 I am particularly thankful first to my colleagues, Professor Baput and Professor Nageshwar Rao, then to an expert team from J. P. Morgan and finally, with our team of teaching assistants and associates who have been working in order to provide all the inputs that we believe you might need. I would also like to thank a large technical team at IIT Bombay, my audio video team which helps us to connect with you regularly on every Saturday, my workshop team which works diligently all seven days to identify the important questions that you send by making a precise list of important questions as suggested by the team of TAs and by ensuring that our faculty colleagues and experts from J. P. Morgan get to see those questions in time so that the important doubts can be answered. Finally, I would like to thank all of you. I understand that all of you are busy doing your normal studies in your universities which must be keeping you busy. So, you are taking up this additional activity as an over and above activity which means the time that you are spending here you have to steal from your other commitments. I am very happy that you did that. As you know, there are assessments and evaluations like in any other course. Most of you should qualify, some of you may not, but independent of the qualification of the marks that you get, I am sure you would have benefited from this exercise. In future, IIT Bombay is committed to continue offering such skill courses, but as I said earlier, since this time we had funding support from J. P. Morgan, we did not charge any fees. Subsequently, we will be offering these courses all by at a very reasonable fees which all of you can afford. More importantly, we believe that millions of students not only college students, but even high school students should benefit from such endeavors. There will be a survey conducted. Please make sure that you give your opinions both on the specific aspects of this course on financial literacy and also on the general mechanism of the conduct of the course including any suggestions that you would like to make. We endeavor perpetually to improve our offerings so that the students who participate benefit more and more and more in the coming years. That is all I wanted to say. Thank you very much. And now, I would now request my colleague, Professor Raj Bapat to take over and carry on with the sessions. Over and out. Thank you. That is great. The 20 percent effectiveness Dharlathari reaches huge. So, are you all ready? Shall we start again with the financial literacy? Two announcements to begin with. You all know that this quiz is due on Tuesday, 19th. So, there is no extension. Please start as soon as this session is over and try to complete the quiz. Second announcement, second is about exit survey. Now, you are all, all of you are requested to respond to the exit survey about your feedback so that we can keep on improving the course based on your feedback. So, now, we will again go back to your questions. I think TA will handle that. That is an important question. B.L.D.E.A. College, Bijapur, please ask your question. Sir, how we compare profit and loss amount and balance sheet? How we? Profit and loss amount and balance sheet. Balance sheet. Basically, these are two complementary statements. There is nothing like comparison. Profit and loss account is a statement where all expenditures and incomes are listed. The net result is your profit. Balance sheet is another statement where you list all your assets and liabilities and it talks about financial statement of the company. So, you cannot compare P and L with balance sheet. Yes, what you can compare is? Take the P and L account of one company, compare with profit and loss account of other companies in the same industry. Then, you will get lot of insights about how are the businesses of those companies. Yeah, thank you. Thank you, sir. Sir, one more question. Yes. Suppose, if you consider an industry, so, changing the old machines will be under liabilities. Okay, so, but after selling those old machineries and converting them into cash and due to the vintage make of those machines, we make more profit, more cash than, you know, the current price. So, will that be considered as an asset or a liability? Okay, first of all, machinery is your asset. I hope all of you agree that machinery is one of our fixed assets. Machinery loses its value gradually. The value of machinery falls that is known as depreciation. So, if machinery is of 1 lakh and has a life of 5 years, it will lose 20,000 rupees each year. This is in the normal course. Now, because of accident or because of any other problem, machinery can also lose its value before 5 years. In any case, at no point of time, machinery becomes a liability. Machinery is always our asset. Even if it is a used machinery, still it is an asset. New machinery may have a value of 1 lakh. After 3 years, theoretically, its value is 40,000, but maybe its value is only 10,000 or 5,000. It may have only value of scrap value like 1,000 or 2,000, but it is not a liability at any point of time. Suppose you scrap it out and sold it at the old machinery for say 5,000. So, Joby 5,000 millega that will be put in your cash on your asset side. Thank you. Thank you so much. Hello. Yes. Hello. Good evening, sir. Yes. My question is that what are the preliminary expenses? Hello. Yes. Okay. My question is that what are the preliminary expenses? Okay, good question. Now, when the company is created, there are certain expenses which are incurred for registration of the company. There will be some stamp duty, some legal charges. Those are generally called as preliminary expenses. Apart from them, you may also incur some expenses to start the project. That can also be added as a preliminary expenses. They are kept on the asset side of the balance sheet. So, if you remember the first question that was asked was what is a fictitious asset? Preliminary expense is one of the example of fictitious asset. So, it is not really an asset, but it is for formation of company. It is kept on the asset side of the balance sheet. Slowly, slowly it is written off. Thank you. Okay. Thank you, sir. Good evening, sir. Yes. As every company talises its balance sheet by the end of the month, then why there is a load in the month of March? Good question, I think. Accountants are the people who have to