...Likewise for credits, which can be revenues or liabilities or equity. |Exercise 3.4 | |Normal balance and classification in financial statements | | | | | | | | | LIGHTFOOT DISTRIBUTION SERVICES Required: Show whether the normal balance is a debit or a credit. Indicate whether the account would appear in the balance sheet/statement of financial position or in the income statement, and under what classification, e.g. liability, asset, equity, income or expense. |LIGHTFOOT DISTRIBUTION SERVICES | | |Item |Normal Balance |Statement | |1. |Telephone Expense | Debit |Income statement (expense) | |2. |Unearned Service Fees | Credit |Balance sheet/Statement of financial position | | | | |(liability) | |3. |Prepaid Advertising | Debit |Balance sheet/Statement of financial position | | |...
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...A REPORT ON BALANCE SHEET ANALYSIS OF LANKA BANGLA FINANCE LIMITED AND INTERNATIONAL FINANCE INVESTMENT AND COMMERCE BANK LIMITED Date of submission: 8th November 2015 Submitted to Farzana Lalarukh Associate Professor Department of Finance University of Dhaka Submitted by SL | Name | BBA ID | Remarks | 1 | Sifat sadia | 17-003 | | 2 | Barna Paul | 17-047 | | 3 | Maghla Hossain | 17-061 | | 4 | Saima Sultana | 17-069 | | 5 | Nawsina Arif | 17-085 | | Date of Submission: 8th November 2015 Department of Finance University of Dhaka Letter of Transmittal November 8, 2015 Farzana Lalarukh Associate Professor Department of Finance University of Dhaka Subject: Submission of Report on “Balance Sheet Analysis of LankaBangla Finance Limited and International Finance Investment and Commerce Bank Limited”. Dear Madam, It gives us enormous pleasure to submit the report on Balance Sheet Analysis of Bank and NBFI as per the Advisor’s instruction. We expect this report to be informative as well as comprehensive as per requirement. Working with such a topic was an inspiring experience for us. We believe that the knowledge and the experience we gathered will facilitate us a lot in our future career life. With our limited knowledge, we have tried our level best to prepare the report worthwhile. Your acceptance and appreciation would surely inspire us. For any further explanations about the report, we will be gladly available to clarify the ins and outs. Sincerely, Sifat Sadia...
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...Analysis of Balance Sheet Structure Of Financial Institutions Submitted to Farjana Lalarukh Professor Department of Finance University of Dhaka Submitted by Group- |Sl No. |Name |Roll | |01 |Moriom Akter |045 | |02 |Tamanna Afrin Mitul |071 | |03 |Rowson Akter |083 | |04 |Tahmina Haque |097 | |05 |Esrat Jahan |061 | Date of submission August 30, 2012. 1. Commercial Banks Commercial Bank is a major player of the context of a country’s economy. As a financial intermediary it plays a very crucial role. In a developing country like us bank is the major and sometime the only reliable source of savings and landing. In identifying the components of balance sheet of commercial bank almost same items are found in both in Property & Asset and Liabilities & Capital. As a sample I have taken four banks- Mercantile Bank Ltd., One Bank Ltd., Bank Asia Ltd...
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...Balance sheet optimisation under Basel III ING Investor Day Koos Timmermans Vice Chairman ING Bank Amsterdam – 13 January 2012 Priorities 1 2 3 Transition to Basel III Balance sheet optimisation Return on Equity ING Investor Day - 13 January 2012 2 Strategy for the coming years is based on two phases 2012 End 2013 2015 Bank: Transition to Basel III • Manage through the crisis • Limit B/S and RWA growth • Execute B/S optimisation • Invest where needed to achieve operational excellence • Further simplify the business portfolio and the organisation • Prudent approach to capital and funding given unstable market conditions Bank Standalone • Grow deposits across the bank Basel III requirements met EC restructuring and Repayment of Dutch State complete • Evolve ING Direct units towards mature business model using loans from Commercial Banking • Grow the franchise without growing the balance sheet • Resume dividend after restructuring and State repayment ING Investor Day - 13 January 2012 3 ING has a good starting position to reach Basel III capital targets by 2013 Targets Core Tier 1 6.5% 3Q08 9.6% 3Q11 Actions • To be reached in 2013 ≥10% • Strong continued capital generation and RWA containment • To be reached in 2013 • Further reduction via balance sheet optimisation • To be reached in 2015 Leverage ratio 57 3Q08 29 3Q11 ~90% 3Q11 < 25 LCR1 > 100% • Further optimising the investment portfolio • Implementation...
