Question

To analyze the financial statements of a publicly traded company

Obtain an annual report from a publicly traded corporation that is interesting to you. Be sure the company’s financial statements include deferred taxes, postretirement benefits, dilutive securities, and share-based compensation.

Using techniques you have learned in the previous weeks, respond to the following questions.

PICK ANY COMPANY and obtain a report

1. What amount of deferred tax assets or deferred tax liabilities are on the two most recent years on the balance sheet? What gives rise to these deferred taxes? What information is disclosed in the footnotes related to deferred taxes? Please define a deferred tax asset and deferred tax liability.
2. What temporary and permanent differences does the company disclose in their footnotes? What are some other examples of temporary and permanent differences?
3. What is the amount of income tax provision in the two most recent years on the income statement? What information is disclosed in the footnotes relating to income tax expense? Does the company have a net operating loss carry-forward or carry-back? What are the guidelines for carry-forwards and carry-backs?
4. Does the company have a defined benefit or defined contribution plan? What are the key elements of the plan discussed in the footnotes? What amounts on the balance sheet relate to this plan? What are the differences between defined benefit and defined contribution plans?
5. What are the earnings per share amounts disclosed on the income statement for the most recent year? What dilutive securities are discussed in the footnotes? Please identify and describe other examples of dilutive securities. How do these impact earnings per share?
6. What kind of share-based compensation does the company have? What was compensation expense for the two most recent years? What are the key elements of this plan discussed in the footnotes? Please identify and describe other types of share-based compensation.
7. Does the company use the direct or indirect cash flow presentation method? What is the difference between these two methods? How does the cash flow statement agree to the other financial statements?
8. What investing and financing activities does the company have? What are some other examples of investing and financing activities?
9. What noncash transactions does the company have on its cash flow statement? What are some other examples of noncash transactions?

Answer 1

Here I would Take RELIANCE INDUSTRIES , INDIA : ( Public Traded Company ) to Answer the Following :

It's Consolidated Balance sheet of the company as on march 2018 to Get a brief List of the Following :

Deferred Tax
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit.

Reason Behind :

Here'san Consolidated Balance Sheet of Reliance Industries , which Deals with Deferred Tax With two years In a Decreasing Trend ...

IN TAXATION :

Income tax recognised in Statement of Profit and Loss
Current tax 8,333 7,801
Deferred tax 1,019 831
Total income tax expenses recognised in the current year 9,352 8,632

Deferred Tax Assets :

They are the current amount a company has overpaid for that can reduce the taxes the company will pay later on. It is the opposite of deferred tax liability.

Deferred tax liability :

It is a tax that is assessed or is due for the current period but has not yet been paid. ... A deferred tax liability records the fact the company will, in the future, pay more income tax because of a transaction that took place during the current period, such as an installment sale receivable.

Permanent and Temporary Differnces are Shown in :

These Differences will be in Deferred Tax and in Notes of accounts also in their Website..

Temporary differences :

They are defined as being differences between the carrying amount of an asset (or liability) within the Statement of Financial Position and its tax base ie the amount at which the asset (or liability) is valued for tax purposes by the relevant tax authority.

Examples :

Revenue recognition, Expenses incurred but not yet paid..

Permanent Differences :

This is the difference between the tax expense and tax payable caused by an item that does not reverse over time. In other words, it is the difference between financial accounting and tax accounting that is never eliminated.

Examples :

Penalties and fines, Meals and entertainment, Life insurance proceeds, interest on municipal bonds..

