Terms used inFinancial statement analysis

Terms used inFinancial statement analysis

1		Net Sales		Gross Sales minus returns, discounts, excise duty.
2		Raw Materials consumed		Opening Stock of raw materials plus purchases of raw materials less Closing stock of raw
				material .
3		Cost of Production		Raw materials consumed, stores and spares consumed, power and fuel, direct labour,
				repairs and maintenance, other manufacturing expenses and depredation plus opening
				stock of stock in process minus dosing stock of stock in process.
4		Cost of Sales	Cost of production (3) plus opening stock of finished goods minus dosing stock of finished
				goods.
5		Gross Profit		Net Sales - Cost of Sales (Item 1 minus Item 4)
6		Operating Profit		Gross Profit (5) minus interest, selling general and administrative expenses.
7		Net Profit before tax		Operating profit plus other incomes minus other expenses
8		Net Profit after tax		Profit before taxation minus provision for taxes.
9		Retained Profit		Net profit minus dividend paid / dedared
10		Cash Profit		Profit before charging Depreciation (Net Profit + Depredation)
11		Cash-Loss		Loss before charging Depredation (Net Loss — Depredation)
_12		Assets	Things owned by a business Not converted into cash in normal course of business, These
13		Fixed Assets		are acquired to use them in the production of other goods and services.
14		Current Assets		Assets which are meant to be converted into cash or consumed in normal course of
				business say within 1 year. These are also called as gross working capital.

15         Intangible assets               Expenditure on invisible assets, likely to yield benefit to the company in future                                                                                        e.g

		goodwill, patent, trade marks, designs.
16	Fictitious Assets	Which have notional value only e.g. losses, preliminary expenses.

         Miscellaneous Assets or Non current Which can't be classified as current, fixed or intangible e.g. inter Corporate investment assets

18	Tangible Assets	Total asset side of balance sheet minus intangible assets.
19	Quick Assets	Assets which can be converted to cash quickly. Cash, bank balances, marketable
		investments, bills receivables and sundry debtors considered goal. (Current Assets
		minus-Inventories & Prepaid Expenses)
20	Liabilities	Things owed by the business.
21	Owners Equity (Net	Paid up share capital, reserves and surplus, preference shares with more than 12 years
	Worth)	maturity.
22	Long term liabilities or Debt	Outsiders funds, payable in more than 12 months. Term loan (exduding instalment
		payable within 12 months) plus debentures maturing within more than one year,
		preference shares redeemable within 12years, deposits payable beyond one year.
23	Current Liabilities	Liabilities which are payable in less than one year e.g. sundry creditors, unsecured loans,
		advances from customers, interest accrued but not due, dividends payable, statutory
		liabilities, provisions, Bank borrowings for working capital etc
24	Total Outside Liabilities	Total of the liability side of balance sheet minus net worth
25	Tangible Net Worth	Total tangible assets minus total outside liabilities. Owner's funds minus Intangible &
		Fictitious assets ; Paid up capital plus reserves minus intangible assets
26	Gross Working Capital	Total of Current Assets
27	Net Working Capital	Current assets minus total current liabilities. Long Term Sources minus long term uses
28	Working Capital gap	Current Assets minus current liabilities other than Bank Borrowings.
29	Long term sources	Paid up capital, reserves and surplus (excluding specific reserves) i.e. Net Worth and long
		term liabilities.
30	Short Term Sources	Current Liabilities
31	Long Term Uses	Fixed Assets, Miscellaneous or Non. current assets, Intangible and Fictitious Assets
		(assets other than current assets)
32	Short Term Uses	Current Assets
33	Contingent Liabilities	Likely liability which may or may not arise on the happening or non happening of an
		event