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N R Institute of Business ManagementCourse Design and Session Plan
Management Accounting-I
PGDM (Term-I)
Introduction
It has been found that management accounts are invaluable when it comes to a company creating
important and timely management decisions concerning their business. The main aim of
managerial accounting is to improve the efficiency and quality of operations by providing
program owners and all others with suitable and applicable cost based performance information
to permit for nonstop improvement in distributing the output to outcome the stockholders.
Managerial accounting has been developed and used with all from the beginning times to help all
the directors to understand the costs of running a project. Modern managerial accounting is
created during the industrial revolution during the difficulties of running a large scale business
which show the way to the development of scheme for recording and checking costs to help
business proprietors and managers to finalize and make conclusions.
So it is very essential for a management student to understand the concepts of managerial
accounting.
Course Objectives
1. To develop an understanding of accounting and enable the students to evaluate the firm’s decision areas related to financial accounting & cost accounting.
2. To familiarize the students with analytical tools & techniques.
3. To assess risks in order to maximizing profits.
Evaluation
Class Participation 20%Quizzes 15%Assignments 15%End term examination 50%
Quiz:
The students are expected to be prepared for any type of questions during the quiz pertaining to
the subject body discussed so far as per course outline.
The quiz is aimed to keep the participants in-tune with the subject on a continuous basis.
They will be used as the instrument to provide constant feedback to the participants on the basis
of their performance to seek necessary improvements.
Assignment:
At the end of completion of each chapter, the participants will be given the course assignments.
The assignments may pertain to presenting the subject related articles, solving numerical
problems / cases, preparing for a business game or performing given exercises.
Supplementary Readings:
1. Management Accounting : By C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg, Pearson publication, fourteenth edition
2. Management Accounting : by M.Y.KHAN & P.K.JAIN [Tata McGRAW HILL]
3. Management Accounting :By P. S. Ananthanarayanan [ oxford]
4. Management Accounting : By Debarshi Bhattacharyya, Pearson Publication, Latest edition
5. Managerial Accounting: By Roby B. Sawyers; Steve Jackson;Greg Jenkins; Ravinder K. Arora,Cengage Learning India Pvt. Ltd, Latest edition
Session Plan- Term I
Sessions Learning Goals Pre- session Activity
Pre-Reads
1 -5Introductionof Management Accounting
Compare and contrast management accounting information with information used for financial accounting & Cost Accounting
Describe the conceptual framework of accounting.
Describe the qualitative characteristics of Accounting information
Briefing of main points of the next session
Chapter 1 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
6-10Understanding of Terminologies & Concept of Financial & Cost Accounting
To understand the difference between the natural classifications used in financial accounts & functional classification used in cost accounting
Chapter 2 & 15 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
11-15
Understanding Financial Statements& Reports
Describe the steps of the accounting cycle.
Understanding how T-accounts & debits & credits are used in double entry accounting system.
Describe the types of information usually disclosed along with the financial statements.
Chapter 16 & 17 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
16-20Preparation of Corporate Financial Statements
Understanding how Corporate accounts are prepared
Preparation of Corporate Financial Statements
Briefing of main points of the next session
Chapter 16 & 17 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
21-25 Financial Statement Analysis – Common size & Comparative Statement Analysis
Calculate and interpret common size & comparative financial statements.
Describe the main sub totals of income on a multi step income statement.