suffer a lot in the month of March, sitting late night trying to tally the balance sheet. Actually, not only at the end of the month, the balance sheet should theoretically tally every day. And nowadays, because of the use of software, the balance sheet is tallyed every day. There is not a problem of tallying. Then at the end of each quarter, at least a listed company is required to come out with a balance sheet. So, for each quarter, they complete the work. At the end of the March, there is an extra work because there are some adjustments which are done only at the end of the year. For example, just now I was talking about the depreciation of the machine. But we cannot show that reduction every day. So, what we do is at the end of the year or sometimes at the end of the quarter, the calculation of depreciation is done and then that is recorded. Similarly, there are several other effects which are specially done at the end of the year, like whether there are any bad dates, whether any provisions are required. So, suppose you have given advance to some party. You have no trace of that party. Then, you will have to record about such possible losses. Some parties might have filed a court case against you. So, you will have to record them as a contingent liability. Such activities, these are known as closing and adjusting activities. They are done at the end of the year. So, even if balance sheet tallies every day or every month, all these activities have to be done at the end of the year. Thank you. Thank you, sir. Hello, sir. How do you calculate total equity for a specific company? Can you explain with example? I think we have discussed this already. There was one question, what is net worth? Net worth is equal to owner's fund, it is equal to equity and if you want to write an equation, it is capital plus reserves. So, to calculate the total equity, if the capital is 2 crores and company has made a profit of 1 crore, which is in the reserves. So, 2 crore plus 1 crore, total equity will be 3 crore. Thank you. Hello, sir. Sir, my question is not related to the last video. So, may I ask that? It is a general question. So, may I ask that question? Yes, sure. As we have seen, that gambling and betting is banned in India. So, my question is, it is pupils' money. It depends on them how they want to use the money. So, it should not be banned. Why is it banned then? Now, this is a very general question. But you know, in America, people are allowed to use guns by same logic. They want to buy the gun, they can buy the gun. But you know what is happening in America? Only last 2-3 days before, there was a news of one student entering the classroom and shooting 17 other students. Like that, 12 incidences have happened in just 3 months. So, student angry, teacher is angry and he directly kills the teachers. So, it is not a question of money of the people. Indian state is a welfare state. We do not want to misuse the money. So, gambling is not a productive activity. So, people cannot be allowed to be put their money in the gambling. That is why gambling is not allowed in India. Same logic says, the band of Gudka. People will say, our money is from Gudka. We will have cancer. But government does not like it. Government wants to restrict certain things. That is why such bands are put. But in some states like Goa, there are so many casinos. But they are allowed to do the gambling. Then why is it that in one state you are allowed to selling the Gudka and in other one you are not allowed to do? This is not a central legislation. Maharashtra state is not good for Gudka. That is why Gudka is banned. You know in Gujarat, even liquor is banned. So, if that state ke logoko laga ki this is not good, they can always try to ban it. Thank you, sir. In the video, one point was covered under balance sheet. That is under liabilities. You told one point that reserves. That is what the profits are. I have not got that point. Can you please explain me again? What are the reserves and how we can include them as in the liabilities? Now, this is a very important point. Good, she asked. Because most of the non-accountants always feel ki reserves is our asset. But you are making a balance sheet of a company. And owners put in the money that is known as capital. Jobi profit ayaga that should go to the owners. I had just explained you in before the break that whenever company earns a profit, there are two choices. A profit owner's kodedia that is known as dividend. Then it does not come in the balance sheet at all. But if the profit is not distributed, then it is added to the balance sheet. A question ayaga ki should it be added in the asset or in the liability. Now it is a liability because it belongs to the owners. If you are not paying it now, in future you will have to pay it. When I say you, I mean I am a company. So, if I am a company, mere owners ka profit ayaga. Either I distribute them now, then it is a dividend. If I do not distribute now, it should be shown on the liability because it should be paid to the owners. After 2 years, 3 years or kabibi pe ne kya, still it will be paid when the company is completely closed. That is why reserves is a liability of the company. Only good point is it is known as internal liability. They say loans have external liability. Bank up ko notice de rege. Time pe apta ne gaya to. In case of reserves, there is no notice. It is an internal liability. Kampani ko jab merji aayagi, company can repay those reserves to the shareholders in the form of dividends. Agar unko dividend nahi diya, aur kal jake company bandho gayi. So, at the time of closure, that reserve money will be paid to the shareholders. But if we know finally we have to give that money to the owners, then why we should take that under the liability. If we know finally we have to give the owner, then why we should wait for it to close the company and all. We try to include under liability. I think you are confusing the question. Aap ek baar bol reyo ki why we should wait. Mene e kabibi kahai ne ki we should wait. If company wants to pay it right away, they can always pay it. Then it is called as a dividend. If company pays all their profit as dividend to the shareholders, fir company ke growth hi nahi hogi. Because the profit earned gives some money to the company to make new investment. Because company has to grow its business, has to