Professional Documents
Culture Documents
Accounts Report-2
Accounts Report-2
GROUP NUMBER-
GROUP MEMBERS-
AAKANKSH GUPTA
SULAGNA MOHANTI
ROHINI SEN
RITUKA MAJUMDAR
Contents
RESEARCH METHODOLOGY........................................................................................................................4
LITERATURE REVIEW:..................................................................................................................................5
INTRODUCTION........................................................................................................................................10
WHAT ARE FINANCIAL STATEMENTS?......................................................................................................11
TYPES OF FINANCIAL STATEMENTS..........................................................................................................13
SIGNIFICANCE OF FINANCIAL STATEMENTS AND ITS DISCLOSURE TO COMPANY AND SPECIFIC
INDIVIDUALS BOTH INSIDE AND OUTSIDE THE ORGANISATION...............................................................21
WHAT FINANCIAL STATEMENT SAY ABOUT THE COMPANY PERFORMANCE?.........................................23
HOW DOES FINANCIAL STATEMENT HELP A COMPANY TO PERFORM AND MAINTAIN REPUTATION.....25
WHAT WOULD HAPPEN IN ABSENCE OF FINANCIAL STATEMENTS AND ITS EFFECT ON THE COMPANY
AND OTHER INDIVIDUALS?.......................................................................................................................27
HOW DOES IT HELP IN THE GROWTH DEVELOPMENT OF THE COMPANY AND ATTRACT SPECIFIC
INDIVIDUALS TOWARS IT THROUGH THEM ?..........................................................................................29
HOW DOES IT HELP IN THGROWTH DEVELOPMENT OF THE COMPANY AND ATTRACT SPECIFIC
INDIVIDUALS TOWARS IT THROUGH THEM ?..........................................................................................30
SOURCE DOCUMENTS..............................................................................................................................31
Cash Flow of Wipro...................................................................................................................................35
CONCLUSION............................................................................................................................................39
RESEARCH METHODOLOGY
This report is made thoroughly referring and studying accounting books by T.S. Grewal and D.K.
Goel and other previous research papers from internet. We referred to several posts and written vlogs
found in google.
LITERATURE REVIEW:
THE NEED FOR FINANCIAL FOR FINANCIAL
STATEMENTS TO DISCLOSE TRUE BUSINESS
PERFORMANCE TO STAKEHOLDERS
By Wadesango N.* , Wadesango V.O.**
*University of Limpopo, Centre for Academic excellence,
**University of Limpopo, Faculty of Education,
South Africa
This research was made to determine the extent to which Financial Statements disclose true business
performance to stakeholders. The study comes to the conclusion that when assessing the level of
reliance that can be placed on financial statements to determine their ability to disclose business
performance, it is important to take into account management fraudulent reporting, relevance of
reports, reliability of information, and source of information.
STATEMENTS:-
required to disclose accounting information, and those disclosures must aid users in assessing
the effectiveness of the company's operations as well as its policies. Organizations that
disclose information about their human capital are said to reap benefits, particularly in terms
of building credibility and minimising information asymmetry. They also add that it improves
public and stakeholder perception of the organisation. The disclosure enhances stakeholders'
perceptions of the business, which may have a beneficial financial impact. The organisation
discloses material it believes is worthy of disclosure because it sees disclosure as a cost that
Relevance of Financial Statement: Periodically, financial statements are issued with the
objectives is evaluated using financial statements. The intended use of the financial
statements determines the relevance of the financial statements, and general reporting must
take into account the needs of all stakeholders. Benefits from financial statements must
Significance of stakeholders groups: In terms of the financial accounts, financial analysts are
another crucial category. They perform a crucial function in the financial markets, one whose
relevance appears to have increased recently. They are seen as information intermediates who
collect, process, and distribute company information to debt lenders and investors. When it
comes to investing and other types of decision-making, analysts are the ones who can
establish trust and confidence in financial accounts. When it comes to the sharing of
information, not all stakeholders in the corporation are treated equally; some groups are
Management fraudulent reporting: In terms of the financial accounts, financial analysts are
another crucial category. They perform a crucial function in the financial markets, one whose
relevance appears to have increased recently. They are seen as information intermediates who
collect, process, and distribute company information to debt lenders and investors. When it
comes to investing and other types of decision-making, analysts are the ones who can
establish trust and confidence in financial accounts. When it comes to the sharing of
information, not all stakeholders in the corporation are treated equally; some groups are
Report relevant and reliable information: All organisations, whether private or public, are
organization's responsiveness, a variety of aspects are taken into account, including the
manner in which the service is delivered. The capacity to provide a breakdown of someone's
accountability. authority is transmitted from one person to another along with the authority.
