PFC Balance Sheet Analysis

ADiscussion On

Power Financial Corporation

24th ANNUAL REPORT2009-10

By: GROUP 10SomdiptaGauravVibhorAreeshaAbhinavRahul

Flow of Presentation About the PFCBALANCE SHEET of the company FEW TERMINOLGY USED IN

BALANCE SHEETPROFIT AND LOSS STATEMENTANALYSIS OF FEW RATIOS

About PFCPFC was set up on 16th July 1986 as a

Financial Institution (FI) dedicated to Power Sector financing and committed to the integrated development of the power and associated sectors. The Corporation was notified as a Public Financial Institution in 1990 under Companies Act, 1956.

PFC, which has completed its Silver Jubilee Year in 2011, is a Schedule-A, Nav-Ratna CPSE (conferred by Govt. of India on 22nd June, 2007) in the Financial Service Sector, under the administrative control of the Ministry of Power. Its Registered and Corporate Offices are at New Delhi.  

Products & Services

PFC's product portfolio comprise of Financial Products and Services like:

Project Term Loan Equipment  Lease Financing   Discounting of Bills Short Term Loan Consultancy Services etc. for various Power projects in Generation,

Transmission, and Distribution sector as well as for Renovation & Modernization of existing power projects.

Balance Sheet A balance sheet, also known as a

"statement of financial position", reveals a company's assets, liabilities and owners' equity (net worth). The balance sheet, together with the income statement and cash flow statement, make up the cornerstone of any company's financial statements.

BALANCE SHEET as on 31st March 2010 ANALYSIS

APPLICATION OF FUNDSSOURCES OF FUNDS

BALANCE SHEET :-ma.xlsx

FEW TERMINOLGY USED IN BALANCE SHEET

SHARE CAPITAL:- Funds raised by issuing shares in return for cash or other considerations. 

The amount of share capital a company has can change over time.

Share capital can be composed of both common and preferred shares.

SCHEDULE 1: SHARE CAPITAL

Share capital cont…Authorized capital is the maximum

capital that a company is authorized to raise.

Issued capital is that part of the authorized capital which is offered by the company for being subscribed by members of the public or any body.

Subscribed capital is that part of the issued capital which is subscribed (accepted) by the public.

Called up capital is a part of subscribed capital which has been called up by the company for payment.

For example, if 10,000 shares of Rs. 100 each have been subscribed by the public and of which Rs. 50 per share has been called up, then the subscribed capital of the Company works out to Rs. 1,00,000, of which the called up capital of the Company is Rs. 50,0000.

Paid Up Capital refers to that part of the called up capital which has been actually paid by the shareholders.

Some of the shareholders might have defaulted in paying the called up money. Such defaulted amount is called as arrears. From the called up capital, calls in arrears is deducted to obtain the paid up capital.

SURPLUS:- Surplus is the difference between

the total par value of the stock outstanding and the shareholder equity and Proprietorship Reserves.

Always part of the surplus is a result of retained earnings (which would increase the shareholder equity).

SCHEDULE 2: RESERVES & SURPLUS

CAPITAL SURPLUS:-There is a specific part of the surplus

that comes from other sources (such as increasing the value of fixed assets carried on the balance sheet, the sale of stock at a premium, or the lowering of the par value on common stock). These "other" sources are frequently called "Capital Surplus" and placed on the balance sheet. In other words, Capital Surplus tells you how much of the company's shareholder equity is not due to retained earnings.

RESERVES:- When a business creates a "Reserve", they are essentially setting aside a certain amount of money for a specific purpose. Often times, reserves are monies set aside to act as a buffer against future losses. 

 Few examples:If a company had a substantial amount

of their current assets in accounts receivables, they would set charge off a percentage of the total amount they were owed in case some of the customers didn't pay their bills. This is a reserve for doubtful and bad accounts.

If a business had a build up of inventories that risked losing their value, management would create a reserve to offset losses.

If a manufacturing corporation decided to save money to build a new widget plant, they would put money in a reserve until they had saved enough to pay for it. In this case, there would be no accounting entry, just a pile of cash growing on the balance sheet.

GENERAL RESERVES General Reserve, in short is the part of

reserve amount kept by the company out of its profits for future purpose.

• Example, if the company might not expect any contingencies or unforseen happenings in the future.