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...Balance Sheet - the information it provides | A typical balance sheet would look something like this. Balance Sheet of M/s Free Flow Fluids as on 30th June 2007 | Liabilities | Amount | Assets | Amount | Eq. Share Capital Pr. Share Capital Reserves and SurplusCapital Reserve General Reserve Share Premium Retained Earnings (P/L Appr.) Other ReservesLong Term Loans Fixed Deposits Collected Debentures Provisions for Taxation Provisions for Dividends Outstanding Expenses Pre-received Incomes Unclaimed Dividends Sundry Creditors Bills Payable Bank Overdraft | 35,00,000 12,00,000 6,00,000 12,00,000 3,50,000 43,50,000 4,00,00054,00,000 16,00,000 24,00,000 3,00,000 4,00,000 5,00,000 2,00,000 20,000 13,00,000 12,00,000 5,00,000 | Goodwill Land Buildings Plant and Machinery Furniture and Fittings Motor Vehicles Patents, Trade Marks, Copyrights Investments Stock of Raw Material Work in Progress Finished Goods Stock Prepaid Expenses Incomes Receivable Sundry Debtors Cash Bank Balance Loans and Advances Bills Receivable Deferred Revenue Expenditure Miscellaneous Expenses Discounts to be written off Accumulated Loss (P/L Appr. a/c debit balance) | 8,00,000 35,00,000 27,00,000 15,00,000 25,00,000 35,00,000 18,00,000 24,00,000 2,50,000 2,40,000 3,00,000 4,00,000 3,00,000 26,00,000 1,16,000 – 6,00,000 15,00,000 54,000 1,20,000 2,40,000 –...
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...4. 5. To understand risk management as driven by risk exposure, the R in TRICl( To understand asset-liability management (ALM) as the coordinated management of a bank's on- and off-balance sheet activities driven by interest rate risk and its two components: priee risk and reinvestment risk To undersland accounting and economic measures of ALM performance To understand the duration or maturity imbalance (gap) in banks' balance sheets in terms of rate-sensitive assets (RSAs) and rate-sensitive liabilities (RSLs) To understand ALM risk profiles as pictures of banks' exposure to interest rale risk and how to hedge that risk using on- and off-balance sheet methods CHAPTER THEME The business of banking involves the measuring, managing, and accepting of risk, which means the heart of bank financial management is risk managemcnt. One of the most important risk management functions in banking is asset-liability management or ALM, broadly defined as the coordinated management of a bank's balance sheet to allow for alternative interest rate, liquidity, and prepayment scenarios. Three techniques of ALM are (1) on-balance sheet matching of the repricing o[ assets and liabilities, (2) off-balance shcet hedging of on-balance sheet risks, and (3) securitization, which removes risk from the balance sheet. The key variables of ALM inelude accounling measures such as net interest income (NIl) or its ratio form net inlerest margin (NIM = NIl/average assets) and an economic measure: the market...
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...liabilities taken over by the purchaser) or on the basis of the average profit of the business during the past years. Calculation of Goodwill or Capital Reserves(negative goodwill): Sometimes the purchaser will have to pay for Goodwill or receive Capital Reserve. Goodwill or capital reserve is the difference between net assets and business purchase price. Goodwill / Capital reserve = Business Purchase Price – Net Assets (Positive figure is goodwill and negative figure is capital reserve) Factors / reasons for Good will: A person has to pay for goodwill when taking over a business or when admitted as a partner because of Profitability Reputation Locality Public relation Existing business means, the business is being operated and a balance sheet is there for the business at any time. The types of business purchase can be mentioned as follows: a) An individual (a person) purchases a business b) A partnership or a sole trader acquires the business of a sole trader c) Two or more sole traders join together to form a partnership d) A limited company takes over the business of a partnership or a sole trader Why business purchases are taking places? a) To avoid competition ( competition will lead the business to “cutthroat” and lose) b) To enjoy the profit of...
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...use of ratios to the liquidity and capital of commercial bank 5 Measure and analyze the ratios of Standard & Chartered 6 Conclusion 9 References 10 Appendix 11 Appendix 1 11 Appendix 2 11 Appendix 3 12 Appendix 4 13 Appendix 5. 13 Executive Summary The report gives a deep investigation of commercial bank and adopts 4 types of ratios to analyse the 5-year-annaul reports in the liquidity and capital sides respectively in Part B. In liquidity, Long- Term Debt to Total Assets ratio, Total Loans to Total Deposits ratio have measured the bank’s liquidity, furthermore, Core Tier 1Capital Ratio and the Tangible Common Equity Ratio have explained the bank’s capital in order to compare with the ratios in liquidity. Generally, these 4 ratios have presented that Standard & Chartered as the commercial bank faced serious financial problem at the year of economy crisis in the area of profitability and security. In order to give the clear explanation to commercial bank, the part A has critically analysed the differences of balance sheet between Standard & Chartered and Legal & General Group insurance company, even though they have the similar functions in financial market, the different positions in Customers, Interest Rate, Liquidity and Distribution make them to own their unique Characteristics which has been shown from their balance sheet in 2012. Introduction Recently, commercial banks and insurance companies both provide financial service to...
