The document discusses the key aspects of company financial reports including profit and loss statements and balance sheets. It provides an overview of the meaning and types of companies, their key characteristics, and understanding annual reports. It then examines the format and major sections of profit and loss statements and balance sheets as prescribed by Schedule VI of the Companies Act, including changes introduced by the 2013 amendment. It discusses requirements for presenting items in the balance sheet and additional required disclosures.
Corporate Governance in India & SEBI RegulationsAtif Ghayas
This document discusses corporate governance in India and regulations from the Securities Exchange Board of India (SEBI). It defines corporate governance and outlines its key principles and objectives. It also discusses SEBI's role in establishing standards and protecting investors following scandals. The largest example discussed is the Satyam scandal, where the CEO confessed to overstating profits by billions through fake accounts and invoices.
The document discusses new corporate governance norms introduced in the Companies Act 2013 that require Indian companies to establish internal financial controls, a risk management policy, an internal audit function, and outlines related responsibilities of management, directors, and auditors as well as penalties for non-compliance. It also provides an overview of Spire Advisors Pvt Ltd, a firm that assists companies with complying with the new regulatory requirements through risk management services.
This document provides an overview of corporate governance practices in India. It discusses the legal and regulatory framework, including key acts like the Companies Act and SEBI guidelines. It covers topics like board structure and composition, including board size, independent directors, and separation of the Chairman and CEO roles. It also discusses requirements around board meetings, directorships, committees, and disclosure/transparency requirements as per the Companies Act.
The Kumar Mangalam Birla Committee was formed by SEBI in 1999 to develop a code of corporate governance for Indian companies. The committee submitted recommendations for both mandatory and non-mandatory guidelines. Key mandatory recommendations included composition of boards, establishment of audit committees, and disclosure requirements. The recommendations were implemented through Clause 49 of the listing agreement, which came into effect in 2005 and aimed to improve governance standards for listed companies.
The document discusses corporate governance in India and regulations by the Securities and Exchange Board of India (SEBI). It defines corporate governance and outlines its importance. It describes SEBI's role in establishing rules and regulations for listed companies in India, including Clause 49 which mandates rules for boards of directors, audit committees, whistleblower policies, and financial disclosures. The changes aim to increase transparency and protect investors as Indian companies compete globally.
The document provides information about accounting for managers, including:
1. It outlines a session plan for an accounting course covering topics like basic accounting concepts, the double entry system, preparing financial statements, and a class test.
2. It discusses different types of business entities like sole proprietorships, partnerships, limited liability partnerships, private and public companies, and one person companies.
3. It provides evaluation criteria for the course, which will be based entirely on an online test.
After the introduction to The companies Act, 2013. We shall discuss and understand each classifications of the companies. This presentation also includes the conversion of public to private company and vise versa, and the difference between the two types of companies formed.
This document provides an overview of laws governing business organizations in Indonesia. It discusses the main types of business entities recognized in Indonesia, including sole proprietorships, partnerships, corporations, and joint ventures. For each type of business entity, the document outlines how they are formed, governed, and their basic legal characteristics such as limited liability and ownership. It also discusses the process for setting up a business and company in Indonesia, as well as relevant regulations regarding foreign ownership of Indonesian businesses.
Corporate Governance in India & SEBI RegulationsAtif Ghayas
This document discusses corporate governance in India and regulations from the Securities Exchange Board of India (SEBI). It defines corporate governance and outlines its key principles and objectives. It also discusses SEBI's role in establishing standards and protecting investors following scandals. The largest example discussed is the Satyam scandal, where the CEO confessed to overstating profits by billions through fake accounts and invoices.
The document discusses new corporate governance norms introduced in the Companies Act 2013 that require Indian companies to establish internal financial controls, a risk management policy, an internal audit function, and outlines related responsibilities of management, directors, and auditors as well as penalties for non-compliance. It also provides an overview of Spire Advisors Pvt Ltd, a firm that assists companies with complying with the new regulatory requirements through risk management services.
This document provides an overview of corporate governance practices in India. It discusses the legal and regulatory framework, including key acts like the Companies Act and SEBI guidelines. It covers topics like board structure and composition, including board size, independent directors, and separation of the Chairman and CEO roles. It also discusses requirements around board meetings, directorships, committees, and disclosure/transparency requirements as per the Companies Act.
The Kumar Mangalam Birla Committee was formed by SEBI in 1999 to develop a code of corporate governance for Indian companies. The committee submitted recommendations for both mandatory and non-mandatory guidelines. Key mandatory recommendations included composition of boards, establishment of audit committees, and disclosure requirements. The recommendations were implemented through Clause 49 of the listing agreement, which came into effect in 2005 and aimed to improve governance standards for listed companies.
The document discusses corporate governance in India and regulations by the Securities and Exchange Board of India (SEBI). It defines corporate governance and outlines its importance. It describes SEBI's role in establishing rules and regulations for listed companies in India, including Clause 49 which mandates rules for boards of directors, audit committees, whistleblower policies, and financial disclosures. The changes aim to increase transparency and protect investors as Indian companies compete globally.
The document provides information about accounting for managers, including:
1. It outlines a session plan for an accounting course covering topics like basic accounting concepts, the double entry system, preparing financial statements, and a class test.
2. It discusses different types of business entities like sole proprietorships, partnerships, limited liability partnerships, private and public companies, and one person companies.
3. It provides evaluation criteria for the course, which will be based entirely on an online test.
After the introduction to The companies Act, 2013. We shall discuss and understand each classifications of the companies. This presentation also includes the conversion of public to private company and vise versa, and the difference between the two types of companies formed.
This document provides an overview of laws governing business organizations in Indonesia. It discusses the main types of business entities recognized in Indonesia, including sole proprietorships, partnerships, corporations, and joint ventures. For each type of business entity, the document outlines how they are formed, governed, and their basic legal characteristics such as limited liability and ownership. It also discusses the process for setting up a business and company in Indonesia, as well as relevant regulations regarding foreign ownership of Indonesian businesses.
This document discusses corporate governance in India and regulations from the Securities and Exchange Board of India (SEBI). It begins with introducing corporate governance and defining it. It then discusses the development of corporate governance norms and practices in India. It outlines SEBI's role in establishing rules and regulations for corporate governance, particularly Clause 49, for publicly listed companies. Clause 49 focused on increasing board independence and transparency around financial disclosures, related party transactions, and internal controls. The document concludes that as Indian companies compete globally, strong corporate governance aligned with international standards has become increasingly important.