increase its size. That is why that money, some small part is given as a dividend. Maximum part company khut ke pass rakti hai unki growth ke liye. It is not compulsory, but normally they keep. But kabhi nahi kabhi aapko shareholders ko wo apis dena hai. Iske liye agar aapne rakha to it has to be kept in the liability. Thank you sir. In the Bhopal, IS college Bhopal. Yes. Sir, how should equity be divided among co-founders of the startup? Again it is not an accounting question, but I will try to answer. See in the startup, suppose there is only one person who starts the company. Then all equity will be held by one person. Instead of one person, if there are three friends who start the company, then the three people will have the equity. Ye log jo hai o originally company start karne wale. Then new technical people or new business people won't have enough money. So naturally they will have to approach their friends and relatives ki by aap log bhi paisa dedo. And if they invest in the company in the form of ownership, then they will also be given the shares. So I am assuming that there are three friends, they start the company. Then these three people will have shares of 11 lakh. Suppose there are their friends and relatives are willing to put the money. And if they all agree, then those people will also have to be given shares. Then outside their friends and relatives, they also may approach some venture capitalists or some angel investors. Then they will also be given shares. Like that these equities form with the agreement of all the parties. What do you mean sir? What does debit memo means on a bank statement? What does debit? Memo means on a bank statement. Debit memo means. Actually I am also not sure in which bank statement you are referring. But I will try to answer. Suppose bank puts some charges on the customer. Our account is with the bank. If the bank charges 100 rupees, then they would put that as a debit memo. Memo I do not know, but they would put as a debit in our bank account. That could be the debit memo you are referring. That means your bank balance will be less because of that debit. So, my next question is what is the difference between stocks and bonds? What is the difference between? Stocks and bonds. Good question. Suppose I am a company to collect money. There are two ways I can collect the money. One is I will distribute my ownership to the owners. When I distribute my ownership, I issue stock. Stock is the shares in India. So, shareholders are my owners. Other choice is I will take a loan. So, I can either take a loan from bank. Sometimes I take a loan from number of people. And in acknowledgement of that debt or in acknowledgement of that loan, I give them a security. That security is known as a bond. Like the shares are traded in the stock market. Bonds are also traded in the bond market. So, share is a ownership security. Shareholders do not get any fixed return. If there is profit, then they will be given a dividend. Whereas in case of bondholders, there will be a fixed rate of interest. Suppose it is a 10 percent bond, then the bondholders will get 10 percent interest. Company will get back their money in case of shareholders. They do not have any guarantee that they will get 10 percent or 5 percent. But if there is more profit, they will get 50 percent or 100 percent. Because they are the owners. So, shareholders are the ownership security. And the bond is a debt security. That is the difference. Thank you. Sir, what is marginal cost? Good question. I think it is covered in the given video, but I will still try to answer. See, marginal refers to, on the margin, something extra. So, suppose if you make 100 units and the cost is 1000. So, 100 units banalegically a 1000. That means cost per unit is 10. That is called as an average cost. Now, if you make 101st unit and the cost is 1005. That means to make one more unit, you have incurred a cost of 5 rupees. That is known as marginal cost. So, this is a cost of making one more unit or one less unit. And this plays very important role in the decision making. Sir, what is the difference between straight bond and convertible bond? Again, a bit of advanced question. I have just tried to respond what is a bond. So, bond is a debt security. If I am a company, I issue bond for 100 rupees carrying interest of 12 percent. Jyobi investor hoga, that investor will give me 100 rupees. I will issue a bond of 100 rupees carrying 12 percent interest. That means every year 12 percent will be the interest paid to the bond holder. This is called as a straight bond. Suppose, if a bond is of 5 years, then after 5 years, I will return the bond and give it 100 rupees. So, this is called as a straight bond. In case of convertible bonds, what happens is, suppose this 100 rupees is a convertible bond after 3 years. That means first 3 years, I will pay interest at 12 percent. At the end of 3 years, there will be option with the investor to convert that bond into shares. So, company will ask the shareholders or the bond holders that do you want to convert these bonds into shares? jithne log yas bolenge unke bonds ka shares me conversion ho jaega. That means they will not get any interest, but they will become the shareholders. Or if they do not like that proposition, they will continue to be the bond holders. At the end of 5 years, they will get back their money. So, convertible bond is a security which is initially bond, but after some period. They say, for example, 3 years bolata, 1 year, 2 years, 3 years, after some period, those bonds can be converted into shares. Thank you. So, what is the difference between when new income and gain? Suppose I am in the business of selling of books. What I earn from sale of book? Manloki, I am a writer of, let us say, this book. This is a book which I have written and the price of the book is 100 rupees. Then by selling one book, I earn 100 rupees. That is my revenue. To print this book, my cost is 80 rupees. So, many a book becha, to mera revenue 100 rupees oga, but cost is 80. That means I make a profit of 20. So, revenue is 100. Profit or income is 20. There is no gain involved because book selling is my regular activity. Abhi book beshte beshte beshte mera naam bahoto gaya. And suppose somebody is willing to, let us say, give me some one-time money for using my name or for doing some one-time activity. Then