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...Funds Flow Analysis: Problems and Solutions 1 The following are summarized balance sheets of a company. You are required to prepare a statement of funds flow. Balance Sheet 31.3. 2005 31.3.2006 Assets (a) Goodwill 0 3000 (b) Building 100,000 95,000 (c) Plant 75,000 84,000 (d) Stock 50,000 37,000 (e) Debtors 40,000 32,100 (f) Bank 0 4,000 (g) Cash 250 300 Total Assets 265250 255400 Liabilities (a) Paid Up Share Capital 100,000 125,000 (b) General Reserves 25,000 30,000 (c) Profit and Loss Account 15,250 15,300 (d) Bank Loan (Long Term) 35,000 67,600 (e) Creditors 75,000 0 (f) Provision for Taxation 15,000 17,500 Total Liabilities 265250 255400 Additional Information i During the year a dividend of Rs. 11,500 was paid. ii Depreciation was written off plant Rs. 7000. iii Depreciation was written off buildings Rs. 5000 iv During the year a sum of Rs. 16,500 was provided for taxation. S olution to Problem #1 Note 1 Statement of Changes in Working Capital 31.3.05 31.3.06 Change Current Assets Stock 50000 37000 -13000 Debtors 40000 32100 -7900 Bank 0 4000 4000 Cash 250 300 50 Current Liabilities Creditors 75000 0 75000 Net Increase in Working Capital 58150 Note 2 Funds Provided by Operations Profit at the end of the year (31.3.2006) 15300 Profit at the start of the year (31.3.2005) 15250 Thus, profit for the year 50 Add:...
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...saying that banks are in the business of “borrowing short and lending long.” For example, if the loans have an interest rate of 10% per year, the bank earns $9 in income from its loans over the year. If the $100 of checkable deposits is in a NOW account with a 5% interest rate and it costs another $3 per year to service the account, the cost per year of these deposits is $8. The bank’s profit on the new deposits is then $1 per year (a 1% return on assets). General Principles of Bank Management Now that you have some idea of how a bank operates, let’s look at how a bank manages its assets and liabilities in order to earn the highest possible profit. The bank manager has four primary concerns. The first is to make sure that the bank has enough ready cash to pay its depositors when there are deposit outflows, that is, when deposits are lost because depositors make withdrawals and demand payment. To keep enough cash on hand, the bank must engage in liquidity management, the acquisition of sufficiently liquid assets to meet the bank’s obligations to depositors. Second, the bank manager must pursue an acceptably low level of risk by acquiring assets that have a low rate of default and by diversifying asset holdings (asset management). The third concern is to acquire funds at low cost (liability management). Finally, the manager must decide the amount of capital the bank should maintain and then acquire the needed capital (capital adequacy management). To understand bank and other...
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...MP A R Munich Personal RePEc Archive A critical analysis of Mudarabah & a new approach to equity financing in Islamic finance Shaikh, Salman Ahmed International Association of Islamic Banks 01. July 2011 Online at http://mpra.ub.uni-muenchen.de/19697/ MPRA Paper No. 19697, posted 19. September 2011 / 12:03 A Critical Analysis of Mudarabah & A New Approach to Equity Financing in Islamic Finance Journal of Islamic Banking & Finance, ISSN 1814-8042 By Salman Ahmed Shaikh Project Director, Islamic Economics Project islamiceconomicsproject@gmail.com www.islamiceconomics.viviti.com Abstract Financial intermediation serves a valuable purpose, but it can also be structured using equity modes of financing. This can relieve the financee and increase diversity of entrepreneurial undertakings as in debt based commercial financing, there is little room for diversity with obligatory and stipulated servicing of debt. Using Islamic equity modes of financing poses the challenge of the agency problem and moral hazard. The extent of this agency problem in Mudarabah and its impact on economic payoffs between counterparties is analyzed in this study with a simulation model. Based on review of alternate solutions proposed, the author presents two possible covenants which could make Mudarabah mode of financing more acceptable and widely usable in financial intermediation. This would also further the egalitarian objectives of an Islamic economic order. Keywords: Interest free economy, Islamic...