Recent Developments of Corporate Insolvency Law in Malaysiainventionjournals
This article aims to analyse the current corporate insolvency framework in Malaysia and the problem faced in the corporate insolvency law. Under the current corporate insolvency law in Malaysia, there are numerous approaches in dealing with corporate insolvency, but it appears that the current framework is found to be inadequate due to lack of focus accorded on the rescue mechanisms or attempts to rehabilitate companies. Conversely, the current corporate insolvency framework is very much focused on liquidation or winding up of a company. This article also highlights some of the proactive reform efforts undertaken by the Malaysian government to keep in tandem with the latest development that had taken place in the corporate sector. Accordingly, this article will propose some future reforms to the relevant department in order to reinvigorate the existing insolvency regulatory framework to be more dynamic and in line with international standards adopted by other countries within the region.
The following presentation takes you through the Corporate Governance norms as prescribed by SEBI with a bit of detail into some major Corporate governance scams in INDIA
This presentation gives you the overview on Public Limited Companies, their history, criterion to become director of such company, paper/formation process, share capitals and queries related to share distribution. Gradually, we move on to the Pros & Cons of PLC with explanation of each merit and demerit. Then we present some factual and statistic analysis of Pros & Cons along with relevant examples. Finally, we wrap up with References & Accomplishments.
The Satyam case involved a $1.4 billion corporate governance fraud at Satyam, India's fourth largest IT company. The founder, Ramalinga Raju, admitted to falsifying Satyam's accounts for several years. Weak corporate governance allowed the fraud to occur, as the board and auditors failed to prevent it. The fraud had major implications, including difficulty retaining clients, damage to India's reputation, and calls for stronger corporate governance laws in India. The case demonstrates issues with agency theory and transaction cost theory, showing how failures in the relationship between agents and principals can harm an organization.
This document summarizes the different types of companies that exist based on various classification schemes. It discusses companies classified by the number of members (one member companies, private companies, public companies), liabilities (companies limited by shares, companies limited by guarantee, unlimited companies), control (holding companies, subsidiary companies), and location (foreign companies). The key types covered are one member companies, private limited companies, public limited companies, companies limited by shares or guarantee, holding and subsidiary relationships between companies, and foreign companies.
Uday salunkhe evolution of corporate governance indiaudaysalunkhe
This article gives an in depth analysis on Evolution Of Corporate Governance In India & It's Influence On India's Capital Market. It has been co- authored by Dr. Uday Salunkhe, Director of the prestigious Welingkar Institute of Management and Research.
The document discusses corporate governance in banks, specifically cooperative banks in India. It notes that cooperative banks have faced problems recently like mismanagement and financial impropriety that have threatened the cooperative system. Good corporate governance is needed now more than ever to restore customer confidence. The document then discusses how corporate governance principles developed from scandals in the US and UK. It highlights recommendations from the influential Cadbury Report on improving board oversight and transparency. The document argues that banking requires more government oversight than other sectors due to risks to depositors, opaque assets, and potential contagion effects. Greater transparency and disclosure are seen as important pillars of good corporate governance for banks.
This presentation is about stock exchange.Stock exchange is an organisation and body of individuals whether incorporated or not established for the purpose of assisting,regulating,and controlling of business in buying ,selling and designing securities
This document discusses different types of business ownership and their associated liabilities. There are two main types: unlimited liability businesses like sole traders and partnerships, where owners are personally liable for all debts and losses; and limited liability businesses called companies, where liability is limited to the amount invested and owners are separate from the business. It also discusses sources of finance for businesses, including retained profits, share capital, bank loans, hire purchase, leasing, trade credit and overdrafts to finance fixed assets and working capital.
- This document discusses corporate governance in India and regulations established by the Securities and Exchange Board of India (SEBI). It provides background on corporate scandals that led to increased regulation. SEBI established Clause 49, which strengthened the role of independent directors and introduced new disclosure requirements for public companies. The key changes required companies to have a minimum number of independent directors, limited terms for non-executive directors, established codes of conduct, and enhanced financial disclosures and internal controls. Effective corporate governance is important for India's corporations as they increasingly compete globally and attract foreign investment.
Educaterer India is an unique combination of passion driven into a hobby which makes an awesome profession. We carve the lives of enthusiastic candidates to a perfect professional who can impress upon the mindsets of the industry, while following the established traditions, can dare to set new standards to follow. We don't want you to be the part of the crowd, rather we like to make you the reason of the crowd.
Today's Effort For A Better Tomorrow
A joint stock company is an artificial legal entity created by law that has a separate legal status from its members. It has perpetual succession and a common seal. A joint stock company's capital is divided into transferable shares and it has limited liability for its members. The document defines key terms related to the formation and capital structure of joint stock companies, including shares, share capital, debentures, and the memorandum of association.
OVERVIEW OF DIFFERENT FORMS OF BUSINESS/ ORGANIZATION: Meaning, features, objectives and scope of Business, Profession, Employment and Vocation, Various forms of Business Organization. SOLE PROPRIETORSHIP: Meaning, characteristics, formation, merits and demerits, Licenses required to start business under Sole Proprietorship.
PARTNERSHIP: Meaning, characteristics, formation of partnership firm, merits and demerits, Types of Partners, Types of Partnership firms, Limited Liability Partnership, Registration of Partnership, Co-ownership.
This document provides an overview of corporate governance in Iran based on a survey conducted by CSR Development Center. Some key findings include:
1) Corporate governance is a relatively new concept in Iran and compliance with governance codes is low among surveyed companies. Ownership is highly concentrated and minority shareholder rights are not well protected.
2) The survey found low levels of board independence, a lack of formal governance policies/procedures, and limited information disclosure among respondent companies.
3) Developing corporate governance in Iran faces challenges such as an outdated commercial law, lack of governance expertise, and reluctance to share information. However, private companies demonstrated some better practices.
4) The report recommends various measures to strengthen
El documento describe varias aplicaciones educativas para dispositivos móviles, incluyendo iTunesU, Brainpop, Duolingo, Math42, AlgebraTouch, AutoCAD360, PocketAnatomy, SimplexSpelling Phonics y GoogleClassroom. Estas aplicaciones cubren una variedad de materias como ciencias, historia, idiomas, matemáticas y diseño, y sirven para enseñar, practicar habilidades y comunicarse entre maestros y estudiantes.
The document is a resume for an applicant seeking a part-time position as a firefighter/paramedic. It summarizes the applicant's work experience including as a paramedic, ski patroller, and fire extinguisher technician. It also lists the applicant's education including firefighter academy training, paramedic licensing from Loyola Medical University, and EMT certification from Technical Center of DuPage. Additional experience includes volunteer work with the Naperville Fire Explorer Program and National Ski Patrol.