Briefing of main points of the next session
Chapter 17 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
Session Plan of Sums
Understanding Financial Statements& Reports
T-AccountsDirector’s ReportManagement Discussion & Analysis reportCorporate Governance ReportAuditor’s Report
Total 7 sums ( from text book & other reference books)
Chapter 16 & 17 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
Preparation of Corporate Financial Statements
Corporate Accounts as per Revised Standard
Total 7 sums ( from text book &other reference books)
Chapter 16 & 17 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
Financial Statement Analysis
Horizontal AnalysisVertical AnalysisTrend AnalysisComparative Study
Total 6 sumsfrom text book & other reference books)
Chapter 17 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
Marginal Costing & CVP Analysis
P V Ratio, BEP , MOS, Desired Profit, Required Sales
Total 16 sums from text book & other reference books
Chapter 2 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
Introductionof Management Accounting
Comparison of Management accounting/Financial Accounting/Cost Accounting
Theory Chapter 1 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
Understanding of Terminologies & Concept of Financial & Cost Accounting
classifications used in financial accounts & functional classification used in cost accounting
Theory Chapter 2 & 15 from C.T. Horngren, Gary L. Sundem , William O. Stratton, David Burgstahler, Jeff Schatzberg
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 3,236.00 3,232.00 3,229.00 3,271.00 3,273.00
Equity Share Capital 3,236.00 3,232.00 3,229.00 3,271.00 3,273.00
Share Application Money 17.00 17.00 25.00 0.00 9.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Reserves212,923.0
0193,842.00 175,711.00 159,698.00 142,800.00
Networth216,176.0
0197,091.00 178,965.00 162,969.00 146,082.00
Secured Loans 2,036.00 10,744.00 2,422.00 6,949.00 10,104.00
Unsecured Loans 87,105.00 74,737.00 52,101.00 51,678.00 53,324.00
Total Debt 89,141.00 85,481.00 54,523.00 58,627.00 63,428.00
Total Liabilities305,317.0
0282,572.00 233,488.00 221,596.00 209,510.00
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block205,638.0
0194,542.00 187,607.00 182,946.00 203,686.00
Less: Revaluation Reserves 0.00 0.00 1,055.00 3,127.00 5,467.00
Less: Accum. Depreciation 91,075.00 85,136.00 77,859.00 69,223.00 60,979.00
Net Block114,563.0
0109,406.00 108,693.00 110,596.00 137,240.00
Capital Work in Progress 75,753.00 41,716.00 19,116.00 7,754.00 12,228.00
Investments112,573.0
086,062.00 52,509.00 54,008.00 37,652.00
Inventories 36,551.00 42,932.00 42,729.00 35,955.00 29,825.00
Sundry Debtors 4,661.00 10,664.00 11,880.00 18,424.00 17,442.00
Cash and Bank Balance 11,571.00 36,624.00 49,547.00 39,598.00 27,135.00
Total Current Assets 52,783.00 90,220.00 104,156.00 93,977.00 74,402.00
Loans and Advances 42,113.00 40,179.00 32,982.00 25,678.00 17,730.00
Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Total CA, Loans & Advances 94,896.00 130,399.00 137,138.00 119,655.00 92,132.00
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities 86,210.00 80,844.00 79,620.00 66,159.00 65,141.00
Provisions 6,258.00 4,167.00 4,348.00 4,258.00 4,601.00
Total CL & Provisions 92,468.00 85,011.00 83,968.00 70,417.00 69,742.00
Net Current Assets 2,428.00 45,388.00 53,170.00 49,238.00 22,390.00
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets305,317.0
0282,572.00 233,488.00 221,596.00 209,510.00
Contingent Liabilities 80,641.00 75,955.00 54,600.00 54,075.00 56,305.00
Book Value (Rs) 668.05 609.78 554.22 498.21 446.25
Balance Sheet of Reliance Industries ------------------- in Rs. Cr. -------------------
