Accountancy Viva – Havells Ltd

These flashcards cover important concepts related to financial statements, cash flow statements, accounting ratios, and specific details about Havells Ltd.

Financial statements

Structured reports showing profit/loss, financial position, and cash flows of a company.

Cash flow statement

A report showing actual cash inflows and outflows for operating, investing, and financing activities.

Operating activities

Details recorded include cash from customers, payments to suppliers/employees, tax paid, and adjustments for working capital.

Investing activities

Details recorded include cash from buying/selling long-term assets like machinery or investments.

Financing activities

Details recorded include cash from issuing shares/debt, loan repayments, and dividend payments.

Comparative statements

Shows figures of multiple years side by side.

Common size statements

Shows each item as a percentage of a base figure.

Current ratio formula

Current Assets ÷ Current Liabilities.

Quick ratio formula

(Current Assets − Inventory) ÷ Current Liabilities.

Net profit ratio formula

(Net Profit ÷ Revenue) × 100.

Debt-equity ratio formula

Total Debt ÷ Shareholders’ Funds.

Accounting ratio

Numerical relationship between two financial figures to assess performance.

Consolidated balance sheet

Includes parent + subsidiaries details.

Standalone balance sheet

Shows only the parent company's details.

Importance of cash flow statement for investors

Shows actual cash movement, critical for sustainability and dividend decisions.

Notes to accounts

Explain accounting policies, break-ups, contingencies, and disclosures.

Statement that shows solvency

Balance Sheet.

Working capital

Current Assets − Current Liabilities.

How accounting ratios help management

They summarize performance and support planning/decision-making.

Liquidity ratio

Best indicated by Current ratio (also quick ratio for a stricter test).

Havells Ltd finance type

More equity-financed (low debt and stronger solvency).