2 11 83 160 110 151 3 15 45 10 3 7 100 100 100 100

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Unformatted text preview: ital 21 Comments/derivations Company Company reliance on borrowed funds has declined whereas the dependence on owned funds has increased which can be revealed by 80%. 80%. The company has gone for an expansion The program which is reflected by addition to the Fixed assets which has increased by 50% in the year 2003 and 70% in 2004 compared to the base year calculated on net Fixed Assets. base 22 Comments/derivations Due Due to increase in Fixed Assets there is also an additional requirement of working capital in order to mobilize the Fixed Assets which is reflected by 24% in the year 2003 and 50% increase in the year 2004 compared to the base year. 2004 23 Advantages Indicates Indicates the direction of movement of financial performance of the company. financial Indicates the increase or decrease in an Indicates accounted item. accounted Shows the magnitude change , hence Shows more effective than regular data. more An efficient method to showcase the An financial performance of a company over a period of time. period 24 Disadvantages Disadvantages Any Any 1 trend by itself does not show the does true picture. true Trend percentages without absolute data Trend reference tend to be absurd. reference Comparison of trend is meaningless if Comparison accounting practices change during the years. years. The base year selected may not be normal The or typical. or 25 Cash Management 26 26 Motives for Holding Cash: Transaction motive- Holding of cash to finance routine transactions occurring during ordinary course of business course Precautionary motive- Holding of cash for Precautionary unpredictable circumstances E.g: Floods, increase in cost of raw materials etc. increase Speculative motive- Take advantage of Speculative unexpected opportunities E.g: making purchase at favorable prices at Compensating motive- Banks use the minimum Compensating balance in accounts to compensate themselves for the...
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This document was uploaded on 02/09/2014.

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