Information must be reported in a timely manner for it to be relevant and reliable. In the
organization, there is a trend toward delaying the timing for financial information reporting,
idea of integrated reporting would be presented throughout the presentation of the traditional
determinant of value added in the purported value added statement. They argue that the value
added statement should and may be one of the primary reporting tools for integrated
reporting, and they suggest how integrated reports can be put together to best meet the
information needs of both internal and external stakeholders. When determining the accuracy
STAKEHOLDERS:-
Provide informational needs regarding non financial issues: The business sector has used new
information as a result of the growing demand for information. Financial transactions in the
public and private sectors must be transparent in order to facilitate accountability and inform
Provide information needs for employees: They go on to say that employees must now
assume responsibility for their investments and their future due to the complexity of the
business environment. Employees are expected to be capable of managing their own affairs
Providing information needs for society and public at large: However, there has been a
connection made between environmental issues and the company's overall performance. The
and the growing stakeholder demand for information disclosure that mimics relationships
between organisations and the environment are important elements in improving quality
performances.
INFORMATION:-
organisations created financial statements falsely, as well as the auditor's release of a clean
report, erode stakeholders' faith. When management fraud occurs, stakeholders are concerned
organisation. The handling of stakeholders in the context in which an entity operates for its
Financial statements are written records that convey the business activities and the financial
performance of a company. Financial statement disclosures are further details that are appended to a
financial statement. These addenda offer information to the public, employees, investors, and
governing authorities. Disclosures, which share non-financial information to set the stage for the
financials, appear at the end of a financial statement. The best judgments may be made using this
information by lenders, investors, and other parties. Financial statement disclosures can occasionally
include additional data, but they frequently consist of narrative. These might outline adjustments to
operations or strategy, convey good or bad news, or reveal information about the organisational
structure and chain of command.
WHAT ARE FINANCIAL STATEMENTS?
Financial statements are written documents that transmit the financial pursuits and conditions of a
trading concern or entity and comprise of 4 major elements. Financial statements are usually meant
to furnish the financial data of the enterprise in question as precisely and concisely as feasible for
both the enterprise and for the readers.
Financial statements for trading concern normally comprise balance sheets, statements of retained
earnings, cash flows and income statements but might need further elucidated acknowledgements
relying upon the appropriate accounting groundwork. These statements are audited by government
firms, accountants, agencies, etc. to make sure the certainty and for tax, financing or investing
intentions.
Financial statements depict the precise condition of an enterprise’s economic assets and
liabilities. External stakeholders, like investors and authorities, do not have this data.
They assist in anticipating the degree of an enterprise’s capability to earn profits. Investors
and shareholders can utilise this information to ascertain their financial decisions.
Financial statements of an enterprise show the efficiency of its management. How well an
enterprise is functioning relies upon its profitability, which these statements depict.
They assist readers of these statements in being aware of the accounting strategies used in
them. This assists in comprehending the statements more predominantly.
These statements also furnish data that is associated with the enterprise’s cash flows.
Creditors and investors can utilise this information to anticipate the enterprise’s cash
requisites and liquidity.
Finally, financial statements elucidate the social effect of businesses. This is due to how the
enterprise’s external aspects influence its operations.