Profit & Loss account of Reliance Industries ------------------- in Rs. Cr. -------------------
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover340,814.0
0401,302.00 371,119.00 339,792.00 258,651.00
Excise Duty 11,738.00 11,185.00 10,822.00 9,888.00 10,481.00
Net Sales329,076.0
0390,117.00 360,297.00 329,904.00 248,170.00
Other Income 8,721.00 8,936.00 7,998.00 6,192.00 3,052.00
Stock Adjustments -1,943.00 -412.00 3,317.00 872.00 3,243.00
Total Income335,854.0
0398,641.00 371,612.00 336,968.00 254,465.00
Expenditure
Raw Materials267,834.0
0334,283.00 310,428.00 279,737.00 198,076.00
Power & Fuel Cost 12,299.00 10,153.00 7,166.00 4,094.00 2,255.00
Employee Cost 3,686.00 3,370.00 3,354.00 2,862.00 2,624.00
Other Manufacturing Expenses 2,692.00 1,985.00 2,258.00 2,731.00 2,612.00
Selling and Admin Expenses 0.00 0.00 0.00 0.00 0.00
Miscellaneous Expenses 9,020.00 9,037.00 9,621.00 7,733.00 7,720.00
Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00
Total Expenses295,531.0
0358,828.00 332,827.00 297,157.00 213,287.00
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
Operating Profit 31,602.00 30,877.00 30,787.00 33,619.00 38,126.00
PBDIT 40,323.00 39,813.00 38,785.00 39,811.00 41,178.00
Interest 2,367.00 3,206.00 3,036.00 2,667.00 2,328.00
PBDT 37,956.00 36,607.00 35,749.00 37,144.00 38,850.00
Depreciation 8,488.00 8,789.00 9,465.00 11,394.00 13,608.00
Other Written Off 0.00 0.00 0.00 0.00 0.00
Profit Before Tax 29,468.00 27,818.00 26,284.00 25,750.00 25,242.00
Extra-ordinary items 0.00 0.00 0.00 0.00 0.00
PBT (Post Extra-ord Items) 29,468.00 27,818.00 26,284.00 25,750.00 25,242.00
Tax 6,749.00 5,834.00 5,281.00 5,710.00 4,956.00
Reported Net Profit 22,719.00 21,984.00 21,003.00 20,040.00 20,286.00
Total Value Addition 27,697.00 24,545.00 22,399.00 17,420.00 15,211.00
Preference Dividend 0.00 0.00 0.00 0.00 0.00
Equity Dividend 2,944.00 2,793.00 2,628.00 2,531.00 2,385.00
Corporate Dividend Tax 615.00 475.00 447.00 410.00 387.00
Per share data (annualised)
Shares in issue (lakhs) 32,356.89 32,319.02 32,286.63 32,710.59 32,733.74
Earning Per Share (Rs) 70.21 68.02 65.05 61.26 61.97
Equity Dividend (%) 100.00 95.00 90.00 85.00 80.00
Book Value (Rs) 668.05 609.78 554.22 498.21 446.25
Source : Dion Global Solutions Limited
Consolidated Balance Sheet of Reliance Industries ------------------- in Rs. Cr. -------------------
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
Sources Of Funds
Total Share Capital 2,943.00 2,940.00 2,936.00 2,979.00 2,981.00
Equity Share Capital 2,943.00 2,940.00 2,936.00 2,979.00 2,981.00
Share Application Money 17.00 17.00 25.00 0.00 9.00
Preference Share Capital 0.00 0.00 0.00 0.00 0.00
Init. Contribution Settler 0.00 0.00 0.00 0.00 0.00
Preference Share Application Money 0.00 0.00 0.00 0.00 0.00
Employee Stock Opiton 0.00 0.00 0.00 0.00 0.00
Reserves214,712.0
0194,882.00 177,433.00 162,726.00 145,027.00
Networth217,672.0
0197,839.00 180,394.00 165,705.00 148,017.00
Secured Loans 10,460.00 14,186.00 2,509.00 7,090.00 9,962.00
Unsecured Loans138,282.0
0119,622.00 86,813.00 75,545.00 70,026.00
Total Debt148,742.0
0133,808.00 89,322.00 82,635.00 79,988.00
Minority Interest 3,038.00 959.00 949.00 799.00 802.00
Policy Holders Funds 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Total Liabilities369,452.0
0332,606.00 270,665.00 249,139.00 228,807.00
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
12 mths 12 mths 12 mths 12 mths 12 mths
Application Of Funds
Gross Block252,416.0
0229,835.00 213,822.00 210,407.00 220,562.00
Less: Revaluation Reserves 827.00 848.00 1,661.00 3,740.00 6,085.00
Less: Accum. Depreciation 95,958.00 88,418.00 80,335.00 71,593.00 62,462.00
Net Block155,631.0
0140,569.00 131,826.00 135,074.00 152,015.00
Capital Work in Progress166,462.0
091,494.00 49,952.00 25,363.00 28,174.00