what money I will get out of that is known as a gain. Aur ek bhi example desaktao ki par printing these books. I am using some computer. That computer ki cost hai 1 lakh. And after 3 years, I dispose of the computer for 10,000. That means I have made a loss of 90,000. This is also a one-time loss. So, it is like a negative gain. So, old asset beshte kabhi kabhi apko agar profit ho gaya. Jo rare hai. But kabhi ho gaya. So, that is also considered as a gain. Land ke case mein axar aisa hota hai ki mera pass purana land hai. Jiski value, ne jiski purchase cost hai 1 lakh. Lekin aaj ki uski value hai 20 lakhs. Mene besh daali. Toh 19 lakhs which I earn will be considered as a gain. Thank you. Thank you. Hello, sir. Yes. Sir, my question is, how are liabilities are classified on the balance sheet? Please see the format. I think you will get your own answer. Still I will try to explain. There is a first item called as owner's fund. Next item is non-current liabilities. And the third item is current liabilities. This is how they are classified. So, where you call it solapur? Please switch on your mic. Yes, sir. Good afternoon, sir. Go ahead. Yes, sir. My question is, what is the meaning of assets and liability? And what is the actual difference between that? Again, I think you have not seen any of my videos because this is a very, very basic question. Asset refers to the property or the resource of the company. For example, if company owned land, they would have building by asset. They would have vehicle by asset. They would have cash by asset. These are all assets. And liabilities refers to those commitments which they have to pay. So, if electricity bill remains, then outstanding electricity bill is a liability. If they have loaned, then that is a liability. If they have issued shares, then that becomes an internal liability and so on. Yes, sir. Is there any other question? If any center has a question, please press the hand raise button at the bottom of the user list. Now, since there are no specific questions, I will like to discuss on one another important topic in brief. We have already discussed about the profit and loss account and also about the balance sheet. There is one more financial statement that is known as cash flow statement. So, for another, say, 15-20 minutes, we will discuss about cash flow statement. These are the items in this PPT, introduction to the cash flow statement, meaning, applicability and so on. Now, in the traditional cash flow, in the traditional financial statements, we prepare profit and loss account and balance sheet. But many times, users want to know how much is the cash generated by the business and where they have used the cash. To show that a new statement was evolved that is known as a cash flow statement. So, this gives a summary of cash payments and receipts during the year. But it does not give receipts at one side and payment at one side. It gives them categorized logically. So, all cash flows are categorized under three heads. They would all be put under one heading known as operating cash flow. Then any investment which you make, so if you make investment or sell investment and get back money, that will be called as an investing cash flow. And if you have raised any money, then that is called as a financing cash flow. So, these cash flows are distributed or categorized into three headings, operating, investing and financing. Now, there is an accounting standard known as AS-3. That is known as IND-AS-7 which explains about the preparation of financial statements. Now, we are talking about cash. So, it is a statement of cash and cash equivalence. What is cash? I think everybody knows. That is not the only cash. Whatever bank balance which we have, that is also called as cash. So, cash includes cash plus bank balances. Then there is something known as cash equivalence. Now, if the money is kept in the form of investments, but which can be liquidated in a very short notice without any loss, that is also considered as a cash balance. It is called as a cash equivalent. I say I am a bank FD Rakhaya, but bank FD is only for 10 days. Then it can be considered as a cash equivalent. Normally, any money which can be converted within 48 hours or within a very, very short period, that is included as a cash equivalent. So, cash flow statement is essentially a statement of cash plus cash equivalent. So, inflows and outflows are enlisted here. We have already seen there are three major categories. So, here you are given examples. All day-to-day activities are operating activities. Any investment led example purchase of land, that will be an investing activity and any financing arrangement like loan taken is called as a financing activity. I will throw out detail made in each category. One category is operating activity. Now, operating activity, examples are cash received from sale of goods or cash received from royalty, cash payment to the suppliers, receipts and payment. Then cash paid to salary, employee salary, all these is included as regular activities. They are all operating activities. Now, the cash flow from operating activities can be calculated by two methods. First method is known as a direct method. It can also be calculated by indirect method. So, you start with profit and add or less non-cash expenses. You get the total cash flows from operating activities. So, this is how cash flow is calculated using indirect method. As per accounting standard, we are allowed to use only indirect method. So, just keep in mind how the cash flows from operations are calculated. This is the format. The third one is known as investing activities. So, if company has more money, they can invest outside the business like in shares or in bonds or in bank deposits. That is an investing activity. So, bank deposits are kept or the old bank deposits are disposed of and I took back the money. Both will be investing activity. Same way, in my own business, I can add fixed assets like new machinery, new land, new vehicle, or old vehicle, old machinery, old computers. All these are examples of investing activities. So, cash received or paid under these categories will be shown here. Third are financing activities. Naturally, I need money. So, I can raise the money in the form of owned funds. So, issue of shares or there was a very good question about bonds. I can also issue bonds that is