TYPES OF FINANCIAL STATEMENTS
There are four types of financial statements that are required to be prepared by an entity. These
statements are:
Income statement,
Balance Sheet or Statement of financial position,
Statement of cash flow,
Noted (disclosure) to financial statements.
1. Income statement
Income statement of an organisation or business entity is the financial statement which contains
financial information about the three important components, which are revenues, profit or loss and
expenses incurred during the accounting period.
The three components of income statement are explained as follows:
Revenues: It refers to the sales of goods and services that the business generates during the current
accounting period. Revenues can be obtained from both cash and credit sales.
Profit or Loss: Profit or loss is the net income which is obtained by deducting the expenses from the
revenues. Profit will happen if revenues are more than expenses and loss will occur if expenses are
more than revenue.
Expenses: Expenses are the cost of operations that an organisation incurs for running day to day
operations. They can be administrative expenses like salaries, depreciation etc.
Company Name
Income Statement
For the period ______
Revenues Xxx
Service revenue/revenue from sale of
goods/royalty/rental/interest income/commission
income etc.
Expenses
Salary expense xxx
Rent expense xxx
Depreciation expenses xxx
Office expenses xxx
Bank charges xxx
Interest expense xxx
Max Associates
Income Statement
For the period 1-4-2019 to 31-3-2020
Revenues
Revenue from legal consultancy fee 25,00,000
Expenses
Salary expense 2,00,000
Rent expense 1,80,000
Depreciation expenses 30,000
Office expenses 20,000
Bank charges 12,000
Interest expense 8000
2. Balance sheet
A balance sheet is known as a statement of financial position as it shows the position of assets,
liabilities and equity at the end of an accounting period. The net worth of a business can be
determined by deducting the liabilities from the assets.
If the users of financial information are looking for information regarding the financial position of
the company, a balance sheet is the most appropriate statement which will present the necessary
information.
Components of a balance sheet are assets, liabilities and equity. These are described below:
a. Assets: Assets are resources that are owned by the company both legally and economically. There
are two main classes of assets. They are current and non-current assets.
Current assets of a company are those assets that are going to be utilised in the current accounting
period. The examples of current assets are cash, marketable securities, cash equivalent etc.
Non-current assets comprise of those assets that cannot be utilised completely in the current
accounting period and are therefore used across several accounting periods. It consists of tangible
and intangible assets including machinery, building, land, computer equipment, vehicles etc.
Assets are equal to the sum of liabilities and equity of the organisation.
b. Liabilities: Liabilities are obligations of a company which they owe to other businesses or
individuals. It includes interests payable, loans, taxes etc. Liabilities are of two categories current
liabilities and non-current liabilities.
Current liabilities are due within a year that means the organisation has to pay the dues within that
accounting year only. Non-current liabilities, on the other hand, are obligations that have a longer
period of repayment, which is more than twelve months. For example, a long term lease which is due
in more than twelve months.
c. Equity: Equity is defined as the difference between assets and liabilities. The examples of equity
are retained earnings, share capital. Equity can be calculated by subtracting assets from liabilities.
2.Review of liability: Financial statements presents the short- and long-term obligations of the
business. If the owner wants to expand his business, he must look at the statements of financial
position and deduce the logic as to whether he should reduce existing liabilities to apply for further
capital expansion. Lenders look at the financial statements and determine business prospects based
on revenues, assets, and liabilities.
3.Review of inventory and its movement: The levels of opening and closing stock as a percentage of
purchase and sales, along with the changes and movements in the levels of stock throughout the year,
show the business’s ability and nature. It shows whether the goods are in demand, fast-moving or
slow-moving, or change in the trend of sales, and so on. When the goods are slow-moving compared
to industry, it is considered a negative for the business prospect and growth.
4.Identification of trends: The business owner should prepare and compare financial statements over
various periods to identify business trends. This helps the business know what products are selling
well, what segments are growing well, and which segment of business needs further review and re-
investment or complete exit at once. Trends are the gospel in the performance of the business.