Investments 76,451.00 61,325.00 42,848.00 38,596.00 21,596.00
Inventories 53,248.00 55,997.00 54,601.00 46,692.00 38,520.00
Sundry Debtors 5,315.00 9,411.00 9,750.00 16,939.00 15,696.00
Cash and Bank Balance 12,545.00 37,984.00 50,456.00 40,731.00 30,139.00
Total Current Assets 71,108.00 103,392.00 114,807.00 104,362.00 84,355.00
Loans and Advances 34,007.00 31,215.00 21,263.00 20,056.00 15,294.00
Fixed Deposits 0.00 0.00 0.00 0.00 0.00
Total CA, Loans & Advances105,115.0
0134,607.00 136,070.00 124,418.00 99,649.00
Deferred Credit 0.00 0.00 0.00 0.00 0.00
Current Liabilities127,261.0
090,653.00 84,943.00 69,488.00 67,671.00
Provisions 6,946.00 4,736.00 5,088.00 4,824.00 4,956.00
Total CL & Provisions134,207.0
095,389.00 90,031.00 74,312.00 72,627.00
Net Current Assets -29,092.00 39,218.00 46,039.00 50,106.00 27,022.00
Minority Interest 0.00 0.00 0.00 0.00 0.00
Group Share in Joint Venture 0.00 0.00 0.00 0.00 0.00
Miscellaneous Expenses 0.00 0.00 0.00 0.00 0.00
Total Assets369,452.0
0332,606.00 270,665.00 249,139.00 228,807.00
Contingent Liabilities 75,166.00 63,712.00 33,135.00 31,141.00 32,119.00
Book Value (Rs) 739.48 672.97 614.27 556.30 496.50
Key Financial Ratios of Reliance Industries
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
Investment Valuation Ratios
Face Value 10.00 10.00 10.00 10.00 10.00
Dividend Per Share 10.00 9.50 9.00 8.50 8.00
Operating Profit Per Share (Rs) 97.67 95.54 95.36 102.78 116.47
Net Operating Profit Per Share (Rs) 1,017.02 1,207.08 1,115.93 1,008.55 758.15
Free Reserves Per Share (Rs) -- -- -- -- --
Bonus in Equity Capital 65.15 65.24 65.30 64.46 64.42
Profitability Ratios
Operating Profit Margin(%) 9.60 7.91 8.54 10.19 15.36
Profit Before Interest And Tax Margin(%) 6.84 5.53 5.78 6.61 9.75
Gross Profit Margin(%) 7.02 5.66 5.91 6.73 9.87
Cash Profit Margin(%) 9.23 7.71 8.27 9.35 13.49
Adjusted Cash Margin(%) 9.23 7.71 8.27 9.35 13.49
Net Profit Margin(%) 6.90 5.63 5.82 6.07 8.17
Adjusted Net Profit Margin(%) 6.72 5.50 5.70 5.96 8.07
Return On Capital Employed(%) 10.42 10.97 12.55 12.82 13.15
Return On Net Worth(%) 10.51 11.15 11.73 12.29 13.88
Adjusted Return on Net Worth(%) 10.51 11.15 11.73 12.29 13.88
Return on Assets Excluding Revaluations 668.05 609.78 554.22 498.21 446.25
Return on Assets Including Revaluations 668.05 609.78 557.49 507.77 462.95
Return on Long Term Funds(%) 10.88 11.94 13.21 13.46 13.98
Liquidity And Solvency Ratios
Current Ratio 0.89 1.11 1.43 1.46 1.12
Quick Ratio 0.63 1.03 1.12 1.19 0.89
Debt Equity Ratio 0.41 0.43 0.30 0.36 0.43
Long Term Debt Equity Ratio 0.35 0.32 0.24 0.29 0.35
Debt Coverage Ratios
Interest Cover 13.45 9.68 9.66 10.66 11.84
Total Debt to Owners Fund 0.41 0.43 0.30 0.36 0.43
Financial Charges Coverage Ratio 17.04 12.42 12.78 14.93 17.69
Financial Charges Coverage Ratio Post Tax 14.18 10.60 11.04 12.79 15.56
Management Efficiency Ratios
Inventory Turnover Ratio 9.32 9.35 8.69 9.45 8.67
Debtors Turnover Ratio 42.95 34.61 23.78 18.40 17.06
Investments Turnover Ratio 9.32 9.35 8.69 9.45 8.67
Fixed Assets Turnover Ratio 1.93 2.36 2.24 2.10 1.61
Total Assets Turnover Ratio 1.22 1.54 1.74 1.68 1.55
Asset Turnover Ratio 1.12 1.51 1.57 1.50 1.20
Average Raw Material Holding -- -- -- -- --
Average Finished Goods Held -- -- -- -- --
Number of Days In Working Capital 16.13 53.44 65.70 67.60 49.64
Profit & Loss Account Ratios
Material Cost Composition 81.38 85.68 86.15 84.79 79.81
Imported Composition of Raw Materials Consumed 90.96 89.68 90.75 91.54 91.71
Selling Distribution Cost Composition -- -- -- -- --
Expenses as Composition of Total Sales 63.63 66.99 63.30 60.16 56.63
Cash Flow Indicator Ratios
Dividend Payout Ratio Net Profit 12.95 12.70 12.51 12.62 11.75
Dividend Payout Ratio Cash Profit 9.43 9.07 8.62 8.05 7.03