This document provides biographical information about an individual named Bogdan who attended the University of West Timisoara in Timisoara, Romania where he studied International Relations and European Studies. He graduated in 2011 and previously attended Colegiul National "Octavian Goga" in Marghita, Romania from 2004 to 2008. It also lists contact information.
This document discusses corporate governance in India and regulations from the Securities and Exchange Board of India (SEBI). It begins with introducing corporate governance and defining it. It then discusses the development of corporate governance norms and practices in India. It outlines SEBI's role in establishing rules and regulations for corporate governance, particularly Clause 49, for publicly listed companies. Clause 49 focused on increasing board independence and transparency around financial disclosures, related party transactions, and internal controls. The document concludes that as Indian companies compete globally, strong corporate governance aligned with international standards has become increasingly important.
Recent Developments of Corporate Insolvency Law in Malaysiainventionjournals
This article aims to analyse the current corporate insolvency framework in Malaysia and the problem faced in the corporate insolvency law. Under the current corporate insolvency law in Malaysia, there are numerous approaches in dealing with corporate insolvency, but it appears that the current framework is found to be inadequate due to lack of focus accorded on the rescue mechanisms or attempts to rehabilitate companies. Conversely, the current corporate insolvency framework is very much focused on liquidation or winding up of a company. This article also highlights some of the proactive reform efforts undertaken by the Malaysian government to keep in tandem with the latest development that had taken place in the corporate sector. Accordingly, this article will propose some future reforms to the relevant department in order to reinvigorate the existing insolvency regulatory framework to be more dynamic and in line with international standards adopted by other countries within the region.
The following presentation takes you through the Corporate Governance norms as prescribed by SEBI with a bit of detail into some major Corporate governance scams in INDIA
This presentation gives you the overview on Public Limited Companies, their history, criterion to become director of such company, paper/formation process, share capitals and queries related to share distribution. Gradually, we move on to the Pros & Cons of PLC with explanation of each merit and demerit. Then we present some factual and statistic analysis of Pros & Cons along with relevant examples. Finally, we wrap up with References & Accomplishments.
The Satyam case involved a $1.4 billion corporate governance fraud at Satyam, India's fourth largest IT company. The founder, Ramalinga Raju, admitted to falsifying Satyam's accounts for several years. Weak corporate governance allowed the fraud to occur, as the board and auditors failed to prevent it. The fraud had major implications, including difficulty retaining clients, damage to India's reputation, and calls for stronger corporate governance laws in India. The case demonstrates issues with agency theory and transaction cost theory, showing how failures in the relationship between agents and principals can harm an organization.
This document summarizes the different types of companies that exist based on various classification schemes. It discusses companies classified by the number of members (one member companies, private companies, public companies), liabilities (companies limited by shares, companies limited by guarantee, unlimited companies), control (holding companies, subsidiary companies), and location (foreign companies). The key types covered are one member companies, private limited companies, public limited companies, companies limited by shares or guarantee, holding and subsidiary relationships between companies, and foreign companies.
Uday salunkhe evolution of corporate governance indiaudaysalunkhe
This article gives an in depth analysis on Evolution Of Corporate Governance In India & It's Influence On India's Capital Market. It has been co- authored by Dr. Uday Salunkhe, Director of the prestigious Welingkar Institute of Management and Research.
The document discusses corporate governance in banks, specifically cooperative banks in India. It notes that cooperative banks have faced problems recently like mismanagement and financial impropriety that have threatened the cooperative system. Good corporate governance is needed now more than ever to restore customer confidence. The document then discusses how corporate governance principles developed from scandals in the US and UK. It highlights recommendations from the influential Cadbury Report on improving board oversight and transparency. The document argues that banking requires more government oversight than other sectors due to risks to depositors, opaque assets, and potential contagion effects. Greater transparency and disclosure are seen as important pillars of good corporate governance for banks.
This presentation is about stock exchange.Stock exchange is an organisation and body of individuals whether incorporated or not established for the purpose of assisting,regulating,and controlling of business in buying ,selling and designing securities
This document discusses different types of business ownership and their associated liabilities. There are two main types: unlimited liability businesses like sole traders and partnerships, where owners are personally liable for all debts and losses; and limited liability businesses called companies, where liability is limited to the amount invested and owners are separate from the business. It also discusses sources of finance for businesses, including retained profits, share capital, bank loans, hire purchase, leasing, trade credit and overdrafts to finance fixed assets and working capital.
- This document discusses corporate governance in India and regulations established by the Securities and Exchange Board of India (SEBI). It provides background on corporate scandals that led to increased regulation. SEBI established Clause 49, which strengthened the role of independent directors and introduced new disclosure requirements for public companies. The key changes required companies to have a minimum number of independent directors, limited terms for non-executive directors, established codes of conduct, and enhanced financial disclosures and internal controls. Effective corporate governance is important for India's corporations as they increasingly compete globally and attract foreign investment.
Educaterer India is an unique combination of passion driven into a hobby which makes an awesome profession. We carve the lives of enthusiastic candidates to a perfect professional who can impress upon the mindsets of the industry, while following the established traditions, can dare to set new standards to follow. We don't want you to be the part of the crowd, rather we like to make you the reason of the crowd.
Today's Effort For A Better Tomorrow
A joint stock company is an artificial legal entity created by law that has a separate legal status from its members. It has perpetual succession and a common seal. A joint stock company's capital is divided into transferable shares and it has limited liability for its members. The document defines key terms related to the formation and capital structure of joint stock companies, including shares, share capital, debentures, and the memorandum of association.
OVERVIEW OF DIFFERENT FORMS OF BUSINESS/ ORGANIZATION: Meaning, features, objectives and scope of Business, Profession, Employment and Vocation, Various forms of Business Organization. SOLE PROPRIETORSHIP: Meaning, characteristics, formation, merits and demerits, Licenses required to start business under Sole Proprietorship.
PARTNERSHIP: Meaning, characteristics, formation of partnership firm, merits and demerits, Types of Partners, Types of Partnership firms, Limited Liability Partnership, Registration of Partnership, Co-ownership.
This document provides an overview of corporate governance in Iran based on a survey conducted by CSR Development Center. Some key findings include:
1) Corporate governance is a relatively new concept in Iran and compliance with governance codes is low among surveyed companies. Ownership is highly concentrated and minority shareholder rights are not well protected.
2) The survey found low levels of board independence, a lack of formal governance policies/procedures, and limited information disclosure among respondent companies.
3) Developing corporate governance in Iran faces challenges such as an outdated commercial law, lack of governance expertise, and reluctance to share information. However, private companies demonstrated some better practices.