• Usually, companies keep 20% aside the general reserves out of the total profit earned for a particular year or a certain period.

SHARE / SECURITIES PREMIUM ACCOUNT:-

Usually found on the balance sheet, this is the account to which the amount of money paid (or promised to be paid) by a shareholder for a share is credited to, only if the shareholder paid more than the cost of the share.

SHARE APPLICATION MONEY:- It is that money received by a company

during an IPO. Payments received for a subscription of stock is normally received over the IPO life.

For example: Widgets Limited has been registered with an authorized capital of $2,00,000 divided into 2,000 shares of $100 each of which, 1,000 shares were offered for public subscription at a premium of $5 per share, payable as:

on application $10on allotment $25 (including premium)on first call $40on final call $30

GROSS BLOCK:- Gross block is the sum total of all assets of

the company valued at their cost of acquisition. This is inclusive of the depreciation that is to be charged on each asset. 

NET BLOCK:- Net block is the gross block less accumulated

depreciation on assets. Net block is actually what the asset are worth to the company.

WORK IN PROGRESS:- Work in progress indicates any good that is not

considered to be a final product, but must still be accounted for because funds have been invested toward its production.Work that has not been completed but has already incurred a capital investment from the company.

SCHEDULE 3:UNSECURED LOANSCOMMERCIAL PAPER

commercial paper is an unsecured promissory note with a fixed maturity of 1 to 270 days.

Commercial Paper is a money-market security issued (sold) by large banks and corporations to get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing bank or corporation's promise to pay the face amount on the maturity date specified on the note.

Since it is not backed by collateral, only firms with excellent credit ratings from a recognized rating agency will be able to sell their commercial paper at a reasonable price.

SCHEDULE 4 :Deferred TaxDeferred tax is

an accounting concept (also known as future income taxes), meaning a future tax liability or asset.

Tax base The tax base of an asset or

liability is the amount attributed to that asset or liability for tax purposes.

Let’s see an example A company purchases an asset for $1,000

which is depreciated for accounting purposes on a straight-line basis of five years. The company claims tax depreciation of 25% per year. The applicable rate of corporate income tax is assumed to be 35%.

Purchase

Year 1 Year 2 Year 3 Year 4

Accounting value

$1000 $800 $600 $400 $200

Tax Base $1000 $750 $563 $422 $316

Taxable temporary difference

$ 0 $ 50 $ 37 $(22) $(116)

Deferred tax liability /asset

$ 0 $ 18 $ 13 $(8) $(41)

Schedule 7: Loans securedBUYERS LINE OF CREDITLINE OF CREDIT:-An agreement between

a bank and a company or an individual to provide a certain amount in loans on demand from the borrower. The borrower is under no obligation to actually take out a loan at any particular time, but may take part of the funds at any time over a period of several years.

BUYERS CREDIT:-A loan or credit line that a bank or other institution provides a company to buy goods needed to conduct its business operations. For example, a bank may extend buyer credit for a company to buy inventory, which it then sells to customers. The term is sometimes used with regard to international commerce.

SCHEDULE 8: Current Assets

Scheduled Banks in India constitute those banks which have been included in the Second Schedule of Reserve Bank of India(RBI) Act, 1934.

RBI in turn includes only those banks in this schedule which satisfy the criteria laid down vide section 42 (6) (a) of the Act. 

The banks included in this schedule list should fulfill two conditions. 1. The paid capital and collected funds of bank should not be less than Rs. 5 lakhs. 2.Any activity of the bank will not adversely affect the interests of depositors. 

Cont…Fringe Benefit :- A collection of various

benefits provided by an employer, which are exempt from taxation as long as certain conditions are met. 

Fringe benefits commonly include health insurance, group term life coverage, education reimbursement, childcare and assistance reimbursement, cafeteria plans, employee discounts, personal use of a company owned vehicle and other similar benefits.

Fringe Benefit TaxFringe Benefits Tax (FBT) was the

tax applied to most, although not all, fringe benefits.

A new tax was imposed on employers by India's Finance Act 2005 was introduced for the financial year commencing April 1, 2005.

The Fringe Benefit Tax is abolished in the Finance Bill of 2009 by Finance Minister Pranab Mukherjee.

PROFIT AND LOSS STATEMENT(ma.xlsx)

ANALYSIS OF FEW RATIOSma.xlsx

THANK YOU !!!!