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...CHAPTER 7 ALTERNATE PROBLEMS Problem 7.1A Bank Reconciliation The cash transactions and cash balances of Flagg, Inc., for August were as follows: 1. The ledger account for Cash showed a balance at August 31 of $9,200. 2. The August bank statement showed a closing balance of $7,480. 3. The cash received on August 31 amounted to $3,100. It was left at the bank in the night depository chute after banking hours on August 31 and therefore was not recorded by the bank on the August statement. 4. Also included with the August bank statement was a debit memorandum from the bank for $25 representing service charges for August. 5. A credit memorandum enclosed with the August bank statement indicated that a non-interest-bearing note receivable for $3,000 from Joyce Sisters Manes, left with the bank for collection, had been collected and the proceeds credited to the account of Flagg, Inc. 6. Comparison of the paid checks returned by the bank with the entries in the accounting records revealed that check no. 912 for $630, issued August 15 in payment for computer equipment, had been erroneously entered in Flagg’s records as $360. 7. Examination of the paid checks also revealed that three checks, all issued in August, had not yet been paid by the bank: no. 917 for $270; no. 919 for $130; no. 922 for $200. 8. Included with the August bank statement was a $200 check drawn by Sharon Jaffer, a customer of Flagg, Inc. This check was marked “NSF.” It had been included...
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...THE RESERVE BANK’S ACCOUNTS FOR 2010-11The balance sheet of the Reserve Bank expanded significantly during the year, mainly reflecting the impact of liquidity management operations undertaken by the Bank. The income from foreign assets declined for the second successive year, reflecting the low interest rates in international markets. The decline in income from foreign assets in 2010-11 was, however, more than offset by earnings from domestic assets which have expanded. While the Bank’s gross income increased by 12.73 per cent to ` 37,070.12 crore in 2010-11, there was a 3 per cent increase in total expenditure to ` 8,655.22 crore. After meeting the needs of necessary transfer to the Contingency Reserve and the Asset Development Reserve, `15,009 crore was allocated for transferring to the Government.XI.1 The size of the Reserve Bank’s balance sheet increased significantly in 2010-11 (July-June) mainly on account of its liquidity management operations. On the liability side, the expansion was on account of a large increase in notes in circulation as also an increase in banks’ deposits with the Reserve Bank in line with the deposit growth in the banking system (see Box II.6). On the asset side, there was a significant increase in Bank’s portfolio of domestic assets in the form of government securities on account of open market purchases, repo purchases and disinvestment of Government of India’s surplus balance parked with the Reserve Bank. The increase in foreign currency assets mainly...
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...professional environment. The balance sheet and the income sheet are the two most important factors that all business needs in order to attract and keep investors. The balance sheet reports assets, liabilities and equity while Income statement lists total income and total expenses. Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. According to the principles of accounting website, “ Accounting is a set of concepts and techniques that are used to measure and report financial information about an economic unit. The economic unit is generally considered to be a separate enterprise. The information is reported to a variety of different types of interested parties ( principles of accounting, 2011). To greatly explain, these interested parties use either a balance sheet or income statement. The balance sheet, “reports the assets, liabilities, and stockholders equity of a company at a specific date”, (Weygandt, 2011). The income statement “ presents the revenues and expenses and resulting net income or net loss of a company for a specific period of time”, (Weygandt, 2011). From actively researching the balance sheet and income statement during my time in the accounting class, I believe the balance sheet is better suited for my everyday life. I use a component of balance sheet, daily by checking my bank statements consisting of checking...
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...Accounting Cheat Sheet Your AccountingCoach PRO membership includes lifetime access to all of our materials. Take a quick tour by visiting www.accountingcoach.com/quicktour. Table of Contents (click to navigate) Financial Statements 3 Balance Sheet 4 Income Statement 5 Cash Flow Statement 6 Stockholders’ Equity 7 Financial Ratios 8 Accounting Principles 9 Bookkeeping, Debits & Credits 10 Accounting Equation 11 Adjusting Entries 12 Bank Reconciliation 13 Petty Cash 14 Accounts Receivable & Bad Debts Expense 15 Inventory & Cost of Goods Sold 16 Depreciation 17 Accounts Payable 18 Cost Behavior & Break-even Point 19 Payroll Accounting 20 Standard Costing 21 Accounting Pronouncements 22 Organizations 23 AccountingCoach.com’s Accounting Cheat Sheet is a quick reference and overview of accounting concepts. You should consult a professional accountant and/or the accounting profession’s official pronouncements for specific situations and for more complete information. For personal use by the original purchaser only. Copyright © AccountingCoach®.com. 2 Financial Statements Financial statements are general purpose, external financial statements prepared according to generally accepted accounting principles. Some terms that apply to the financial statements include: balance sheet reports the amounts of assets, liabilities, and stockholders’...
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