also included in the financing activity. I may borrow money from bank, take a loan that is another financial activity. When I take loan, I have to repay the loan or I have to redeem the bond or I have to pay back the shares. All these will be included in the financing activity. So, here is a list of financing activities. The last item is dividend and interest paid. Receiving the loan is a financing activity. I have to repay the loan, but when I repay the loan, I do not just repay the principal. I have to pay the interest also on that. That is also included in the financial activity. Same way, when I issue shares, that dividend is also a financing activity. Now, suppose I receive interest from investment. If that investment is short term, less than one year, then that interest will be considered as a regular activity. But if it is an investment for a long term use, then it will be considered as a... If you receive interest from a long term investment, then it is considered as a long term interest received. So, it is an investing activity. Same way for interest paid, normally if I take loan and I pay interest, the loan is a financing activity. So, interest on that loan is also a financing activity. Short term loan, which is taken for less than one year, then interest paid on that loan is considered as an operating activity. Now, I have a look at a dividend. Now, when we receive dividend, I have invested in a dividend mill, then it becomes an investing activity. But if we pay dividend, when we issue shares, it is a financing activity. So, dividend paid also is a financing activity. We will, I think, skip this foreign exchange effect, etcetera. Sometimes there are some non-cash transactions. There was one question about merger. They say company A takes over another company B. So, A will buy all the assets and liabilities of B. In exchange, they will make a payment. If they pay in cash, then it becomes an investing activity. But they do not pay in cash. They issue their own shares to the shareholders of B. Then it is a non-cash transaction. As many assets liye, uske barile many shares liye, then it is a non-cash transaction. Such transactions should not be shown in the cash flow statement. Because cash flow statement, by definition, is a statement of cash. So, non-cash transaction hoga to naturally, it will not be shown in the cash flow statement. These are some of the examples of non-cash transactions. There was also one question about conversion of bond. Ki straight bond kaotha and convertible bond kaotha. Convertible bond jaisa main bataya tha is a bond issued in the beginning. After one or two years, it is converted into equity. So, briefly, I have tried to explain what is a cash flow statement. So, what cash flow statement does is, it starts with cash opening balance. Then, all the inflows and upflows are categorized as operating, investing and financing. Uske total karthe, that is a cash flow generated in the year. Opening balance plus that cash flow is a closing cash balance. So, this is a statement which explains how the cash has come in or how the cash has been spent during the year. Now, along with P and L and balance sheet, cash flow statement is a very important statement. Agar ap logane kisi company ka annual report reallly download kia hai, which I am sure all the good students would have done. You can get access to their cash flow statements. Please go through it. Then, you will understand how the cash movement has happened in that company during that year. Thank you. Again, we will move to the questions. Are there any questions now, either related to earlier things or even related to cash flow? Now, we have some time. Let us have a look at how does the actual P and L account or balance sheet look like. Now, this is the first statement. This is shipping corporation of India, leading shipping company in India. You can see their P and L account, which I have put in excel. If you look at the heading on top, it says consolidated profit and loss account. So, consolidated means the main shipping corporation and their subsidiaries. The entire group's profit and loss together is shown in a statement known as consolidated P and L. We have the income, which may first item a revenue from operations gross. So, in the last year, that is March 17, the revenue is 3400 crores. March 16, the revenue was 4213. So, every year, this revenue is falling. So, like that, you can make a comparative analysis. If you take the data for 2-3 years, since it is a shipping company, cost of material, etc., but you can see operating and direct costs, which are 2141. Last year, it was 2365. So, operating costs also have come down only a bit, but you can see the employee benefit costs. Earlier it was 466, now it is 452. If you still go down, you will get the total expenses, which are 3414. So, profit or loss during the year is 177. Uske Pele Yerme, that is on March 16, they had very good profit. They had a profit of 434 crores. Now, the profit has come down to 177. So, I am sure all of you have seen some of the P and L, but you have incomes minus expenses, which gives you the profit. After that, there are some other figures, which are not so important, but this is a general format of P and L. These are consolidated P and L. If you look at the second P and L, this is called as a stand-alone P and L. Stand-alone means only of shipping corporation of India, not their group companies. Have a look at it. This is a concise shortcut. So, again you have gross revenue, net operating revenues, then other income, then list of all expenses and then you get the net profit or loss. Now, Ejo net profit Mila, last year it was 421. Now, it is 127. This is known as profit before tax. Now, then taxes are charged. So, last year the tax was 71. Current tax is 61. Total taxes last year was 46. Now, they are 41. You get profit or loss after tax, which is last year it was 375. Now, it is 135. So, overall this is how their P and L statement looks like. Now, we look at their balance sheet. This is the balance sheet of the company. Again, I am first showing you the consolidated balance sheet for last three years. Here is equity share capital. Tinosal constant here, because every now and then equity share capital won't change. Then there was one question in the question answer session about preference share capital. If this company would have issued