1. Financial Statement Analysis JOMON THOMAS
Assignment MBA11- B22
FSA ASSIGNMENT
1. Current assets are important to businesses because they are the assets
that are used to fund day-to-day operations and pay ongoing expenses.
Depending on the nature of the business, current assets can range from
barrels of crude oil, to baked goods, to foreign currency. In personal
finance, current assets include cash on hand and in the bank, and
marketable securities that are not tied up in long-term investments. In
other words, current assets are anything of value that is highly liquid.
2. There are 5 major items included into current assets:
1. Cash and cash equivalents — it is the most liquid asset,
which includes currency, deposit accounts, and negotiable
instruments ( money orders, cheque, bank drafts).
2. Short-term investments — include securities bought and
held for sale in the near future to generate income on
short-term price differences (trading securities).
3. Receivables — usually reported as net of allowance for non-
collectable accounts.
4. Inventory — trading these assets is a normal business of a
company. The inventory value reported on the balance
sheet is usually the historical cost or fair market value,
whichever is lower. This is known as the "lower cost or
market" rule.
5. Prepaid expenses — these are expenses paid in cash and
recorded as assets before they are used or consumed
(insurance).
3.current liabilities are often understood as all liabilities of the business that are
to be settled in cash within the fiscal year or the operating cycle of a
given firm, whichever period is longer. Current liabilities appear on the
company's balance sheet and include short term debt, accounts
payable, accrued liabilities and other debts.
4.Items considered as Current Liabilities

2. Financial Statement Analysis JOMON THOMAS
Assignment MBA11- B22
Current liabilities appear on the company's balance sheet and include short term
debt, accounts payable, accrued liabilities, sundry creditors, Bank
O/Dand other debts.
5.Fixed assets, also known as a non-current asset or as property, plant, and
equipment are a term used in accounting for assets and property which
cannot easily be converted into cash. This can be compared with current
assets such as cash or bank accounts, which are described as liquid
assets. In most cases, only tangible assets are referred to as fixed.
6. Land, BuildingPlant and Machinery, Furniture, Company Vehicles, Long term
Investments, office equipment’s etc.
7.SUNDRY DEBTOR - is an entity from who amounts are due for goods sold or
services rendered or in respect of contractual obligations. Also termed
as debtor, trade debtor, and account receivable.
8.SUNDRY CREDITOR- A business or an individual to whom there is money owed.
9. Asset- Any item of economic value owned by an individual or corporation,
especially that which could be converted to cash. Examples are
cash, securities, accounts receivable, inventory, office equipment, real
estate, a car, and other property. On a balance sheet, assets are equal to
the sum of liabilities, common stock, preferred stock, and retained
earnings. From an accounting perspective, assets are divided into the
following categories: current assets (cash and other liquid items), long-
term assets (real estate, plant, equipment), prepaid and deferred assets
(expenditures for future costs such as insurance, rent, interest),
and intangible assets (trademarks, patents, copyrights, goodwill).
10.Liability-An obligation that legally binds an individual or company to
settle a debt. When one is liable for a debt, they are responsible for
paying the debt or settling a wrongful act they may have committed. In
the case of a company, a liability is recorded on the balance sheet and
can include accounts payable, taxes, wages, accrued expenses, and
deferred. Current liabilities are debts payable within one year,
while long-term liabilities are debts payable over a longer period.

3. Financial Statement Analysis JOMON THOMAS
Assignment MBA11- B22
11. Long-term liabilities are liabilities with a future benefit over one year, such as
notes payable that mature longer than one year.
In accounting, the long-term liabilities are shown on the right wing of the balance-
sheet representing the sources of funds, which are generally bounded in
form of capital assets.A category of debts on a company's balance
sheet that do not need to be repaid during the upcoming twelve
months, but that instead need to be repaid in a year or more.
12. Examples of long-term liabilities are debentures, mortgage loans and other
bank loans
13. Short term liability- A debt or current liability arising from normal business
operations and recurring expenses that is expected to be satisfied within
one year. Examples of short term liabilities are accounts payable, taxes
payable, unearned revenues, current purchases, vendor invoices,
accrued expenses payable and current portions of long-term debt.
14. Short term liabilities are accounts payable, taxes payable, unearned revenues,
current purchases, vendor invoices, accrued expenses payable and
current portions of long-term debt.
15. Net worth- For a company, total assets minus total liabilities. Net worth is an
important determinant of the value of a company, considering it is
composed primarily of all the money that has been invested since
its inception, as well as the retained earnings for the duration of
its operation. Net worth can be used
to determine creditworthiness because it gives a snapshot of
the company's investment history. Also calledowner’s, shareholders'
equity, or net assets.
16. Turnover is sometimes a synonym for revenue. Turnover is sometimes the
name for a measure of how quickly inventory is sold
17. Turnover ratio - A measure of the number of times a company's inventory is
replaced during a given time period. Turnover ratio is calculated as cost
of goods sold divided by inventory during the time period. A high
turnover ratio is a sign that the company is producing and selling
its goods or services very quickly.

