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Advanced Financial Statements analysis

EDUCOMP

Group-4

Submitted by:

Aditya Choudhry 14PGDM071 Ashdeep Kaur 14PGDM074 Hardeep Singh 14PGDM081 Kshitij Sehgal 14PGDM085 Kunal Khurana 14PGDM086 Kunwarpreet Singh 14PGDM088

INTERNATIONAL MANAGEMENT INSTITUTE NEW DELHI

08 Fall

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Analysis Sr No.

Problems Reasons

Y2014-15 Y2013-14 Y 2012-13

1. Repayment of long term borrowings

--- No repayment of

long term

borrowings has

taken place while

the borrowings

continue to

increase

(Schedule2.3).

No repayment of long term

borrowings has taken place

while the borrowings

continue to increase

(Schedule2.3).

2. Borrowings The firm suddenly

reduces/pays off its long

and short term

obligations/borrowings

and also the company

has already siphoned off

money to subsidiaries,

indicating that they

might close down if the

same trend continues.

---- ---

3. Trade receivables

The trade receivables

increased in the previous

financial years have

been declared as bad

debts in this year

reports.

Trade receivables

increased by

Rs.6595mn

approximately

which is a huge

amount.

Tremendous increase in trade

receivables of Rs.4411mn.

Raises a red flag pertaining to

the operation of the firm.

4. Proceeds of long term borrowings

--- --- The value of issue of long

term borrowings does not

match with the value as

shown in the schedule 2.3

5. Opening cash and cash equivalents

While preparing the

cash flow statements,

balance of cash and cash

equivalents are taken

and cash at bank are

ignored.

While preparing

the cash flow

statements,

balance of cash

and cash

equivalents are

taken and cash at

bank are ignored

While preparing the cash

flow statements, balance of

cash and cash equivalents are

taken and cash at bank are

ignored

6. Purchase of fixed assets

For the year, 2014-15

the value of purchase of

fixed assets does not

match in the balance

sheet and cash flow

statement, cash flow

statement it is

Rs.291.82mn, while in

balance sheet it is

Rs.318.70mn.

--- The value of purchase of

fixed assets is not matching

with the value as mentioned

in the specified schedule of

balance sheet.

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7. Loans, advances and other assets

--- --- Issue of loans and advances

is 198 as per the schedule but

in cash flow it has been

mentioned as 195.

8. Loan and advances to related parties

--- The company

faces cash crunch

along with huge

losses. Whilst the

same, it lends

huge amounts to

related parties.

Hence, a red flag

is raised.

---

9. Short term loans and advances

--- --- Loans and advances made to

related parties (Ref :

Schedule 2.18)

10. Investment in subsidiaries

There is no investment

in subsidiaries during

2014-15, indicating that

the company has already

siphoned off the money

to them.

--- ---

11. Trade payables

--- --- Increase in trade payables as

mentioned in cash flow is

Rs.373mn whereas actually it

is Rs.353mn.

12. Depreciation and amortization expense

Mismatch: Value of the

depreciation and

amortization expenses in

the balance sheet with

the cash flow statement,

Cash flow statement:

Rs478.33mn, Balance

sheet: Rs.524.87mn.

--- ---

13. Proceeds from sale of fixed assets

Mismatch: Value of the

depreciation and

amortization expenses in

the balance sheet with

the cash flow statement,

Cash flow statement:

Rs.0.77mn, Balance

sheet: Rs.2.68mn.

--- ---

14. Provision for Doubtful Debts

The company has

evaluated its outstanding

trade receivables

including dues to Rs

6502.35 million as

doubtful of recovery.

The company has listed

all its trade receivables

A huge amount of

provision has been

created abruptly

which gives a sign

that company

---

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as their doubtful debts. wants to increase

its cash flow from

operating activity.