any preference share capital, amount here is 99 percent of the companies do not issue preference capital. So, equity capital plus preference capital gives you the total capital. Which shows that it is a very good company. Ten times say which other reserves accumulate. So, it is a profit making company. Now, we have discussed in the class that capital plus reserves. That is known as total shareholders funds. After that, there are many items like preference share, hybrid capital, these, that. Now, you get the total, the second heading we are into that is non-current liabilities. In that, we go into long term borrowings, deferred tax liabilities and so on. So, these are the loans taken. These are the taxes which are not yet paid. Total non-current liabilities of 3507. Someone asked what is leverage? Now, you can see that about 7000 is their shareholders fund and 3500 is their long term loans. Means, roughly 50 percent is a loans taken. This is known as debt equity ratio. Now, I will try to show a ratio cash on economy. So, debt upon equity. So, it gives me 0.5. If I extend it over the period of copy and paste, I think that is better. So, you can see last 3 years ratio as a time. Currently, it is 0.5. Last year, it was 0.7. Uskebi last year, it was 0.96. You can see their loans are coming down over the period of 3 years. So, Kishine question, taking loans is good or bad. Now, I cannot tell good or bad, but you can see that their dependence on debt is slowly, slowly coming down. Maybe, they have good money. So, they are giving back their loans. Next is heading is known as current liabilities. Current liabilities again. This item is totally here. You can see about 4000 crores. Now, last year, 3100. So, now asset side, liability side is over. So, it gives you total capital and liabilities. Then, on asset side, you have got non-current assets. Because they own lot of ships. They have around 300 ships. Last year, 12,000 were a little less. Because depreciation is a little less. Then, this total of all these items are fixed assets. Then, these are all small items because they do not have any large investments. So, non-current investment is very small. Only 136 crores. So, you get total non-current assets as 11,800 crores, roughly. Then, you can go to current assets. Current investment is zero. Inventory is not much because it is a shipping company. Cash is a lot. 1,300 is the cash. Total current assets are 2727. And this is the total assets. You can see this total assets will always match with the total liabilities. Abhimene apko ek relationship dikhayati debt by equity ratio. Asahi ek ratio otaya that is known as current ratio. This is a ratio of current assets upon current liabilities. Now, you can see the ratio is 0.66. We will also calculate for last two years. Last two years, it was 0.7. Uske last year thar 0.83. Now, if there you can see there current assets is comparatively less. Current liabilities kaafi jada hai. Which is not a good sign. Ye ratio thoda jada hona chahiye tha. It should be around 1. That means they would easily pay back their liabilities. That is shown by the current ratio. As a manager's example ke liye do bataya hai, you can calculate many ratios. If you really want to study the financial position of the company. Iske baad me aate contingent liabilities. I think we had discussed in the class that. If there are any liabilities which are not acknowledged as debt. So, company. Ye manne ko tayar nahi hai ki liability hai. But, dusre parties ulke upar claims kare hai. That is why it is not taken in total. But, it is just made as a disclosure. Then, there are some small, small disclosures. This is how the balance sheet of shipping corporation. Inki aur ek balance sheet dekte. This is the balance sheet which is stand alone balance sheet. So, I have shown you the 5 years balance sheet. You can go through format. Sein hai almos jaisa abhi amne dekada. If you are interested, I can share this file with you. Otherwise, you can yourself download it from any website. But, please go through this. Because, you will get an idea ki format of balance sheet kese hota hai. Now, we will go to cash flow statement. Just now, we discussed about cash flow statement. So, now I hope I will just increase zoom it. Ye apu lije ki real life cash flow statement kese dikta hai. So, they are starting with the profit. Then, they show the cash flow from operating activities, cash flow from investing activities, cash flow from financing activities. Here, Tino ka total lene se, they get net increase or decrease in cash. Last year, it is 74, that is March 17. March 16, it is 30. Uske bhi pale dekei amount or badata. 237 tha. This is the total of these three columns, which gives you the net increase or decrease in cash. Opening cash is 496. 496 plus 74, the closing cash is 571. Agar apu ye verify karna ho, ye sahi hai ki nahi? So, you go to balance sheet. Balance sheet me ap dekei, asset side me you can see these figures. These are the cash and cash equivalents of the company. You can either see from the regular balance sheet or from the consolidated balance sheet. So, is this clear to you? So, ye jo pura mena set dikaya. These are three important statements, P and L balance sheet and cash flow. Now, in another five minutes, we will see one more file. Some of you are, I think really very keenly interested in finance because many of you asked very detailed questions. Abhi apko agar detail me shipping corporation ke baare main janna hai. So, you cannot only study shipping corporation. So, what I have done is, I have collected five peer companies. So, shipping corporation hai. There is a company called Gujarat Pipalao, G-shipping, Reliance Naval, Shreyas shipping. Parts leading shipping companies India ke hai. Unke balance sheets yeha comparable format me present ki hai. So, this is a comparative balance sheet. Yeh se shipping corporation ka capital 465 hai. Gujarat Naval ka, Gujarat ka Pipalao ka 483 hai, 150 hai, 736 hai. Shreyas ka choti company yeh keye sirf 21 hai. You can see the results. Shipping corporation ke results bohot achche hai. Aur yeh G-shipping ke bhi achche hai. Baaki companies ke results kum hai. So, like that you can make a comparison. Then you can have a look at their loans. You can see shipping corporation has very large size loan, 4000. Or take total debt. Yeh company jo hai, Gujarat Pipalao, unka