INCOME STATEMENT

Name	Jun 30, 2020	Mar 31, 20...	Dec 31, 20...
Total Reve...	912,380	1,398,650	1,568,020
Revenue	912,380	1,398,650	1,568,020

Share Based Compensation Scheme In Reliance Industries :

Employees Stock Option Scheme (ESOS)
i. A description of each ESOS that existed at any time during the year, including the general
terms and conditions of each ESOS, are as under-
a. Date of
shareholders’
approval
January 8, 2007
b. Total number of
options approved
under ESOS
1,11,96,640
c. Vesting
requirements
The vesting period shall commence on the expiry of one year from the Grant Date.
Not earlier than 1 (one) year and not later than 5 (five)years from the date of grant
of such options. The Vesting or Exercise shall be subject to the continued
employment of the employee with the Company upto the specified date(s) of
vesting or Exercise.
d. Exercise price or
pricing formula
The Exercise price of each of the Option under each of the plan(s) shall be decided
by the Nomination and Remuneration Committee and / or by the Board of Directors
of the Company.
e. Maximum term of
options granted
Exercise period would commence from the date of vesting and extend up to 5 (five)
years from the date of last vesting.

Amount Invested about 2,69,60,072 in This Share Compensation Scheme For the Welfare of employees ..

FOOTNOTES :
Footnotes are always needed in the financial statements..it refer to additional information that helps explain how a company arrived at its financial statement figures. They also help to explain any irregularities or perceived inconsistencies in year to year account methodologies. It functions as a supplement, providing clarity to those who require it without having the information placed in the body of the statement. Nevertheless, the information included in the footnotes is often important, and it may reveal underlying issues with a company's financial health.

No , At Present Company doesn't Face any loss..so there's no need to Carry forward !

KEY ELEMENTS OF FOOTNOTES :

• The footnote/endnote begins with the same superscript number as the one that appears in the paper and is followed by a period.
• Footnotes/endnotes always include a specific page number or numbers where the cited information can be found.

Defined-Benefit Plan
Defined-benefit plans provide eligible employees guaranteed income for life when they retire. Employers guarantee a specific retirement benefit amount for each participant that is based on factors such as the employee’s salary and years of service..

Defined contribution plan

It is a type of retirement plan in which the employer, employee or both make contributions on a regular basis. Individual accounts are set up for participants and benefits are based on the amounts credited to these accounts plus any investment earnings on the money in the account.

Here's some of Key Differences Between Them ;

Share Contribution of Reliance Industries :

Earning Per Share (EPS TTM) (₹) 55.48

Price To Earnings (P/E) Ratio 40.90

Book Value Per Share (₹) 496.66

• Board's Report

FINANCIAL STATEMENTS

Standalone

• Independent Auditors’ Report on Financial Statements
• Balance Sheet
• Statement of Profit and Loss
• Statement of Changes in Equity
• Cash Flow Statement
• Notes to the Financial Statements

Consolidated

• Independent Auditors’ Report on Consolidated Financial Statements
• Consolidated Balance Sheet
• Consolidated Statement of Profit and Loss
• Consolidated Statement of Changes in Equity
• Consolidated Cash Flow Statement
• Notes to the Consolidated Financial Statements
• Salient Features of Financial Statements of Subsidiary/Associates/Joint Venturess

SHAREHOLDER INFORMATION

• Notice of Annual General Meeting
• Attendance Slip and Proxy Form
• Members’ Feedback Form 2018-19

1. Home
2. Consolidated Cashflow Statement

Consolidated
CASH FLOW STATEMENT

For the year ended 31st March, 2019

(` in crore)

