements </li></ul><ul><li>Admission open throughout the year </li></ul><ul><li>Complete support from beginning to the end – from idea generation to making the project viable. </li></ul>
  13. 13. Branches of AFTERSCHO☺OL <ul><li>PGPSE programme is open all over the world as free online programme. </li></ul><ul><li>Those who complete PSPSE have the freedom to start branches of AFTERSCHO☺OL </li></ul><ul><li>A few branches have already started - one such branch is at KOTA (Rajasthan). </li></ul>
  14. 14. Workshop on social entrepreneurship <ul><li>We conduct workshop on social entrepreneurship – all over India and out of India also - in school, college, club, association or any such place - just send us a call and we will come to conduct the workshop on social entrepreeurship. </li></ul><ul><li>These workshops are great moments of learning, sharing, and commitments. </li></ul>
  15. 15. FREE ONLINE PROGRAMME <ul><li>AFTERSCHO☺OL is absolutely free programme available online – any person can join it. The programme has four components : </li></ul><ul><li>1. case studies – writing and analysing – using latest tools of management </li></ul><ul><li>2. articles / reports writing & presentation of them in conferences / seminars </li></ul><ul><li>3. Study material / books / ebooks / audio / audio visual material to support the study </li></ul><ul><li>4. business plan preparation and presentations of those plans in conferences / seminars </li></ul>
  16. 16. 100% placement / entrepreneurship <ul><li>AFTERSCHO☺OL has the record of 100% placement / entrepreneurship till date </li></ul><ul><li>Be assured of a bright career – if you join AFTERSCHO☺OL </li></ul>
  17. 17. Pursue professional courses along with PGPSE <ul><li>AFTERSCHO☺OL permits you to pursue distance education based professional / vocational courses and gives you support for that also. Many students are doing CA / CS/ ICWA / CMA / FRM / CFP / CFA and other courses along with PGPSE. </li></ul><ul><li>Come and join AFTERSCHO☺OL </li></ul>

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