...How to Value Tangible Non Current Assets How to value tangible non current assets “Valuing tangible non-current assets is subjective and complex and can therefore result in different companies valuing similar assets very differently.” Discuss this statement with specific regard to your knowledge of how tangible non-current assets discussion. Valuing tangible non-current assets can be subjective and complicated. This essay explains it from two aspects, costs of PPE and depreciation respectively, under the international accounting standards. Property, plant and equipment are the representative of tangible non-current assets which commonly are held by business entity. When to value assets the definition from the outset that should be understood is carrying account. According to IAS16, carrying amount is defined as” the amount at which an asset is recognized after deducting any accumulated depreciation and accumulated impairment losses”. Therefore, subjectivity of valuing tangible non-current assets can be attributed to recognized cost, accumulated depreciation. From the outset the cost should be measured after assets are recognized. This is the first step that confirms initial costs. When buying same assets, the costs can be totally different. For example, the items of assets can have many spare parts which may be minor or major for corporation usage. However, if the corporation defines that this spare parts is important-major spare parts, this amount should belong...
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... * Current Ratio * Acid Test Ratio * Average Collection Period Coverage Ratios * Times Interest Earned * Net Income + Non-cash Exp / Current Portion of LT Debt Leverage Ratios * Fixed Assets / Tangible Net Worth * Debt to Tangible Net Worth | Operating Ratios and Indicators * Gross Profit Margin * EBT / Tangible Net Worth * EBT / Total Assets * Fixed Asset Turnover Ratio * Total Asset Turnover Ratio * E.B.I.T.D.A. ("Ebitda") Expense to Revenue Ratios * % Depreciation, Depletion & Amortization / Revenue * Officers' &/or Owner's Compensation / Revenue Ratio Fusion! * Altman's Z-Score for Privately Held Firms | Banks often use ratios in loan contracts with benchmarked minimums or maximums (aka 'Covenants'). Even if covenants are not listed in your loan contract, banks still look at them. You will add credibility to your financial statements if you include financial ratios and indicators in your presentation to the bank. They will think you use these indicators internally, and they'll love you for it! Actually; If you're not using Financial Analysis Tools and Benchmarks internally, you should strongly consider it. LIQUIDITY RATIOS Liquidity ratios indicate the company’s ability to meet its short term obligations. * The Current Ratio is calculated by dividing current assets by current liabilities. If current assets are greater than current liabilities, the current ratio will...
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...they’re also large-cap – nor should you include Credit Suisse or Deutsche Bank, because they’re not US-based. 2. Rather than cutting the set by revenue or EBITDA, you use metrics like total assets or total deposits to determine the “size” of banks. 3. Instead of traditional metrics like revenue and EBITDA, you list the metrics and multiples that are relevant to a bank: EPS, Return on Equity (ROE), Book Value (BV), P / E, P / BV, and so on. Operating Metric Equity Value Book Value (BV) How to Calculate It Shares Outstanding * Share Price Shareholders’ Equity(1) What It Means How much are we worth? How much are we worth according to our assets rather than the market? How much are we worth to everyone except preferred shareholders? How much are we worth according to our incomeproducing assets? How much money do we make after taxes? How much money is left to pass on to common shareholders? How much in dividends could we potentially issue to each common shareholder? Does our market cap overvalue or undervalue us? Does our market cap overvalue or undervalue us relative to our income-producing assets? How much after-tax income are we generating with the capital we’ve raised? How much after-tax income are we generating for common Common Book Value Common Shareholders’ Equity Tangible Book Value (TBV)(3) Net Income Net Income to Common EPS Common Shareholders’ Equity – Goodwill –...
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...“Valuing tangible non-current assets is subjective and complex and can therefore result in different companies valuing similar assets very differently” Financial reporting attempts to measure the worth of assets, a concept that is inherently subjective and arbitrary. We can never know the true value of an asset, and rather than being an objective truth, valuations are always biased. Financial reporting is used for different purposes by different users and so each different way might be appropriate in different circumstances and values are affected by the purpose of measurement. Property, plant and equipment are the main non-current assets that a company holds. Similar assets can be valued differently in different companies due to several different factors which I will discuss in this essay. Tangible non-current assets are usually valued by using the historical cost, which is the initial cost of acquiring the asset to the company. The IFRS states that the historical cost of an item not only includes the price paid for it, but also “any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.” This includes transportation and labour costs, and the cost of site preparation. Different companies may have different views on whether costs involved in bringing the asset into use should be counted as part of the asset or an expense, and often small costs that should be capitalised...