		2018-19	2017-18
A.	CASH FLOW FROM OPERATING ACTIVITIES
	Net Profit Before Tax as per Statement of Profit and Loss	55,227	49,426
	Adjusted for:
	Share of (Profit) / Loss of Associates and Joint Ventures	(103)	(59)
	(Profit) / Loss on Sale / Discard of Property, Plant and Equipment and Other Intangible Asset (Net)	33	(22)
	Depreciation / Amortisation and Depletion Expense	20,934	16,706
	Effect of Exchange Rate Change	(1,319)	(2,059))
	Profit on Divestment of Stake *	(20)	(1,146)
	Net Gain on Financial Assets	(2,607)	(4,160)
	Dividend Income	(548)	(1,021)
	Interest Income	(5,016)	(2,952)
	Finance Costs	16,495	8,052
	Operating Profit before Working Capital Changes	83,076	62,765
	Adjusted for:
	Trade and Other Receivables	(36,499)	(21,991)
	Inventories	(6,724)	(10,474)
	Trade and Other Payables	18,074	51,003
	Cash Generated from Operations	57,927	81,303
	Taxes Paid (Net)	(12,191)	(9,844)
	Net Cash Flow from Operating Activities *	45,736	71,459
B.	CASH FLOW FROM INVESTING ACTIVITIES
	Purchase of Property, Plant and Equipment and Other Intangible Assets	(93,626)	(73,953)
	Proceeds from disposal of Property, Plant and Equipment and Other Intangible Assets	849	999
	Purchase of Other Investments	(11,23,763)	(5,33,984)
	Proceeds from Sale of Financial Assets	11,18,332	5,37,504
	Net Cash Flow for Other Financial Assets	(2,370)	(1,220)
	Maturity of Fixed Deposits	12	33
	Interest Income	1,012	1,310
	Dividend Income from Associates	3	12
	Dividend Income from Others	545	1,009
	Net Cash Flow used in Investing Activities	(99,006)	(68,290)
* Includes Exceptional items of ` Nil (Previous Year ` 1,087 crore) from profit on divestment of stake in Gulf Africa Petroleum Corporation (GAPCO). # Amount spent in cash towards Corporate Social Responsibility is ` 904 crore. (Previous Year ` 771 crore).

(` in crore)

		2018-19	2017-18
C.	CASH FLOW FROM FINANCING ACTIVITIES
	Proceeds from Issue of Equity Share Capital	117	125
	Proceeds from Issue of Share Capital to Non Controlling Interest	113	281
	Redemption of Preference Share Capital of Non Controlling Interest	-	32
	Share Application Money	2	15
	Proceeds from Borrowing - Non-Current	80,299	36,970
	Repayment of Borrowing - Non-Current	(20,245)	(19,813)
	Borrowing - Current (Net)	26,402	2,713
	Deferred Payment Liabilities	(870)	(739)
	Movement in Deposits	(2,292)	-
	Dividend Paid (including Dividend Distribution Tax)	(4,282)	(3,916)
	Interest Paid	(23,338)	(17,669)
	Net Cash Flow (used in) / from Financing Activities	55,906	(2,001)
	Net Increase in Cash and Cash Equivalents	2,636	1,168
	Opening Balance of Cash and Cash Equivalents	4,255	2,989
	Add: Upon addition of Subsidiaries	621	98
	Closing Balance of Cash and Cash Equivalents * (Refer Note 9)	7,512	4,255

* Include towards Unclaimed Dividend of ` 235 crore (Previous Year ` 259 crore).

They follow both Depends upon the Circumstance..Mostly on Indirect method..

Difference between Direct and Indirect method of Cash flow Statement :

Investing Activities of Reliance industries Include :

• Purchase of property plant, and equipment (PP&E) – a.k.a. capital expenditures. ...
• Proceeds from the sale of PP&E.
• Acquisitions of other businesses or companies.
• Proceeds from the sale of other businesses (divestitures)
• Purchases of marketable securities (i.e., stocks, bonds, etc.)

Financing Activities Of Reliance industries Include :

• Receiving cash from issuing stock or spending cash to repurchase shares.
• Receiving cash from issuing debt or paying down debt.
• Paying cash dividends to shareholders.
• Proceeds received from employees exercising stock options.

Reliance industries have huge masses on Non CashTransactions :

Such as

• Impairment expenses.
• Stock-based compensation.
• Provision for discount expenses.
• Deferred income taxes..

Examples Of Non cash transaction :

• Depreciation.
• Amortization.
• Unrealized gain.
• Unrealized loss.