Advanced Financial Statements analysis

EDUCOMP
Group-4

Submitted by:
Aditya Choudhry
Ashdeep Kaur
Hardeep Singh
Kshitij Sehgal
Kunal Khurana
Kunwarpreet Singh

14PGDM071
14PGDM074
14PGDM081
14PGDM085
14PGDM086
14PGDM088

INTERNATIONAL MANAGEMENT INSTITUTE

NEW DELHI
1

Analysis
Sr Problems
No.

Reasons
Y2014-15

Y2013-14

Y 2012-13

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).

1.

Repayment
of long term
borrowings

---

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

Trade receivables
The trade receivables
increased by
increased in the previous Rs.6595mn
financial years have
approximately
been declared as bad
which is a huge
debts in this year
amount.
reports.
-----

4.

Proceeds of
long term
borrowings

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.

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.

While preparing
the cash flow
statements,
balance of cash
and cash
equivalents are
taken and cash at
bank are ignored
---

---

Tremendous increase in trade

receivables of Rs.4411mn.
Raises a red flag pertaining to
the operation of the firm.
The value of issue of long
term borrowings does not
match with the value as
shown in the schedule 2.3
While preparing the cash
flow statements, balance of
cash and cash equivalents are
taken and cash at bank are
ignored

The value of purchase of

fixed assets is not matching
with the value as mentioned
in the specified schedule of
balance sheet.

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

---

9.

Short term
loans and
advances
Investment
in
subsidiaries

---

10.

11.

Trade
payables

12.

Depreciation
and
amortization
expense

13.

Proceeds
from sale of
fixed assets

14.

Provision for
Doubtful
Debts

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.
---

---

There is no investment
in subsidiaries during
2014-15, indicating that
the company has already
siphoned off the money
to them.
---

---

---

---

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.
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.

---

Increase in trade payables as

mentioned in cash flow is
Rs.373mn whereas actually it
is Rs.353mn.
---

---

---

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 ---

Loans and advances made to

related parties (Ref :
Schedule 2.18)

provision has been

created

abruptly

which gives a sign

that

company

as their doubtful debts.

wants to increase
its cash flow from
operating activity.