4) The report recommends various measures to strengthen
El documento describe varias aplicaciones educativas para dispositivos móviles, incluyendo iTunesU, Brainpop, Duolingo, Math42, AlgebraTouch, AutoCAD360, PocketAnatomy, SimplexSpelling Phonics y GoogleClassroom. Estas aplicaciones cubren una variedad de materias como ciencias, historia, idiomas, matemáticas y diseño, y sirven para enseñar, practicar habilidades y comunicarse entre maestros y estudiantes.
The document is a resume for an applicant seeking a part-time position as a firefighter/paramedic. It summarizes the applicant's work experience including as a paramedic, ski patroller, and fire extinguisher technician. It also lists the applicant's education including firefighter academy training, paramedic licensing from Loyola Medical University, and EMT certification from Technical Center of DuPage. Additional experience includes volunteer work with the Naperville Fire Explorer Program and National Ski Patrol.
This document provides biographical information about an individual named Bogdan who attended the University of West Timisoara in Timisoara, Romania where he studied International Relations and European Studies. He graduated in 2011 and previously attended Colegiul National "Octavian Goga" in Marghita, Romania from 2004 to 2008. It also lists contact information.
The document discusses opportunities and challenges facing new artists in today's music business. It outlines how major record labels have seen declining revenues and sign fewer artists. However, new technologies have reduced recording costs and made distribution nearly free. This allows artists to succeed independently through DIY strategies like using online tools like YouTube, websites, blogs, and social networks for promotion. While labels provide marketing support, they take a large percentage of sales revenues. The document examines whether artists are better off signing with a label or going independent, and strategies independent artists can use to succeed in today's music industry.
This document outlines a lesson plan on creativity and starting a business. It includes the aims of introducing creativity and business advice. Students will discuss favorite foods and develop ideas for marketing a regional food product. In groups, they will create brand names and website homepages. Students will then present their food business ideas and discuss areas where advice could help the business. For an extension, they will use a case study to further develop creative plans to make their food business a global leader.
Connecting Design Thinking with the Future Value Generation Framework @daniel...Daniel Egger
This document introduces the Future Value Framework, which aims to guide organizations in efficiently using time to generate human and context-centric value. The framework includes elements like value propositions, futures context, visions, and value policies. It also incorporates principles from design thinking, which emphasizes empathy and creating perceived value by questioning assumptions and experimenting. The document argues the framework and design thinking both focus on understanding individuals in the present and future to identify value opportunities. It invites the reader to learn more by visiting the Future Value Hub or a LinkedIn discussion group.
O documento discute o conceito de polimorfismo na programação, onde objetos de diferentes tipos podem ser referenciados de forma uniforme, e apresenta um exemplo de registro de entrada de funcionários de um banco polimórfico, categorizados como gerentes, atendentes e zeladores.
La falta de liderazgo, es en ocasiones capaz de afirmarse sólo por la fuerza, la resistencia al cambio de quienes ocupan posiciones establecidas y la inflexibilidad de la respuesta frente a un mundo en continua ebullición, no harán sino prolongar la decadencia de un realidad insostenible.
While colleges and universities were among the first in terms of industries diving in to the abundant world of Internet marketing, they face very unique challenges when it comes to advertising online: Competing departments cannibalizing efforts and budget, disparate content management systems threatening accurate tracking and integration… the list goes on.
In these webinar slides we will focus on:
- What makes the EDU market so competitive when it comes to online advertising.
- How your SEO campaigns can help alleviate some of the competition through management of content sources, segmentation of users and a variety of other specific methods.
- How you can optimize your PPC efforts through cost per enrollment tracking, remarketing, and multi-channel marketing/attribution strategies and improve market share while maintaining campaign goals.
- The potential future of the EDU marketplace for both SEO & PPC, and how you can proactively be prepared for what’s next.
ESTUDIO EXPLORATORIO DE FACTORES DE RIESGO PSICOSOCIALjjmbezanilla
Este documento presenta los resultados de un estudio diagnóstico realizado en una comunidad escolar para identificar factores de riesgo. El estudio evaluó a estudiantes, docentes, personal administrativo y familias. Los principales factores de riesgo identificados incluyen baja cohesión del grupo escolar, deficiencias en habilidades académicas y estilo de vida, tolerancia al consumo de alcohol y otras sustancias, y presencia del síndrome de burnout en docentes. Sin embargo, las familias se presentan como un factor protector importante.
El documento describe el método de casos, el cual nació en 1908 en la Universidad de Harvard con el objetivo de enseñar a pensar a los estudiantes de manera activa. El método implica el estudio de casos reales que presentan situaciones problémicas que requieren tomar decisiones. El proceso involucra la preparación individual del caso, trabajo en grupos para analizarlo desde diferentes perspectivas, y discusión plenaria para obtener conclusiones. Tanto profesores como alumnos tienen compromisos para garantizar el éxito del método, el cual busca desarroll
Identification of communities from Multiplex NetworksAnaïs Baudot
This document discusses combining multiple biological networks to identify protein communities. It introduces the concept of a multiplex framework to analyze multiple networks simultaneously. Simulations show the multiplex approach more accurately detects communities in heterogeneous and incomplete networks compared to analyzing networks individually or combined through simple operations. The document applies the multiplex framework to real PPI, pathway, co-expression, and complex networks, finding it identifies more balanced and annotated communities than other approaches. An example community enriched for genes associated with Coffin-Siris syndrome is presented.
The document provides an overview of company law in India according to the Companies Act of 1956. It discusses the types of companies, the key documents that establish a company (the memorandum of association and articles of association), shareholders and debenture holders' rights, and winding up procedures. The act aims to regulate company formation, operations, and dissolution for the purposes of transparency, accountability and protecting stakeholder interests.
This document provides an overview of key aspects of company law in India according to the Companies Act of 1956. It begins with an introduction to the Act and objectives. It then discusses the different types of companies according to basis of incorporation, liability, and number of members. The document outlines the essential contents and features of a Memorandum of Association and Articles of Association. It also describes shareholders, debenture holders, and the different modes of voluntary and compulsory winding up of a company.
This document discusses forms of business organizations and accounting information users. It describes the three main forms of business organization: sole proprietorships, partnerships, and corporations. Sole proprietorships and partnerships are unincorporated businesses where owners have unlimited liability, while corporations are legally separate entities where owners have limited liability. The document also outlines external users of accounting information like owners, creditors, suppliers and internal users like managers, supervisors and directors who use accounting data for decision making.
This document provides an overview of company law and secretarial practice in India. It defines a company and outlines its key characteristics such as separate legal identity, limited liability, transferable shares, and perpetual existence. It then classifies companies based on liability, members, control/holding, and other categories. The document also discusses company promotion, registration procedures, memorandum and articles of association, and the differences between private and public limited companies.