Identifying trends is, therefore, a necessity for the business to sustain growth and achieve higher
profits.
5.Preparation of budget: Every business must have a vision. To prepare a vision, the business must
have defined goals and objectives. The objective of financial statements is to prepare a blueprint for
the future by analysing the past financial statements already prepared and audited. Budgets help to
keep the expenses in line with income and sales. The budgets are forecasted using prepared financial
statements.
Significance of Financial Statements: Financial Statements are important since they serve to
persuade the various interests of different types of people, such as creditors, the general public,
management, etc.
Environmental Reporting and Social Disclosures: Although each country has its own
distinct requirements, companies in the US, Canada, and the EU are all required to report
environmental risks and consequences generated by their activities. Companies with more
than 500 workers, especially in the EU, are also obligated to declare their diversity initiatives,
employee treatment, and related information. Contrarily, it's possible that firms in North
America are merely obligated to report threats to profitability.
Operations Insights: Events that have place in between financial statements, such as
bankruptcy or contract loss, frequently need to be conveyed in a narrative. It may also be
required to indicate significant changes to the organizational structure or operational
procedures.
Conflicts of Interest: The link between the brokerage and the company in issue must be
made explicit, especially when a brokerage firm has generated a financial statement. It's not
always a warning sign if the broker has performed financial services for the company or if
analysts or other firm members hold company stock. Outside investors, for example, ought to
be informed so they may conduct their own examination of the financial statements in their
own unique context.
Legal Disclaimers: Other disclaimers will probably be included with every financial
statement. These include statements on whether the report contains predictions that might not
correspond to actual future events. Additionally, it should be made clear whether or not the
data in the report has been thoroughly checked for accuracy and whether or not it is intended
to serve as a guide for making investment decisions.
WHAT FINANCIAL STATEMENT SAY ABOUT THE
COMPANY PERFORMANCE?
Financial performance is a gauge of how well a company can utilize resources from its main line of
business and create income. The phrase is also used as a broad indicator of a company's long-term
financial stability.
Financial performance is compared by analysts and investors between similar companies in the same
industry or between industries or sectors as a whole.
Investors can learn information about a company's general health from its financial performance. It
provides a quick picture of the country's economic situation and managerial performance.
Form 10-K, which all publicly traded firms are required to release yearly, is a significant document
in reporting company financial performance.
The balance sheet, the income statement, and the statement of cash flows are financial statements
that are used to assess overall financial performance.
Indicators of financial success are quantitative criteria used to gauge a company's performance.
No one metric should be used to assess a company's financial success.
Financial Statements: The balance sheet, income statement, and cash flow statement are the
three financial statements that are included in the 10K.
Cash Flow Statement: The income statement and balance sheet are combined to create the
cash flow statement. Because it offers a reconciliation between net income and cash flow, the
cash flow statement is considered by some analysts to be the most significant financial
statement. Here, researchers can see how much the business spent on dividends, capital
expenditures, and stock repurchases. The source and purposes of cash flow from operations,
investment, and borrowing are also provided.
Numbers serve as the foundation for a company's financial performance. However, in the end, it
leaves a lasting image of the business and its stability. Any serious investor who wants to
comprehend and evaluate a company fairly must do a financial analysis of the financial statements of
the firm, as detailed in annual reports and Form K-10s.
It's crucial to understand, though, that financial success only ever represents the past and is never a
precise predictor of the future. It also doesn't exist by itself. When assessing a company's financial
success, one should constantly take into account the company's history, the industry as a whole, and
other, comparable firms.
HOW DOES FINANCIAL STATEMENT HELP A
COMPANY TO PERFORM AND MAINTAIN
REPUTATION
Organizations can gain from financial statement analysis in many different ways. It gives internal
and external stakeholders the chance to make well-informed investment decisions. In addition,
financial statement analysis offers lending institutions a frank assessment of a company's financial
standing, which aids in lending decisions. Financial statement analysis also aids in issues of
corporate governance because top executives and other members of management depend on
accounting to accurately portray the results of their decisions.