ek bhi loan nahi hai. Loans are zero. If you go to G-shipping, again they have loan of around 3000. If you go to Reliance, unka capital is 736, aur loan kitna hai dekhi hai. Loan is A337. So, we had calculated debt equity ratio. Now, we will try to calculate debt equity ratio for these three companies. So, this is total debt upon net worth. See for shipping corporation, it is 0.59. If you look at other companies, it is 0 for Gujarat, 0.75 for GE, 7 times for Reliance, and 0.63 for Shreyas. Like that you can do comparisons of the companies. Abhi ye itne fast mein bohot jada mein nahi batanga. But if you are really interested, you can easily do it. This is, we are just doing using simple Excel model. Same way, you can have a look at their assets. Yase GE-shipping ke leko sapse jada ship se unka pas. 15,000 tour ka gross block hai. Other companies ka gross block bohot chota hai. Because these are small companies, then some of the companies do not own the ship. Bolok foreign ships lees pe lethe aur Bharat mein chalate, like that you can study their business models if you are really interested. Then you can also see other assets, jase cash and bank balance, compare kar sakte ho, sundry daters, compare kar sakte ho. Abhi ye the shipping corporation government company. Inke sundry daters kitne pade hai? 658. Bakke companies ke 28, 49. Reliance deko sapse efficient hai. Only 3.45. So, like that you can make comparisons. Now, I will go to PNL account. Now, have a look at their PNL. Again, these 5 companies are compared. Shipping corporation 3446. Other companies like 600, 1700, 513. Chote chote companies hai. Inke turnover kam hai. You can also have a look at their expenditures. Biggest expenditure hote hai, other manufacturing expense. That is their cost of operating the ships. Deke inke kitna heavy hai. Whereas, other companies it is comparatively less. Total expenses are 2000, year only 200, 900, etc. So on. Now, you can compare the operating profits. Shipping corporation is 770. Gujarat 418. GE shipping kitna profitable deke 739. Reliance 22 and Shreyas is 50. So, if you want to compare these profits with the sales, you can take a ratio of operating profit upon total income. See, this is 21 percent for shipping corporation. We will compare it for other companies. Other companies ka reko inke kitna achaya. 0.5, 0.3, 0.34, 0.14. So comparatively GE shipping is most profitable. Next profitable is shipping corporation. Like that, any other item also you can compare. Now, we will directly go to their profits. Reported net profit is 135. Gujarat is quite profitable. 249. GE shipping is even more profitable. 601. Reliance is making huge losses. Minus 523. Kyu loso raya apthoda upar jayenge na. Ta apko realize hoga ki unka profit has only 22 from operations. Interest burden jabardas thay. Interest burden is 572. That is why reliance is posting lot of losses as of now. They may have some plans in future to increase their ships. This is how we can calculate the figures for different companies and then do the comparison. So in short, I have tried to show you the format and also see. Hello sir. My name is Neha Kulkarni and my question is, suppose if I have invested some money in a share and after sometime I have seen that the company in which I have invested that is going in a loss. So there is any way to return the balance or money. Just wait we will change the battery. Hello. Just listen. So if you have invested in shares of any company, you can always dispose of the shares. But the share will be less. If you have taken the shares in 200 rupees, the company's prospects are not good. It may come down to 110. 90 rupees is your loss. If the company is unlisted, then probably it is very difficult for you to recover your money. Thank you. You said that it is on the owner of the company whether he wants to, means if he is getting the proper profit from the share market, then it is on him that whether he wants to give the 100% profit to you or not. But there is a company in the real world also. There is a company which goes in loss. I would not name that company. I think you would know that its owner was in jail for so many months also. My parents invest in that fund. But at the starting of the fund, when they were joining the fund, when they were investing, at that time the company said that they would give the profit of some amount, means double or anything. But after five years it was not there because the company was in total loss and the owner was in the jail. So at that time we were just hoping that we would get the money which we invested. So is it possible that, means is it possible for the owner that he gave the, first he said that I would give the money double or triple to you. But after some time that he is only able to give the money which is just equivalent to the money which I have invested. See I do not know which company you are referring to. But if you are asking about the official companies, I said that there is no double or triple money in the company. Whatever money you invest, you get the shares. If company makes profit, they would distribute you as a dividend. If the company goes well, you can get 2 times, 3 times, 4 times, 10 times, even 100 times your money. If company does not go well, the money goes in bad. You will get some small interest. Company share is a risky investment. So you may get lot of money or you may even lose your money. The case which you are referring may be, I do not know, but it could be a cheat fund or such scheme. These are all not recognized by law. So I do not think it is in the form of a company. But in a company, there is no promise of paying double, triple or 10 percent. For shares, it is a risky investment. You study the company well and if you like, you invest. Even if you lose money, government does not guarantee repayment. If you make good investment, you can make lot of money. Thank you. Actually, it is a very popular mutual fund. Its name is Sahara. In Sahara, my parents invested 40,000 of money. So when they were buying the mutual funds, at that time they promised that they would give some percent interest. Everyone gave the interest. So after 5 or 10 years, they would give some money. I do not know what exactly that was. But now at this stage, it is not able, not now, but one year before. So one year before it was not able to give the money at that level also. I