Narayan murthy report on corporate governanceDhruvKothari13
The document summarizes the key recommendations from the Narayana Murthy Committee Report on Corporate Governance in India from 2003. The committee was formed by SEBI under Murthy's chairmanship to review corporate governance standards and disclosure requirements. The committee recommended several mandatory requirements, such as strengthening audit committees, requiring approval of related party transactions, and establishing whistleblower policies. It also recommended non-mandatory best practices around moving to unqualified financial statements, training board members, and evaluating board performance. The recommendations aimed to improve transparency, accountability and investor protection in Indian markets.
This document provides information about the sequence and content of a lecture on business organizations and corporate governance. The lecture will cover forms of business organizations like sole proprietorships, partnerships, and corporations. It will discuss important corporate concepts such as the memorandum of association, articles of association, prospectuses, and initial public offerings. The lecture will also cover corporate governance topics including the workings of corporate entities, basic governance principles, audit committees, and the workings of audit committees. The overall goals of the lecture are to educate about business organizational forms, corporate governance, and corporate accountability.
A company is formed through several key steps:
1) Promotion, where the idea for the company is conceived and initial planning is done. Promoters are the individuals who undertake promotion.
2) Incorporation, which involves registering the company with statutory documents like the Memorandum and Articles of Association.
3) Raising capital, typically through the public issuance of shares, to fund the company's operations.
The Memorandum outlines the company's basic constitution while the Articles provide internal regulations and procedures. A prospectus may also be required to publicly offer shares. Upon submission of the required documents and fees, the Registrar of Companies will issue a Certificate of Incorporation, formally recognizing the
The document discusses the process of forming a company in India. It begins by defining a company and then outlines the key steps in formation which include promotion, incorporation, raising capital and obtaining a commencement certificate for public limited companies.
The roles and functions of promoters are described, which include conceiving the idea, investigating feasibility, and arranging preliminary documents and expenses. Registration and incorporation requires filing documents like the memorandum of association, articles of association, director details and capital statement with the registrar.
The memorandum outlines the name, objectives, capital structure and liability of the company. The articles of association describe the internal regulations and management structure. A prospectus may also be required which discloses important company information to potential investors.
Corporate digest magazine august, 2017 by venture careKumar Kanaujia
Corporate Digest is a monthly e-magazine published for India Business owners by www.venture-care.com. It contents latest trends and expert opinions on Business, Strategy, Technology, Digital, Finance and Legal.
1. Accounting involves systematically recording, analyzing, classifying, summarizing, and interpreting business transactions and financial information.
2. The main purposes of accounting are to plan finances, keep financial records, enable information sharing, and use data to make decisions.
3. Accounting provides both internal and external users with financial information to assess a business's performance and financial position.
A company is a legal entity that is separate from its owners. It has an independent existence and can own property, be party to contracts, sue and be sued. The key advantages of the corporate form include limited liability, meaning owners are not personally liable for the debts of the company, and transferable shares that allow for investment and ownership changes. A private company must have restrictions on share transfers and a maximum of 50 members to maintain its private status.
This document discusses creating a shareholders trust in India to offset management control. It proposes establishing a trust under the Indian Trust Act of 1882, with management acting as trustees and shareholders as beneficiaries. This would make management impartial and accountable to shareholders. Currently, shareholders have little power while management has full control. A trust could guarantee shareholders a return and prevent losses, while making management answerable. It would give investors greater rights and encourage more investment in companies.
The document discusses various models of corporate governance in India including the Business House Model, Anglo-American Model, German Model, Japanese Model, Indian Model, and Open Enterprise Model. It then summarizes key reports on corporate governance reforms in India, including recommendations from the Kumar Mangalam Birla Committee (2000), Naresh Chandra Committee (2002), and Narayana Murthy Committee (2003). The reports focused on strengthening audit committees, improving financial disclosures, assessing business risks, and other measures to improve corporate governance practices in India.
COMPANY ORGANISATION: Meaning, definition under the Indian Company’s Act-2013, characteristics, formation procedure, merits and demerits, Types of company, Concept of One Person Company, difference between public Ltd. And private Ltd. Company, subscription and commencement, detailed study of Memorandum of Association, Articles of
Association, Prospectus, statement in lieu of prospectus, brief idea about winding-up.
CO-OPERATIVE ORGANISATION: Meaning, characteristics, formation, merits and demerits, Federal Co-operative Society
PUBLIC ENTERPRISE: Meaning, characteristics, formation, merits and demerits. Role of Public Enterprise in infrastructure and social development.
NON-PROFIT ORGANISATION: Meaning, characteristics, formation, merits and demerits. Role of Non-profit organization development of society.
1) A company is a legal entity formed by individuals to operate a business ranging from a partnership to a corporation.
2) There are several types of companies including companies limited by guarantee, unlimited companies, one person companies, private companies, and public companies.
3) The doctrine of ultra vires states that a company can only depart from its stated objectives in its memorandum to the extent permitted by law.
4) An equity share represents partial ownership where shareholders have voting rights and maximum entrepreneurial liability.
The document discusses the concept of a company. It defines a company as a legal entity formed by individuals to operate a business. It then discusses key characteristics of companies like separate legal entity status, limited liability, perpetual succession, and common seals. It also discusses the concept of lifting the corporate veil in situations where a company's legal personality is misused. Finally, it briefly outlines different types of companies based on mode of incorporation, ownership, control, nationality, and number of members.
The document discusses corporate governance requirements for companies in India. It defines corporate governance as a set of standards that aim to improve a company's image, efficiency, effectiveness and social responsibility. Some key requirements discussed include:
- Board of directors must have at least one woman director and at least 50% non-executive directors.
- There must be at least four board meetings per year with a maximum gap of 120 days between meetings.
- Companies must have audit, nomination & remuneration, and stakeholders relationship committees.
- Detailed criteria are provided for independent directors regarding their appointment, tenure, and separation from the company.
- Related party transactions require audit committee and shareholder approval depending on
The document discusses the different types of business structures available in India, including sole proprietorships, partnerships, private limited companies, public limited companies, and limited liability partnerships. It provides details on the key features of each structure, such as ownership, liability, administration requirements, and the types of businesses that each structure is best suited for. Choosing the right business structure depends on factors like personal liability, taxation, and administration needs for each individual business owner.