Few ways how Financial Statement help are:
Know that decisions should be based on more than just the numbers on financial statements
to maintain objectivity.
Prevent acquiring a fake sense of security. Accounting professionals should also use in-the-
moment observations of business activity in addition to financial documents to determine
whether a corporation is steady and lucrative. For instance, a declining inventory that is
difficult to replenish could eventually lead to significant problems.
Financial statements give potential lenders a picture of the company, and they can use this
information to either restrict credit in order to begin a recovery or to extend additional credit
for business expansion,
Since the firm issues financial statements, the information an analyst receives is obviously restricted
to what the corporation wants to disclose and how it intends to modify the data.
Historical Costs: Historical expenses are used in financial reporting. All transactions are
documented at historical cost; the financial statements do not include the current value of the
company's assets and liabilities since such values fluctuate over time and are influenced by
market variables. As a result, the financial statements may be deceptive if any items are
included that are based on prior expenses and the firm has not updated them.
Inflation Adjustments: The company's assets and liabilities are not adjusted for inflation.
Since the goods in the reports will be reported at lower costs when inflation is really strong,
the readers won't receive much information from them.
Personal Judgements: Personal judgements form the basis of the financial accounts. The
accounting standard that is applied by the individual or group of individuals preparing the
assets and liabilities determines their worth. Depreciation procedures, asset amortization, etc.,
are subject to the individual judgement of the person utilizing the assets. As a result, all such
procedures have limitations and cannot be disclosed in financial reports.
Specific Time Period Reporting: Since the financial statements are based on a certain time
period, they may have an impact on seasonality or an abrupt upswing or slump in sales. Since
numerous factors impact a company's success, which is detailed in the financial reports, it is
difficult to compare one period to another. As a result, when analysing the reports based on
just one reporting period, a reader may make mistakes. A more accurate picture of the
company's performance can be obtained by carefully examining reports from various time
periods.
Intangible Assets: The company's intangible assets are not included on the balance sheet.
Intangible assets, such as brand value and the company's reputation built through time, which
aid in increasing sales, are excluded from the balance sheet, for instance. However, intangible
assets are noted on the financial accounts if the corporation has acquired them. In general, it
is a challenge for start-ups that, based on domain expertise, produce a significant amount of
intellectual property, but since they have not been in operation for very long, they are unable
to generate sufficient revenues. As a result, neither their intangible assets nor their sales are
included on the financial accounts.
Fraudulent Practices: The financial statements might be fraudulent. There are several
reasons for engaging in fraudulent behaviour and distorting the company's financial
outcomes. For instance, if the promoters want to increase the share price or the management
wants to receive a bonus, they frequently use dishonest accounting techniques, phony sales,
etc. to demonstrate the company's success. Analysts can see them if the firm performs better
than average compared to its sector.
A company that doesn’t provide a balance sheet when publishing its financial statements doesn’t
abide by accounting rules -- the most prominent of which include generally accepted accounting
principles (GAAP), international financial reporting standards (IFRS) and edicts from the U.S.
Securities and Exchange Commission (SEC). Financial noncompliance also triggers the wrath of
investors and business partners as diverse as service providers, lenders, customers and vendors.
HOW DOES IT HELP IN THE GROWTH
DEVELOPMENT OF THE COMPANY AND
ATTRACT SPECIFIC INDIVIDUALS TOWARS IT
THROUGH THEM ?
An financial disclosure is a statement that recognizes the financial policies of a firm or a business
organization. This statement shows all the expenses and revenues over a period of time. The
accounting policies statement is disclosed for all the present investors and potential investors in a
business organization. This policies are strategies and methods of accounting which are followed by
the firm or organization. The financial statement comprises of balance sheet, income statement and
cash flow of a business organization.
In financial and investment world, disclosures of disclosure statement, all the relevant
information about the firm are required to be issued by the business corporation which can influence
potential investors through Annual Reports. This reports helps the investors to make informed
decisions and choose stocks or bonds which suits their investment needs and investment portfolio.
