REVISED SCHEDULE VI
CA. Mahendra Mehta
CA Mahendra Mehta 1
DISCLAIMER
These are personal views of the
author and shall neither be
considered as professional advise
nor be constructed to be the views of
ICAI, any of its Region / Branch /
Study Circle.
CA Mahendra Mehta 2
QUOTE FROM SWAMI VIVEKANANDA
Perfection does not come from
belief or faith.
Perfection comes through
selfless work.
CA Mahendra Mehta 3
NECESSITY FOR REVISION

Globally corporate Balance Sheets
are classified
balance sheets. Assets and Liabilities are presented
based on current and non current classification. Where
as In India Balance Sheets till date were unstructured.

India Moved from controlled economy to a growing
economy and to make Indian companies competitive and
globally recognisable and to harmonizing and
synchronizing Schedule VI with the notified Accounting
Standards.

Earlier Schedule VI did not provide any format for
presentation of Statement of Profit & Loss leading to
development of variety of dissimilar presentation.
CA Mahendra Mehta 4
SALIENT FEATURES

All assets and liabilities are classified into current and
non-current categories which are at par with the
requirements of Ind AS 1.

The alternative and rarely used horizontal form of
Balance Sheet is deleted.

“Schedules” are now replaced by “Notes To Accounts”.

Disclosure of shareholder holding more than 5% shares
specifying the number of share held.
CA Mahendra Mehta 5
SALIENT FEATURES

Debit balance of Profit & Loss Account is to be presented
in the Reserves & Surplus within bracket as a negative
figure.

Standardization of Statement of Profit & Loss.

Separate Presentation of performance of Discontinuing
Operations.
CA Mahendra Mehta 6
SIMPLIFICATION OF DISCLOSURE REQUIREMENTS BY
SCRAPPING THE FOLLOWINGS BALANCE SHEET ITEMS

Relief from disclosing 5 years old details pertaining to
aggregate number and class of shares allotted for
consideration other than cash, bonus shares and shares
bought back.

Special reserve for repayment of capital and loans.

Disclosure of debts regarding trade receivables from same
management is omitted.

Heading “Miscellaneous Expenditure (to the extent not
written off or adjusted)”
CA Mahendra Mehta 7
SIMPLIFICATION OF DISCLOSURE REQUIREMENTS BY
SCRAPPING THE FOLLOWINGS PROFIT & LOSS ITEMS

Item-wise quantitative details of purchases, opening and closing stock of goods
traded.

Status of completion of work in progress.

Brokerage & Commission on sales.

Payment to directors and detailed calculations under section 198 as also
computation of profit u/s 349 with details of calculation of commission by
percentage of profits.

Special disclosures of information regarding licensed capacity, installed capacity
and actual production for each class of goods.

Item-wise quantitative details of raw material consumed.

Item-wise quantitative details or value of opening and closing stock of goods
purchased for manufacturing.
CA Mahendra Mehta 8
OTHER DISCLOSURE REQUIREMENTS

Disclosures as per notified Accounting Standards.

Disclosures under Companies Act, 1956

Disclosures under statutes MSMED Act, 2006.

Disclosures as per others ICAI pronouncements.

In case of Listed Companies , disclosure under clause 32 of the
Listing Agreement.
CA Mahendra Mehta 9
OTHER PRESENTATION REQUIREMENTS

Presentation of figures:
Where Turnover:

< ` 100 crores = Figures to be in nearest hundreds, thousands,
lakhs or millions or decimals thereof.

> ` 100 crores = Figures to be in nearest lakhs or millions or
crore or decimals thereof.

Once a unit of measurement is used, it should be used uniformly in the
Financial Statements.