1. FINANCIAL REPORTING AND
COST CONTROL
COMPANIES FINAL ACCOUNTS
Module 1
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2. CHAPTER CONTENTS
Introduction
Meaning of companies
Types of companies
Characteristics of companies
Understanding Annual Reports
Profit and loss statement and balance sheet
Off Balance sheet items
Treatment of events occurring after Balance sheet
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3. LEARNING OUTCOMES
Obtaining a basic understanding about company form of business
organization
Understanding the contents and format of P&L and Balance sheet
of companies.
Understanding Annual reports.
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5. INTRODUCTION
Industrial revolution has led to the emergence of large scale business
organizations. These organization require big investments and the risk involved is
very high.
Joint Stock Company form of business organization has become extremely
popular as it provides a solution to overcome the limitations of partnership
business.
The giant Indian Companies may include the names like Reliance, Talco
Bajaj Auto, Infosys Technologies, Hindustan Lever Ltd., Ranbaxy Laboratories Ltd.,
and Larsen and Tubro etc.
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6. DEFINITION/MEANING OF
COMPANY
A comprehensive and clear definition of a company is given by Lord
Justice Lindley, “A company is meant an association of many persons who contribute
money or money’s worth to a common stock and employ it in some trade or business,
and who share the profit and loss (as the case may be) arising there from. The common
stock contributed is denoted in money and is the capital of the company. The persons
who contribute it, or to whom it belongs, are members. The proportion of capital to
which each member is entitled is his share. Shares are always transferable although the
right to transfer them is often more or less restricted”.
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14. CHARACTERISTICS OF COMPANY
Separate Legal Entity:
Under Incorporation law, a company becomes a separate legal entity as
compared to its members. The company is distinct and different from its
members in law. It has its own seal and its own name, its assets and
liabilities are separate and distinct from those of its members. It is capable
of owning property, incurring debt, and borrowing money, employing
people, having a bank account, entering into contracts and suing and
being sued separately.
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15. CHARACTERISTICS OF COMPANY
Limited Liability:
The liability of the members of the company is limited to contribution to the assets
of the company upto the face value of shares held by him. A member is liable to
pay only the uncalled money due on shares held by him. If the assets of the firm
are not sufficient to pay the liabilities of the firm, the creditors can force the
partners to make good the deficit from their personal assets. This cannot be done in
the case of a company once the members have paid all their dues towards the shares
held by them in the company.
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16. CHARACTERISTICS OF COMPANY
Perpetual Succession:
A company does not cease to exist unless it is specifically wound up
or the task for which it was formed has been completed. Membership
of a company may keep on changing from time to time but that does
not affect life of the company. Insolvency or Death of member does
not affect the existence of the company.
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17. CHARACTERISTICS OF COMPANY
Separate Property:
A company is a distinct legal entity. The company's property is its own. A member cannot
claim to be owner of the company's property during the existence of the company.
Transferability of Shares:
Shares in a company are freely transferable, subject to certain conditions, such that no
share-holder is permanently or necessarily wedded to a company. When a member
transfers his shares to another person, the transferee steps into the shoes of the transferor
and acquires all the rights of the transferor in respect of those shares.
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18. CHARACTERISTICS OF COMPANY
Common Seal:
A company is an artificial person and does not have a physical presence.
Thus, it acts through its Board of Directors for carrying out its activities
and entering into various agreements. Such contracts must be under the
seal of the company. The common seal is the official signature of the
company. The name of the company must be engraved on the common
seal. Any document not bearing the seal of the company may not be
accepted as authentic and may not have any legal force.
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19. CHARACTERISTICS OF COMPANY
Capacity to sue and being sued:
A company can sue or be sued in its own name as distinct from its
members.
Separate Management:
A company is administered and managed by its managerial personnel i.e.
the Board of Directors. The shareholders are simply the holders of the
shares in the company and need not be necessarily the managers of the
company.
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20. CHARACTERISTICS OF COMPANY
One Share-One Vote:
The principle of voting in a company is one share-one vote i.e. if a
person has 10 shares, he has 10 votes in the company. This is in direct
distinction to the voting principle of a co-operative society where the
"One Member - One Vote" principle applies i.e. irrespective of the
number of shares held, one member has only one vote.
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22. ABOUT ANNUAL REPORTS
An annual report is intended to provide a snapshot of a business' performance with
investors, potential investors and other stakeholders.
It should provide enough information so that a potential investor understands the
nature and scope of the business, its recent developments and future outlook.
The main sections of an annual report typically include the financial statements and
the "Management Discussion and Analysis."
The former gives a summary of the financial results over the past year. For publicly
traded companies, all financial results must be reported for public consumption. Privately
held companies are under no such obligation, but most will share key financial
information with investors.
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23. ABOUT ANNUAL REPORTS
The information contained in an annual report should give investors
and other stakeholders a clear idea of how the company is performing
and how it plans to grow and improve its business in coming years.
Publicly traded companies mail reports to shareholders or provide a
copy of the annual report on their websites.
Investors who want the straight financial data can also download
copies of the company's 10-K it files with the Securities & Exchange
Commission.
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24. CHAIRMAN’S LETTER
It is customary for the annual report to contain a letter from the chairman of
the board of directors to shareholders.
A small business might not have a separate board of directors, but a letter from
the chairman and CEO/president is appropriate to give to investors and other
stakeholders and should provide an overview of the past year's key developments.
The chairman's letter should provide details about the successes as well as the
challenges of the past year. It should also include the future outlook for the
company, including insights about the market and growth opportunities.
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25. MANAGEMENT DISCUSSION &
ANALYSIS
The Management Discussion and Analysis is a section of the annual report that
discusses different aspects of the business.
Topics of discussion typically include new hires or appointments, new product
introductions, updates on the progress of business acquisitions, product launches
and other information management believes to be important to investors.
It is an overview of the previous year's developments and how the company
performed over that period. It should be a good starting point for a new investor
who wants to understand a business' fundamentals.
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26. AUDITOR’S REPORT/LETTER
Annual reports include a letter form the party reviewing and
externally verifying the financial data, typically in the form of an
auditors report or Certified Public Accountant letter.
This letter provides proof of independent verification of the data
presented.
It is typically presented on the official letterhead of the auditing
firm or individual CPA.
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27. FINANCIAL STATEMENTS
The financial statements comprise the meat of the annual report. This is where the company
provides the numbers that investors use to determine how well the company performed
financially.
The financial statements consist of the income or profit and loss statement, balance sheet
and cash flow statement for the current year previous year and prior years so investors can
compare the performance from one year to the next.
Publicly traded companies are required to provide three years worth of financial statements
in their annual reports. A privately held company is not bound by the same regulations.
However, investors will always welcome greater transparency. A privately held business that
goes above and beyond to publish prior-year financial results in its annual report increases its
chances of attracting new money.