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...1. Company background: Mention the sectors that the company operates in, main products/brand names, market share, geographies of operations, new developments, main competitors etc. Which business segment and/or geographical segment - generates most revenues, is the most profitable, employs the most capital & tangible assets 2. Company Management: Board Size & Composition –is the board diverse enough with reference to Gender, Age, Educational Background, Experience, independence etc. Has the company expanded board size? Compensation to directors – as % of revenues & increase over last year. How many Board meetings were held during the year? Do these directors also hold directorships in other companies? 3. Shareholders: Issued Share Capital : No of shares & par value -Rs10. 2009: 88,81,26,020 2010: 96,01,26,020 2011: 97,21,26,020 2012: 97,21,26,020 2013: 97,21,26,020 Has the company issued any shares during the year? Yes in 2009, 2010 and 2011 How & to whom were they issued? 2009: CCPS were compulsorily converted into 91,211,001 Ordinary Shares of Rs. 10 each at a premium of Rs. 590 per share on 1st September, 2009. 2010: 1,50,00,000 Ordinary Shares of ` 10/- each at a premium of ` 584/- per share aggregating to ` 891 crores The Company completed a follow-on public issue of 5,70,00,000 Ordinary Shares of ` 10/- each at a price of ` 610 per share (including premium of ` 600 per share) aggregating to ` 3,477 crores. The Ordinary Shares...
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...RECOGNITION OF ASSETS Accountants define assets as resources that a firm owns or controls as a result of past business transactions, and which are expected to produce future economic benefits that can be measured with a reasonable degree of certainty. Distortions in asset values generally arise because there is ambiguity about whether: * The firm owns or controls the economic resources in question: * Are the ventures controlled? * Are the leased assets owned by the lessee or the lessor? * Have the revenues resulting in the receivables been earned? * The economic resources are likely to provide future economic benefits that can be measured with reasonable certainty. * the economic benefits from research and development are generally considered highly uncertain * If all firms expense R&D, financial statements will reflect differences in R&D success only when new products are commercialized rather than during the development process (less timely). The analyst may attempt to correct for this distortion by capitalizing key R&D outlays and adjusting the value of the intangible asset based on R&D updates. * The fair values of assets fall below their book values. * An asset is impaired when its fair value falls below its book value. An impairment loss is recognized when book value exceeds the greater of its net selling price and the discounted cash flows expected to be generated from future use. * Markets...
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...FSA Report of Britannia Industries Ltd. for Financial Year 2012-2013, 2013-14 and 2014-15 END TERM PROJECT REPORT Submitted to - Dr.Pawan Jain Name of the Student | Roll No. Section D | 1. Kunal Desai | 2015211 | 2. Sagar Arora | 2015236 | ------------------------------------------------- Britannia Industries Ltd Britannia Industries Ltd is an India-based food company. The Company was born in 21st March of the year 1918 as a public limited company in Kolkata which initially used to manufacture biscuit in a small house. But now it has plants in Kolkata, Delhi, Chennai, Mumbai and Uttarakhand and is recognized as one of the most trusted, valuable and popular brands among Indian consumers in various reputed surveys. Over the last century and a quarter, Britannia has been serving the Indian consumer with a range of fresh, nutritious and flavour-rich products. Company offers a range of bakery products and dairy products, its product range includes Britannia Cheese Slices, Britannia Tiger, Britannia NutriChoice Oat Cookies, Britannia NutriChoice Ragi Cookies, Veg Cakes, Nutrichoice Health Starter Kit, NutriChoice 5 Grain, NutriChoice SugarOut, NutriChoice Digestive Biscuit, Treat Fruit Rollz, and many more. Biscuits manufacturing is the main divisions of the company, the company's factories have an annual capacity of 433,000 tonnes. The brand names of biscuits include VitaMarieGold, Tiger, Nutrichoice Junior, Good day, 50 50, Treat, Pure Magic, Milk Bikis...