will try to answer. Sahara is not a company. It is not a mutual fund also. To the best of my knowledge, they were investing in some real estate. Or they gave some wrong promises to people and took the money. That is why the promoters of Sahara are in jail. They have done some criminal illegal activities. Do not compare it with the official stock exchange. Suppose, yesterday you took the shares of the shipping corporation of India. So you do not get the money from the shipping corporation. You have invested money from some other shareholders. You like the feeling of the shares. You can sell those shares or you can buy extra shares. The company that is shipping corporation is not involved anywhere in buying or selling of their shares. This is how stock market operates. So the transactions which you are referring, these are illegal pony schemes The official stock exchange is not available. The promoter has been caught. The government is taking very strict action against all the defaulters including Sahara. After selling their property, whatever money will be recovered, that will be paid back to the investors. But this is nothing to do with stock market or with the mutual funds. Thank you. Thank you sir. Good afternoon sir. Hello. Yes. Good afternoon sir. My question is, like nations are divided into three types. First is developing nation and developing nation. Being the second most populated country, being the third most popular country in the term of armed forces, being the seventh largest country in the terms of land. But still sir, we are the people of India are still counted as a developing country. Sir, what are your suggestions that we should inculcate, the government should inculcate to raise the financial literacy of that country. Because sir, it is said that if you want to learn the economy, don't go to US but go to the village of our country. Because household management, which is also said that economy is the second, second name of economy is household management. Sir, household management can be easily seen in the villages. Sir, what are your suggestions? Government of a country so that they should, I think, I want your suggestion to the government of our country that we should inculcate your suggestions so that our economy can be developed. What are your suggestions sir? Okay, first of all I think you are giving me a good answer. So, you don't want much of answer from me. But since you have asked, first of all I would like to tell you that if we know the economic history of India, India was extremely prosperous country before Britishers came. So, we should never believe that we are a poor country because of any fault in our society. We were a very strong society because of the attacks first by Mughals, Abghans and then by Britishers. We have become a poor country. So, we should stop fighting with each other on caste etc. That is why we have become poor. Slowly, slowly we are picking up in technology. So, we have to pick up better technology. We have to start more businesses. We have to improve our entrepreneurship. That is why Indians going abroad do good businesses. But in India, most of the people are in search for jobs. So, if we do good businesses, once again we will come back to the as a developed country. So, 600, 700 years we cannot become a developed country. Definitely it will take time because we are slowly, slowly developing ourselves. So, instead of fighting with each other, slowly we should go on a path. You must know that Modi ji has brought a lot of good schemes. Like Mudra scheme, like demonetization, GST. All these things will bring enormous benefit to the economy. But it will take time. Like GST system is new. Now people will have a lot of time. It will take 1-2 years to learn. After that, people will start getting the benefit of it. Like in Mudra scheme, small businesses are getting loans. If they do well, they should not do like Nirao Modi. The money they got, they ran away. If they use that money and do business, then only they will benefit from the economy. So, government already knows good measures. And they have taken also those measures. The only thing is as citizens, we all should also participate in that measure. And Kisibi, Socaitiko, Kisibi, Rashtrakogar develop one. So, minimum things which all citizens should do. We should have high level of self-confidence. We should not be divided on caste. We should not try to fool the government by evading taxes. All these things as citizens also we should do. So, I think I am not saying we will become developed in 4 years or 5 years. But I am confident that next 10 to 15 years, we would be a developed nation. Thank you. So, I think there are no more questions. So, we will stop here. You can continue to ask your questions on the chat. And then we will answer you as it was already announced. Aplogapka feedback with Eriji and that you can take the quiz up to Tuesday. In the summary to conclude, as far as the accounting is concerned, I think accounting or financial literacy is your entry gate to the field of finance. Aplogapka feedback with Eriji and that you can take the quiz up to Tuesday. There are a lot of material statements of some companies. You study them. You look at the good videos. There is so much of material available. Actually, learning nowadays is not difficult. You have to just give some time. Never have an impression. It is going to be very much useful for your own development. And tomorrow you can become a good entrepreneur. If you have some basic knowledge of finance, that those things you can slowly learn yourself. And keep in mind that most of the learning cannot happen in the classroom. That is why it is classroom to corporate. Because classroom may only by lectures or only through books, you would not be able to learn much. That experience can be of business. It can be of various type of social work. You try to participate in social activities or in the college activities related to entrepreneurship. So that you will get experience. Because in student time, the experience you can get, that will be useful in your professional life. Whether in job or in your own business. So with this, I will stop here. I will share with you the PPPs, which we discussed today. And try to go through it. Have much more learning, not just for this course, in the long run in your life also. Thank you so much. Namaste.