Understanding Balance Sheet by Vishal Thakkar

1. Understanding Balance Sheet Presented By: Vishal Thakkar ConTeTra Universal LLP Vishal.Thakkar@contetra.com +919320007891

2. Balance Sheet • A statement of Assets and Liabilities of the Company. • A snapshot view of a business at a defined point of time. • Balance Sheet is a measure of financial resources or wealth of a company whereas Profit and Loss Account is an indicator of performance of a company, • Balance Sheet is always balanced. Assets are equal to liabilities.

3. Assets and Liabilities • Liabilities: Amounts owed by the Company to parties external to the Company – sources of funds. • Assets: Resources ownedby the company – Application of funds. • It could be presented in either a Horizontal or vertical format.

4. Balance Sheet: Horizontal Structure Liabilities Assets Equity Capital (10) & Reserves (60) Fixed Assets (70) (e.g. Land & building, Plant & machinery , Computers, DG set) Loan Funds (30) Current Assets(40) (e.g. cash, inventories, Debtors) Current Liabilities (10) (e.g. creditors, provision) Total (110) Total (110)

5. Equity Capital (10) Reserves (60) Loan Funds (30) Fixed Assets (70) Net Current Assets (30) [Current Assets (40) less: Current Liabilities (10)] Balance Sheet: Vertical Structure Liabilities (owed) Sources Assets (owned) Application

6. Fixed Assets Land Building Finished products Machinery Computers Furniture and fixtures Current Assets Cash Account receivables Raw material Motor vehicles Loans and advances Find the items in the wrong heading

7. How do they relate to each other? Profit & Loss Account Balance Sheet31 March 2018 Balance Sheet31 March 2017 Cash Flow

8. Net worth = Share Capital +Reserves = Rs. 10 +Rs. 60 = Rs. 70 Cr. OR Net worth = Total Assets – Loan Funds = Rs.100 – Rs.30 = Rs. 70 Cr Net Worth

9. Working Capital = Current Assets – Current Liabilities = Rs. 40 - Rs.10 = Rs. 30 Cr. Working Capital

10. Industry Comparison – Balance Sheet

11. Q & A

12. Thank you!!