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28. NOTES TO STATEMENTS
An annual report’s financial statements are followed by notes that clarify various
points.
This may include an introductory summary of the nature of the organization
and its business.
This may be followed by a summary of the accounting policies applied,
information regarding capital contributions, investments and stock redemptions,
and other items depending on the business and events of the prior year.
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29. ADDITIONAL INFORMATION
If the company has partners or subsidiary companies, partner
profiles and company data sheets may be included in the report to
provide a more complete picture of the year’s activities.
Contact information is always included and generally closes the
report.
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31. SCHEDULE VI OF COMPANIES
ACT(2013 AMENDMENT)
Schedule VI to Indian Companies Act 1956
specifies the format of Profit & Loss account &
Balance Sheet.
The latest format as per 2013 amendment is
attached for perusal & understanding
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32. FORMAT OF P & L ACCOUNT &
BALANCE SHEET
BALANCE SHEET AND PROFIT AND LOSS FORMAT.xlsx
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33. MAJOR CHANGES IN REVISED
SCHEDULE VI
The major changes that have been made in schedule Vi can be
better understood by categorizing the changes into 3 broad headings
Major changes in balance sheet
Additional disclosures that are required in balance sheet
Major changes in P & L account
Disclosures that are not required
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34. MAJOR CHANGES RELATED TO
THE BALANCE SHEET
The Revised Schedule VI prescribes only the vertical format for
presentation of Financial Statements. Thus, a company will now not have an option
to use horizontal format for the presentation of Financial Statements as prescribed
in Old Schedule VI.
Current and non-current classification has been introduced for
presentation of assets and liabilities in the Balance Sheet. The application of
this classification will require assets and liabilities to be segregated into their
current and non-current portions. For instance, current maturities of a long term
borrowing will have to be classified under the head “Other current liabilities.”
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35. MAJOR CHANGES RELATED TO
THE BALANCE SHEET
The Number of shares held by each shareholder holding more than 5
percent shares in the company now needs to be disclosed. In the absence
of any specific indication of the date of holding, such information should
be based on shares held as on the Balance Sheet date.
Details pertaining to aggregate number and class of shares allotted for
consideration other than cash, bonus shares and shares bought back will
need to be disclosed only for a period of five years immediately preceding
the Balance Sheet date including the current year.
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36. MAJOR CHANGES RELATED TO
THE BALANCE SHEET
Any debit balance in the Statement of Profit and Loss will be disclosed under
the head “Reserves and surplus.” Earlier, any debit balance in Profit and Loss
Account carried forward after deduction from uncommitted reserves was required
to be shown as the last item on the Assets side of the Balance Sheet.
Specific disclosures are prescribed for Share Application money. The application
money not exceeding the capital offered for issuance and to the extent not
refundable will be shown separately on the face of the Balance Sheet. The amount
in excess of subscription or if the requirements of minimum subscription are not
met will be shown under “Other current liabilities.”
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37. MAJOR CHANGES RELATED TO
THE BALANCE SHEET
The term “sundry debtors” has been replaced with the term “trade receivables.”
‘Trade receivables’ are defined as dues arising only from goods sold or services rendered
in the normal course of business. Hence, amounts due on account of other contractual
obligations can no longer be included in the trade receivables.
The Old Schedule VI required separate presentation of debtors outstanding for a
period exceeding six months based on date on which the Guidance Note on the Revised
Schedule VI to the Companies Act, 1956 bill/invoice was raised whereas, the Revised
Schedule VI requires separate disclosure of trade receivables outstanding for a period
exceeding six months from the date the bill/invoice is due for payment.
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38. MAJOR CHANGES RELATED TO
THE BALANCE SHEET
“Capital advances” are specifically required to be presented separately
under the head “Loans & advances” rather than including elsewhere.
Tangible assets under lease are required to be separately specified
under each class of asset. In the absence of any further clarification, the
term “under lease” should be taken to mean assets given on operating
lease in the case of lessor and assets held under finance lease in the case
of lessee.
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39. MAJOR CHANGES RELATED TO
THE BALANCE SHEET
In the Old Schedule VI, details of only capital commitments were required to be
disclosed. Under the Revised Schedule VI, other commitments also need to be
disclosed.
The Revised Schedule VI requires disclosure of all defaults in repayment of
loans and interest to be specified in each case. Earlier, no such disclosure was
required in the Financial Statements. However, disclosures pertaining to defaults in
repayment of dues to a financial institution, bank and debenture holders continue to
be required in the report under Companies (Auditor’s Report) Order, 2003 (CARO).
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40. ADDITIONAL DISCLOSURES
(a) Rights, preferences and restrictions attaching to each class of shares,
including restrictions on the distribution of dividends and the repayment of capital;
(b) Terms of repayment of long-term loans;
(c) In each class of investment, details regarding names of the bodies corporate
in whom investments have been made, indicating separately whether such bodies are
(i) subsidiaries, (ii) associates, (iii) joint ventures, or (iv) controlled special purpose
entities, and the nature and extent of the investment made in each such body
corporate (showing separately partly-paid investments);
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41. ADDITIONAL DISCLOSURES-
CONTD.
(d) Aggregate provision for diminution in value
of investments separately for current and long-term
investments;
(e) Stock-in-trade held for trading purposes,
separately from other finished goods.
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42. MAJOR CHANGES RELATED TO
THE P & L ACCOUNT
The name has been changed to “Statement of Profit and Loss” as
against ‘Profit and Loss Account’ as contained in the Old Schedule
VI.
Unlike the Old Schedule VI, the Revised Schedule VI lays down a
format for the presentation of Statement of Profit and Loss. This
format of Statement of Profit and Loss does not mention any
appropriation item on its face.
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43. MAJOR CHANGES RELATED TO
THE P & L ACCOUNT
In addition to specific disclosures prescribed in the Statement of Profit and
Loss, any item of income or expense which exceeds one percent of the revenue
from operations or Rs. 100,000 (earlier 1 % of total revenue or Rs. 5,000),
whichever is higher, needs to be disclosed separately.
The Old Schedule VI required the parent company to recognize
dividends declared by subsidiary companies even after the date of the
Balance Sheet if they were pertaining to the period ending on or before the
Balance Sheet date. Such requirement no longer exists in the Revised
Schedule VI.
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44. MAJOR CHANGES RELATED TO
THE P & L ACCOUNT
In respect of companies other than finance companies, revenue from
operations need to be disclosed separately as revenue from (a) sale of
products, (b) sale of services and (c) other operating revenues.
Net exchange gain/loss on foreign currency borrowings to the extent
considered as an adjustment to interest cost needs to be disclosed
separately as finance cost.