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...EXAMINATION : FINAL STAGE MODULE F SUBJECT : FINANCIAL ACCOUNTING III CODE : P18 EXAMINATION DATE : THURSDAY, 4TH MAY, 2006 TIME ALLOWED : THREE HOURS (9:00AM – 12:00NOON) ---------------------------------------------------------------------------------------------------- GENERAL INSTRUCTIONS 1. There are FIVE questions in this paper. 2. Attempt all the FIVE questions. 3. Marks are shown at the end of each question. 4. Show all your workings in your answer book(s). 5. Calculate your answers to the nearest one decimal point where applicable. 6. This question paper comprises 7 printed pages. QUESTION 1 The International Accounting Standard No24 on related party Disclosures has the main objective of ensuring that an entity’s financial statements contain the disclosers necessary to draw attention to the possibility that its financial position and profit or loss may have been affected by the existence of related parties and by transactions and outstanding balances with such parties. REQUIRED: a) Mention five parties identified in the standard as being related to an entity. b) Give examples of transaction that needs to be disclosed if they are of a related party nature. c) Tanzania Financial Accounting Standard (TFAS) No. 12 on Directors’ Report is one of the TFAS still applicable even after the wholesale adoption of IFRS in 2004 REQUIRED: Compare And Contrast IAS 24 and TFAS 12 showing the similarities and...
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...POLICIES FOR VALUATION OF ASSETS & LIABILITIES (FMCG SECTOR) INDEX 1. Introduction 3 2. Godrej Consumer Products Limited 3 3. Colgate-Palmolive (India) Limited 4 4. Hindustan Unilever Limited 4 5. United Spirits 5 6. Emami Ltd. 5 7. Marico Limited 6 8. Nestle India Limited 7 9. Dabur India Limited 8 10. Britannia Industries Limited 9 11. GlaxoSmithKline Pharmaceuticals Ltd 9 12. Summary 10 Introduction The aim of this project is to study the policies followed by each company in the FMCG (Fast Moving consumer goods) industry for valuation of assets and liabilities. Since FMCG sector in itself is quite diversified, hence instead of selecting the companies on the basis of total assets or total revenues, identification has been done on the sole criteria of BSE and...
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...Value Network Analysis and value conversion of tangible and intangible assets Verna Allee Online version of Final Draft Published in Journal of Intellectual Capital Volume 9, No. 1, 2008, pp. 5-24 Verna Allee verna@vernaallee.com Published in Journal of Intellectual Capital Volume 9, No 1, 2008 pp. 5-24 Page 1 of 21 Introduction One of the most important and challenging questions in working with intangibles is, “How do we convert intangible assets such as human knowledge, internal structures, ways of working, reputation, and business relationships into negotiable forms of value?” Value network analysis offers a way to model, analyse, evaluate, and improve the capability of a business to convert both tangible and intangible assets into other forms of negotiable value, and to realise greater value for itself. Underlying this approach is an understanding that intangible, but nonetheless strong and dynamic relationships, and the intangible assets that make up and have an impact on those relationships, are the foundation of any successful business endeavor. Indeed, the future success of a company or organisation as a whole depends on how efficiently a company can convert one form of value into another. An example of value conversion occurs when an intangible asset such as professional expertise is converted into a more negotiable form of value, perhaps in the form of consulting services. The conversion dynamic also applies to value realisation. An example is when...
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...accounting principles in valuing assets, which are fair value and historical cost. The property refers to the land and building, as those are the main part of total fixed assets of a company. Asset is the most important element in the balance sheet, hence the method used for assets valuation is very important to avoid over or under estimation. This is the reason why the choice for measurement method is importance in determining the value of assets because it will affects the acquisition price and the comprehensive income of the firm in terms off income and shareholder equity. The author too focuses on the accounting treatment in accordance to International Financial reporting Standard (IFRS), US GAAP and Greek GAAP. With reference to the article, asset can be defined as a good able to provide a constant flow of services such as housing services and a source of cash flow. Assets are ruled by a set of basic aspects such as the cost (cost of land or construction cost), the residual value, the useful life estimation and depreciation charge. These elements are correlated with the type and use form of assets. The author also apply some accounting principles in their study such as prudence, historical costs, substance over form, going concern, true and fair view and many more. Data Methodology/approach The topic is approach by using an integration of fixed assets into four main portfolio categories, which are for own use, investment, held for sale assets and inventories. The data is...