Many countries have developed laws and established guidelines on how and when this are to be
made and published.
HOW DOES IT HELP IN THGROWTH
DEVELOPMENT OF THE COMPANY AND
ATTRACT SPECIFIC INDIVIDUALS TOWARS IT
THROUGH THEM ?
An financial disclosure is a statement that recognizes the financial policies of a firm or a business
organization.This statement shows all the expenses and revenues over a period of time.The
accounting policies statement is disclosed for all the present investors and potential investors in a
business organization. This policies are strategies and methods of accounting which are followed by
the firm or organization.The financial statement comprises of balance sheet, income statement and
cash flow of a business organization.
In financial and investment world, disclosures of disclosure statement ,all the relevant
information about the firm are required to be issued by the business corporation which can influence
potential investors through Annual Reports. This reports helps the investors to make informed
decisions and choose stocks or bonds which suits their investment needs and investment
portfolio.Many countries have developed laws and established guidelines on how and when this are
to be made and published.
SOURCE DOCUMENTS
The following are the source documents of financial statements of WIPRO LIMITED:
1. BALANCE SHEET
Mar '22 Mar '21 Mar '20 Mar '19 Mar '18
Sources Of Funds
Mar '22 Mar '21 Mar '20 Mar '19 Mar '18
Application Of Funds
Gross Block 17,101.80 16,177.50 14,788.70 11,721.20 11,237.80
Total CA, Loans & Advances 30,129.70 30,898.30 30,095.00 30,235.30 22,330.90
Mar '22 Mar '21 Mar '20 Mar '19 Mar '18
Income
Expenditure
Mar '22 Mar '21 Mar '20 Mar '19 Mar '18
Mar '22 Mar '21 Mar '20 Mar '19 Mar '18
Net Cash From Operating Activities 7240.50 12727.70 9068.10 10210.10 6470.90
Net Cash (used in)/from Financing Activities 494.70 -12105.70 -12233.00 -1395.10 -12918.40
Opening Cash & Cash Equivalents 9783.20 10444.00 10389.90 1942.50 3362.20
Closing Cash & Cash Equivalents 4898.10 9783.20 10444.00 10389.90 1922.20
4.FINANCIAL RATIO
Mar
Mar '21 Mar '20 Mar '19 Mar '18
'22
Operating Profit Per Share (Rs) 30.43 26.96 21.60 19.25 22.96
Profitability Ratios
Long Term Debt Equity Ratio 0.09 0.01 0.01 0.05 0.09
Dividend Payout Ratio Net Profit 26.82 5.05 7.05 6.03 6.77
In conclusion, financial statement includes the cash flow statement ,balance sheet and income
statement. Every statement shows thee financial situation of the company separately. With
financial statement in combination, it determines a companies health and stability also providing
on how the company conducts its business and how the business can manage its expenditures and
revenues, and estimate its value. It should not be compromised as it increases the efficiency of the
business operations. The disclosure of financial statements helps the business organization attract
potential investors by publishing annual reports.
REFERENCES
WEBSITES:
https://www.completecontroller.com/importance-of-accounting-policies-disclosure-and-
their-impact-on-business/
https://smallbusiness.chron.com/importance-accounting-standards-44927.html
https://www.wallstreetmojo.com/objectives-of-financial-statement-analysis/
https://www.sec.gov/reportspubs/investor-publications/
investorpubsbegfinstmtguidehtm.html
https://onlinemasters.ohio.edu/blog/financial-statement-analysis-helps-business-grow/
https://www.scirp.org/journal/paperinformation.aspx?paperid=102605
https://www.cfainstitute.org/-/media/documents/article/position-paper/financial-
reporting-disclosures-investor-perspectives-on-transparency-trust-volume.ashx
https://onlinemasters.ohio.edu/blog/financial-statement-analysis-helps-business-grow/
https://www.fluencetech.com/post/what-are-financial-statement-disclosures