4. Financial Statement Analysis JOMON THOMAS
Assignment MBA11- B22
18. Revenue- For a company, this is the total amount of money received by the
company for goods sold or services provided during a certain
time period. It also includes all net sales, exchange of
assets; interest and any other increase in owner's equity and is
calculated before any expenses are subtracted. Income can be
calculated by subtracting expenses from revenue. In terms of reporting
revenue in a company's financial statements,
different companies consider revenue to be received, or "recognized",
different ways. For example, revenue could be recognized when a deal is
signed, when the money is received, when the services are provided, or
at other times. There are rules specifying when revenue should be
recognized in different situations for companies using different
accounting methods, such as cash basis and accrual basis accounting.
19. Gross profit- Calculated as sales minus all costs directly related to those sales.
These costs can include manufacturing expenses, raw materials, labor,
selling, marketing and other expenses.
20.Net Profit - Often referred to as the bottom line, net profit is calculated by
subtracting a company's total expenses from total revenue, thus
showing what the company has earned (or lost) in a given period of time
(usually one year). also called income or net earnings.
21. Cost of Goods Sold- An income statement figure which reflects the cost of
obtaining raw materials and producing finished goods that are sold
to consumers. Cost of Goods Sold = Beginning
Merchandise Inventory + Net Purchases of Merchandise - Ending
Merchandise Inventory.
22. Equation for Cost of Goods Sold = PRIME COST + FACTORY O/H + COST OF
PRODUCTION
23. Inventory - A company's merchandise, raw materials, and finished and
unfinished products which have not yet been sold. These are
considered liquid assets, since they can be converted into cash quite
easily. There are various means of valuing these assets, but to
be conservative the lowest value is usually used in financial statements.
24. Suppliers - Supplier may refer to:

5. Financial Statement Analysis JOMON THOMAS
Assignment MBA11- B22
Manufacturer uses tools and labor to make things for sale
Distributor (business), the middleman between the manufacturer and
retailer
Wholesaler, retailers etc.
25. Debt - An amount owed to a person or organization for funds borrowed. Debt
can be represented by a loan note, bond, mortgage or other form
stating repayment terms and, if applicable, interest requirements. These
different forms all imply intent to pay back an amount owed by a
specific date, which is set forth in the repayment terms.
26. Operating Profit - A measure of a company's earning power from ongoing
operations, equal to earnings before deduction of interest
payments and income taxes. Also called EBIT (earnings before interest
and taxes) or operating income.
27. Working Capital -Current assets minus current liabilities. Working capital
measures how much in liquid assets a company has available to build
its business. The number can be positive or negative, depending on how
much debt the company is carrying. In general, companies that have
a lot of working capital will be more successful since they
can expand and improve their operations. Companies with negative
working capital may lack the funds necessary for growth. Also called net
current assets or current capital.
28. Capital Employed - Fixed assets plus current assets minus current liabilities.
Capital employed is the value of the assets that contribute to
a company's ability to generate revenue.
29.Shareholders' funds is all the money belonging to common stock shareholders
which includes the balance of share capital, all profits retained and
money classified as reserves. For the accounts of a company with no
subsidiaries it is total assets minus total liabilities
30. External Fund- Funds brought in from outside the company, such as through
a bond or equity offering.

6. Financial Statement Analysis JOMON THOMAS
Assignment MBA11- B22
LOGIC OF SELECTING A BEST COMPANY IN ANGLE OF:
Suppliers who supply raw materials
Financial stability of Companies
Production capabilities of the company
Brand value of the product
Location of the company
Debt Payment of the Company
Banks which planned to give short term loan
Credit history of the company
Cash flow history and projections of the business
Collateral available to secure the loan
Financial position of the company
Owners in terms of Survival of the company
Return on Investment
Availability and cost of raw materials
Goodwill
Customer satisfaction towards the Product

7. Financial Statement Analysis JOMON THOMAS
Assignment MBA11- B22
New investors planned to invest
Goodwill of the company
Share value
Profitability
Dividend of the company
Growth rate
Management to show their efficiency
Harmonious relationship within the Organization
Employee satisfaction
Good external relationship
Meet Customers’ needs and wants.