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...Current and Noncurrent Assets Paper Every business must have assets to generate income for the business. Businesses must account for all assets in their balance sheets regardless if what is being reported are assets or non-assets. Balance sheets are organized in a particular way so that financial statements fundamentals are arranged in subgroups. Some of the basic examples of assets consist of cash, accounts receivables, and prepaid expenses. Examples of non-current assets consist of fixed assets, intangible assets such as equipment and property, and long term notes receivables. This paper will analyze the meaning of assets and non-assets and compare and contrast the two terms. Current Assets Current assets are short-term assets that a company plans on using or converting within a fiscal year. These assets are defined as company property, which provide benefits to the company. Current assets can be sold, lent, or lease to produce income or help generate value for the business. On a balance sheet companies list the current assets on the top section as it is available to use for the company and they are listed in the order of liquidity. The assets that are listed are cash, short term investments, receivables, inventories, and prepaid expenses. Some company’s accounting and operating fiscal year are longer than one calendar to classify assets and liabilities (Kimmel, Weygandt, & Kieso, 2007). Non-Current Assets Non-current assets are investments made by the company that...
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...Alaska Sea Grant Marine Advisory Program The Business of Fish Handout 6 Analyzing Your Financial Ratios Taken from http://www.va-interactive.com/inbusiness/editorial/finance/ibt/ratio_analysis.html Overview Any successful business owner is constantly evaluating the performance of his or her company, comparing it with the company's historical figures, with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of your company's effectiveness, however, you need to look at more than just easily attainable numbers like sales, profits, and total assets. You must be able to read between the lines of your financial statements and make the seemingly inconsequential numbers accessible and comprehensible. This massive data overload could seem staggering. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Comparative ratio analysis helps you identify and quantify your company's strengths and weaknesses, evaluate its financial position, and understand the risks you may be taking. As with any other form of analysis, comparative ratio techniques aren't definitive and their results shouldn't be viewed as gospel. Many off-the-balance-sheet factors can play a role in the success or failure of a company. But, when used in concert with various other business evaluation processes, comparative ratios are invaluable. This discussion contains descriptions and examples of the eight major...
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...Structure of the Assets and Liabilities 1.2. Net Assets (Net Worth) 1.3. Financial Sustainability Analysis 1.3.1. Key indicators of the company's financial sustainability 1.3.2. Working capital analysis 1.4. Liquidity Analysis 2. Financial Performance 2.1. Overview of the Financial Results 2.2. Profitability Ratios 2.3. Analysis of the Business Activity (Turnover Ratios) 3. Conclusion 3.1. Key Indicators Summary 3.2. Rating of the Financial Position and Financial Performance of DAWSON STORES, INC. 4. Appendix 4.1. Bankruptcy Test (Altman Z-score) 4.2. Calculation of the Final Rating of the Financial Condition 1. DAWSON STORES, INC.'s Financial Position Analysis The analysis given in this report on DAWSON STORES, INC.'s financial state and activity efficiency is made for the period from 01.02.2007 to 31.01.2010 based on the financial statements data prepared according to International Financial Reporting Standards (IFRS). 1.1. Structure of the Assets and Liabilities Indicator | Value | Change for the analysed period | | in thousand USD | % of the balance total | thousand USD (col.5-col.2) | ± % ((col.5-col.2) : col.2) | | 31.01.2007 | 31.01.2008 | 31.01.2009 | 31.01.2010 | at the beginning of the period analysed (31.01.2007) | at the end of the period analysed (31.01.2010) | | | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | Assets | 1. Non-current assets | 5,204 | 5,504...
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...Alaska Sea Grant Marine Advisory Program The Business of Fish Handout 6 Analyzing Your Financial Ratios Taken from http://www.va-interactive.com/inbusiness/editorial/finance/ibt/ratio_analysis.html Overview Any successful business owner is constantly evaluating the performance of his or her company, comparing it with the company's historical figures, with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of your company's effectiveness, however, you need to look at more than just easily attainable numbers like sales, profits, and total assets. You must be able to read between the lines of your financial statements and make the seemingly inconsequential numbers accessible and comprehensible. This massive data overload could seem staggering. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Comparative ratio analysis helps you identify and quantify your company's strengths and weaknesses, evaluate its financial position, and understand the risks you may be taking. As with any other form of analysis, comparative ratio techniques aren't definitive and their results shouldn't be viewed as gospel. Many off-the-balance-sheet factors can play a role in the success or failure of a company. But, when used in concert with various other business evaluation processes, comparative ratios are invaluable. This discussion contains descriptions and examples of the eight major...
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