Earning Retention Ratio 87.05 87.30 87.49 87.38 88.25
Cash Earning Retention Ratio 90.57 90.93 91.38 91.95 92.97
AdjustedCash Flow Times 2.86 2.78 1.79 1.87 1.87
Mar '15 Mar '14 Mar '13 Mar '12 Mar '11
Earnings Per Share 70.21 68.02 65.05 61.26 61.97
Book Value 668.05 609.78 554.22 498.21 446.25
Corporate Action
Board Meetings
AGM/ EGM
Bonus Rights Splits Dividend
s
Information
Company History
Listing Info
Locations Bulk
DealsLarge
DealsSharehol
dingMF
HoldingTop
ShareholdersPromoter
Holding
Financials
Balance Sheet
Profit & Loss
Quarterly Results
Half Yearly Results
Nine Monthly Results
Yearly Results
Cash Flow
Ratios
Annual Report
Directors Report
Chairma n's Speech
Auditors Report
Notes to Accounts
Finished Goods
Raw Materials
Backgrou nd
Board of Directors
Capital Structure
Peer Comparison
Competition Price Price
PerformanceMarket Cap Net Sales Net Profit Total Assets Historical Prices Price of
Reliance on previous budgets
Operating Profit & OPMOperating Profit gives an indication of the current operational profitability of the business and allows a comparison of profitability between different companies after removing out expenses that can obscure how the company is really performing.
Interest cost depends on the management's choice of financing, tax can vary widely depending on acquisitions and losses in prior years, and depreciation and amortization policies may differ from company to company.
Reliance Industries LimitedFinancial Year 2009-10
Cost Statement(Figures in Crores)
Particulars Amount Amount
Rs. Rs
Raw Material Consumed 147,919.21
Direct/Production Wages 1,175.19
Allocated @ 50% of total Employee Cost (50% of Rs. 2350.38)
Direct Expenses
Factory Depreciation 2,099.31
Allocated at 20% of Total Depreciation (20% of Rs. 10496.53)
Prime Cost
151,193.71
Factory Overheads
Depreciation on assets other than used in manufacturing 4,198.61
Allocated @ 40% of total depreciation (40% of 10496.53)Employee Cost-Factory Salary
Allocated @ 20% of total Employee Cost (20% of Rs. 2350.38) 470.08
Stores, Chemicals and Packing Material 2,773.98
Electricity,Power,Fuel and Water 2,706.71
Machinery Repairs 378.74
Building Repairs 25.22
Labour, Processing,Production royalty,Machinery Hire charges 1,774.93
Excise Duty 369.15
Lease Rent 2.74
Exchange Difference (Net) (676.42)
12,023.74
Less-Sale of Scrap -
Factory Cost 163,217.44
Add-Opening Stock of Stock in Process 2,193.89
Less-Closing Stock of Stock in Process (2,878.85)
(684.96)
Adjusted Factory Cost 162,532.48
Office/Management/Administration Expense
Depreciation on Office assets 2,099.31
Allocated @ 20% of total depreciation (20% of 10496.53)Employee Cost-Office Salary
Allocated @ 15% of total Employee Cost (15% of Rs. 2350.38) 352.56
Insurance 486.58
Rent 105.15
Rates and Taxes 40.39
Other repairs 256.22
Travelling Expenses 59.72
Payment to Auditors 12.82
Professional fees 524.82
Loss on sale/Discarding of Fixed Assets 29.28
General Expenses 651.96
Investments written Off 18.38
Wealth tax 13.20
Charity and Donations 103.37
4,753.75
Less-Sale of By Product -
Cost of Production 167,286.24
Add -Opening Stock of Finished Goods 3,015.13
Less-Closing Stock of Finished Goods (6,278.06)
(3,262.93)
Cost of Goods Sold 164,023.31
Selling and Distribution Expenses
Depreciation on Selling Department Assets 2,099.31
Allocated @ 20% of total depreciation (20% of 10496.53)Employee Cost-Selling and Distribution Staff
Allocated @ 15% of total Employee Cost (15% of Rs. 2350.38) 352.56
Samples,Sales Promotion and Avertisement expenses 50.49
Brokerage,Discount and Commission 228.02
Warehousing and Distribution Expenses 3,280.49
Sales tax/Vat/Service tax 564.77
6,575.63
Cost of Sales 170,598.94
Profit and Loss 21,862.08
Sales 192,461.02
