Manufacturing:-

Manufacturing is the use of machines, tools and labor to produce

goods for sale.
In manufacturing raw materials are transformed into finished goods on
a large scale. Such finished goods may be used for manufacturing other,
more complex products, such as aircraft, household appliances or
automobiles, or sold to wholesalers, who in turn sell them to retailers,
who then sell them to end users the "consumers".















Explanation:-
As you can see in the diagram that first raw material is extracted.
Second, it is transferred into output. Third it is transported. Forth it is
utilized. Fifth it is disposed. After disposing it is recycled and is used as a
raw material.
This all work is done in manufacturing sector.
Bank:-
A bank is a financial institution that serves as a financial
intermediary. The term "bank" may refer to one of several related
types of entities:
1. Central bank
2. Commercial bank
3. Saving bank

Activities of bank:-

Some activities of a bank are

1. Collecting deposits from customers and giving them interest
2. Lending loans to customers (With an interest)
3. Safeguarding customers valuables by means of safe deposit vaults
4. Provide investment services like Mutual funds
5. Provide Depository services (DEMAT Accounts, Share trading etc)

The above mentioned list is not exhaustive but are some of the major
functions provided by banks these days.
The above all activities are performed in banking sector.

Important point:-

The main source of income of manufacturing sector is
to sell his final goods in consumer market. A Bank's
main source of income is interest. A bank pays out at a
lower interest rate on deposits and receives a higher
interest rate on loans. The difference between these
rates represents the bank's net income.

Similarities of both sectors balance sheet:-

First we write accounting equation:
Assets= Liabilities+ Owners equity

In any company balance sheet we will see these things
that are common.

1. Both have current assets and long term assets.
2. Both have current liabilities and long term
liabilities.
3. Both have shareholders that buy the shares of
the company.

Current assets of manufacturing company:-
Manufacturing company current assets include
cash, accounts receivable, inventory, marketable
securities, and prepaid expenses.
Current assets of bank:-
Bank current assets include Negotiable
certificates of deposit, Marketable securities, due
from banks, Cash held in trust, Interest-bearing
deposits in other banks.
Current liabilities of manufacturing company:-
Accounts payable for goods, services or supplies
that were purchased for use in the operation of
the business and payable within a normal period
of time would be current liabilities.
Current liabilities of bank:-
Current liabilities include savings accounts,
regular checking accounts, NOW (Negotiable
Order of Withdrawal) accounts, money market
deposit accounts.
Short-term borrowings are usually from banks,
securities dealers, the Federal Home Loan Bank,
unsecured federal funds borrowings, which
generally mature daily.
Dividend payable (preferred stock).
Long term assets of manufacturing company:-
Long term assets are land, building, plants,
machinery, motor vehicles, office, and
computers.

Long term assets of bank:-
Bank long term assets are land, machinery,
building, motor vehicles, computers and
furniture.
Long term liabilities of manufacturing company:-
Long term financing, liabilities against assets
subject to finance lease, deferred liability for staff
gratuity.
Long term liabilities of bank:-
Long term borrowing, sub-ordinate loans, fixed
deposit.

Difference between manufacturing sector and banking sector:-


1. In manufacturing
sector the main
source of income is
to sell his goods in
consumer market,
interest on short
term deposit.
1. In banking sector the
main source of
income is interest.
Some other sources
are fees charges.
2. In manufacturing
sector raw material
is used as an input.
2. In banking sector
deposit is used as an
input.
3. In manufacturing
sector final goods are
considered as output.
3. In banking sector
interest is considered
output because when
a financial institution
(bank) gives loan to
people then he
charges interest on
the loan for a certain
period of time when
maturity date comes.
4. Manufacturing
companies may be in
loss because there
are many
competitors to sell
same good in the
market.
4. Banks earn profit
either it is high or
low. They have loss in
the shape of bad
debts, investment
securities.
5. The manufacturing
sector has machinery
like:
Computer
Plants
5. The banking sector
also has machinery
like:
Computer
ATM machines
Because the
machinery is when
we give him input he
gives us output.






















This is a manufacturing
company balance sheet as you
can see that there are few
things that are different from
the bank balance sheet.
They have assets but what
assets they have in the assets
that are not in bank balance
sheet.
Inventory
Account receivable
Account payable

We see that in bank balance
sheet there is no term like this
because they do the business of
finance that is a paper and
manufacturing companies do
the business of real goods that
are consumed by consumer.
The inventory is held by
manufacturing company in
three shapes:
1. Raw material
2. Work in progress
3. Finished goods

Manufacturing Company
The primary asset categories for a bank Omni Bank
assets are, of course, what the bank owns. Omni Bank,
being a representative bank, has four main categories of
assets listed on the balance sheet at the right:
1. Physical assets:
This includes the buildings, land, furniture, and
equipment owned by the bank.
2. Loans:-
Loans are the primary source of interest revenue.
While a loan is a liability for the borrower, it is an
asset for the bank, for the lender. This asset
includes loans to consumers (home loans,
personal loans, automobile loans, credit card
loans) and businesses (real estate development
loans, capital investment loans).
3. Reserves:-
This is small in amount, it is extremely important.
Reserves are what banks use for daily
transactions, such as processing checks or
satisfying cash withdrawals. Banks use reserves to
ensure the security of deposits. Two varieties of
reserves worth noting are vault cash (the actual
paper currency and coins that is kept in the bank,
that is, in the vault) and Federal Reserve deposits
(deposits that banks keep with the Federal
Reserve System to clear checks and assist in other
banking activities).
4. Investment securities:-
They pay more interest than reserves, but not as
much as loans. If a bank has a few extra reserves,
but is not ready to lock in loans for the long term,
then investment securities are the answer.
Omni bank Balance sheet
Bank