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45. MAJOR CHANGES RELATED TO
THE P & L ACCOUNT
Break-up in terms of quantitative disclosures for significant items of
Statement of Profit and Loss, such as raw material consumption, stocks,
purchases and sales have been simplified and replaced with the disclosure
of “broad heads” only.
The broad heads need to be decided based on considerations of
materiality and presentation of true and fair view of the Financial
Statements.
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46. DISCLOSURES THAT ARE NOT
REQUIRED
Disclosures relating to managerial remuneration and computation of net profits for
calculation of commission;
Information relating to licensed capacity, installed capacity and actual production;
Information on investments purchased and sold during the year;
Investments, sundry debtors and loans & advances pertaining to companies under
the same management;
Maximum amounts due on account of loans and advances from directors or officers
of the company;
Commission, brokerage and non-trade discounts
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48. OFF BALANCE SHEET ITEMS
Off-balance sheet financing means a company
does not include a liability on its balance sheet.
It is an accounting term and impacts a company’s
level of debt and liability.
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49. EXAMPLE OF OFF BALANCE SHEET
ITEMS
Common forms of off-balance sheet financing include operating
leases and partnerships. Operating leases have been widely used over the
years, although the accounting rules have been tightened to lessen the use.
For example, a company can rent or lease a piece of equipment and
then buy the equipment at the end of the lease period for a minimal
amount of money, or it can buy the equipment outright. In both cases, a
company will eventually own the equipment or building.
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50. ANALYSIS OF EXAMPLE-CONTD
The difference is in how a company accounts for the purchase. In an
operating lease, the company records only the rental expense for the
equipment rather than the full cost of buying it outright.
When a company buys it outright, it records the asset (the equipment)
and the liability (the purchase price). So by using the operating lease, the
company is recording only rental expense, which is significantly lower
than booking the entire purchase price, resulting in a cleaner balance
sheet.
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51. ANOTHER EXAMPLE
Partnerships are another common OBS financing item
When a company engages in a partnership, even if the company
has a controlling interest, it does not have to show the partnership’s
liabilities on its balance sheet, again resulting in a cleaner balance
sheet.
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52. OBS & INVESTORS
These two examples of OBS financing arrangements depict the reason their use is
attractive to many companies.
The problem investors encounter when analyzing a company’s financial statements is
that many of these OBS financing agreements are not required to be disclosed at all, or
they have partial disclosures, which are very minimal and do not provide adequate data
required to fully understand a company’s total debt.
Even more perplexing is that these financing arrangements are allowable under
current accounting rules, although some rules govern how each can be used. Because of
the lack of full disclosure, investors need to determine the worthiness of the reported
statements prior to investing by understanding any OBS arrangements.
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53. WHY OBS FINANCING IS SO
ATTRACTIVE
OBS financing is very attractive to all companies, but especially to those that are
already highly levered. For a company that has high debt to equity, increasing its
debt may be problematic for several reasons.
First, for companies that already have high debt levels, borrowing more money
is usually exceedingly more expensive than for companies that have little debt
because the interest charged by the lender is high.
Second, borrowing more may increase a company’s leverage ratios, causing
agreements (called covenants) between the borrower and lender to be violated.
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54. WHY OBS FINANCING IS SO
ATTRACTIVE
Third, partnerships, such as in research and development, are attractive to companies
because R&D is expensive and may have a long-time horizon before completion. The accounting
benefits of partnerships are many-fold.
For example, accounting for an R&D partnership allows the company to add very minimal
liability to its balance sheet while conducting the research. This is beneficial because during the
research process, there is no high-value asset to help offset the large liability. This is particularly
true in the pharmaceutical industry where R&D for new drugs takes many years to complete.
Last, OBS financing can often create liquidity for a company. For example, if a company
uses an operating lease, capital is not tied up in buying the equipment since only rental expense is
paid out.
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55. HOW OBS FINANCING AFFECTS
INVESTORS
Financial ratios are used to analyze a company’s financial standing. OBS
financing affects the leverage ratios, like the debt ratio, a common ratio used to
determine if the debt level is too high when compared to a company's assets.
Debt-to-equity, another leverage ratio, is perhaps the most common because it
looks at a company's ability to finance its operations long term using shareholder
equity instead of debt.
The debt-to-equity ratio does not include short-term debt used in a company's
day-to-day operations to more accurately depict a company’s financial strength.
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56. HOW OBS FINANCING AFFECTS
INVESTORS
In addition to the debt ratios, other OBS financing situations include operating leases
and sale-lease back impact liquidity ratios. Sale-lease back is a situation where a company
sells a large asset, usually a fixed asset like a building or large capital equipment, and then
leases it back from the purchaser.
Sale-lease back arrangements increase liquidity because they show a large cash inflow
after the sale and a small nominal cash outflow for booking a rental expense instead of a
capital purchase. This reduces the cash outflow level tremendously, so the liquidity ratios
are also affected.
Current assets to current liabilities is a common liquidity ratio used to assess a
company’s ability to meet its short-term obligations. The higher the ratio, the better the
ability to cover current liabilities. The cash inflow from the sale increases the current
assets, making the liquidity ratio more favorable.
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58. EVENTS AFTER BALANCE SHEET
DATE
Events after the balance sheet date are significant financial events that occur after the
date of the balance sheet, but prior to the date that the financial statements are issued.
For example, a company's balance sheet that has the heading of December 31, 2012
might not be finalized and distributed until February 1, 2013.
During January new information may arise that has financial significance. Perhaps
there is an event that provides more information about the conditions actually existing on
December 31.
The second type of event would be a new January event that does not change the
December 31 amounts, but needs to be disclosed to the readers of the December 31
financial statements.
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59. AN EXAMPLE…..
An example of the first situation might be that a customer owes Jay Company
$200,000 on December 31 and Jay Company assumed that the customer was financially
sound.
As a result Jay Company did not provide any allowance for the customer's account
being uncollectible.
Then on January 28, the customer filed for bankruptcy and Jay Company learns that
none of the $200,000 receivable will be collected.
If the customer's financial condition on December 31 was already in bankruptcy
condition, Jay Company will need to adjust its December 31 balance sheet and its income
statement for the year 2012 for this $200,000 of bad debts expense.
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60. ANOTHER EXAMPLE….
An example of the second situation might be a loss arising from a catastrophe
occurring on January 16, 2013. The amounts reported as of December 31, 2012 will
not be adjusted since those amounts were correct as of December 31.
However, the readers of the December 31 balance sheet and the 2012 income
statement should be informed through a disclosure that something significant has
occurred to the company's financial position since December 31.
The events after the balance sheet date are often referred to as subsequent
events or post balance sheet events.
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