Any item under which income or expenses exceed 1% of revenue from
operations or ` 1,00,000 whichever is higher, shall be shown separately
and distinct item against an appropriate account head in Profit & Loss
statement.
CA Mahendra Mehta 10
PART I – FORMAT OF BALANCE SHEET
Particulars
Note
No.
Figures as at the
end of the current
reporting period
Figures as at the
end of the previous
reporting period
I. EQUITY AND LIABILITIES
(1) Shareholders’ Funds
(a) Share capital
(b) Reserves and surplus
(c) Money received against share
warrants
(2) Share Application Money pending
allotment
New Line Item
New Line Item
(3) Non-current Liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
(4) Current Liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
TOTAL
CA Mahendra Mehta 11
PART I – FORMAT OF BALANCE SHEET
Particulars
Note
No.
Figures as at the
end of the current
reporting period
Figures as at the
end of the previous
reporting period
II. ASSETS
(1) Non-current Assets
(a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
(iii) Capital work-in-progress
(iv) Intangible assets under
development
(b) Non-current Investments
(c) Deferred Tax Assets (net)
(d) Long-term loans and advances
(e) Other non-current assets
(2) Current Assets
(a)
(b)
(c)
(d)
(e)
(f)
Current investments
Inventories
Trade receivables
Cash and cash equivalents
Short-term loans and advances
Other current assets
TOTAL
CA Mahendra Mehta 12
Line Items for Share capital
{FOR EACH CLASS OF SHARE CAPITAL}
(DIFFERENT CLASSES OF PREFERENCE SHARES TO BE TREATED SEPARATELY)
Particulars
Note
No.
Figures as at
the end of the
current
reporting
period
Figures as at the
end of the
previous
reporting period
Authorized
Issued
Subscribed & Fully paid up
Subscribed & not Fully paid up
Par value per share
Calls Unpaid
 By Directors
 By Officers
 By Others
Forfeited Shares(amount originally paid-up)
The rights, preferences & restrictions attaching to each
class of shares including restrictions on the distribution
of dividends & the repayment of capital.
CA Mahendra Mehta 13
Line Items for Share capital
{FOR EACH CLASS OF SHARE CAPITAL}
(DIFFERENT CLASSES OF PREFERENCE SHARES TO BE TREATED SEPARATELY)
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at the
end of the
previous
reporting period
Shares in respect of each class in the company held
by its holding company or its ultimate holding
company including shares held by or by subsidiaries
or associates of the holding company or the ultimate
holding company in aggregate.
Shares in the company held by each shareholder
holding more than 5% shares specifying the number
of shares held
Shares reserved for issue under options and
contracts/commitment for the sale of
shares/disinvestment, including the terms & amounts
For the periods of 5 years immediately preceding the
date as at which the Balance Sheet is Prepared
- Aggregate number & class of shares allotted as
fully paid up pursuant to contract(s) without
payment being received in cash.
- Aggregate number & class of shares allotted as
fully paid up by way of bonus shares
CA Mahendra Mehta 14
Line Items for Share capital
{FOR EACH CLASS OF SHARE CAPITAL}
(DIFFERENT CLASSES OF PREFERENCE SHARES TO BE TREATED SEPARATELY)
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at
the end of the
previous
reporting period
Terms of any securities convertible into
equity/preference shares issued along with the
earliest date of conversion in descending order
starting from the farthest such date.
a reconciliation of the number of shares outstanding
at the beginning and at the end of the reporting
period.
CA Mahendra Mehta 15
LINE ITEMS FOR RESERVES & SURPLUS
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at the
end of the
previous reporting
period
Capital Reserves
Capital Redemption Reserves
Securities Premium Reserves
Debenture Redemption Reserves
Revaluation Reserves
Share Option Outstanding Account
Other Reserves(Net of debit balance of
Profit & Loss Account)
Surplus
Total
CA Mahendra Mehta 16
SHARE APPLICATION MONEY PENDING ALLOTMENT

Share application money not exceeding the issued capital and to
the extent not refundable is to be disclosed under this line item.

However, the following should be shown under the head “Other
Current Liabilities:

The amount of share application money received over and
above the authorised capital,

The amount of excess of subscription or

If the requirement of minimum subscription are not met ,”.
CA Mahendra Mehta 17
CLASSIFICATION OF CURRENT LIABILITIES
A liability shall be classified as current when it satisfies
any of the following criteria:
a) It is expected to be settled in the company’s normal operating
cycle ,
b) It is held primarily for the purpose of being traded;
c) It is due to be settled within 12 months after the reporting date; or
d) The company does not have an unconditional right to defer
settlement of the liability for at least 12 months after the
reporting date. Terms of a liability that could, at the option of
the counterparty, result in its settlement by the issue of equity
instruments do not affect its classification.
All other liabilities shall be classified as non-current
CA Mahendra Mehta 18
OPERATING CYCLE

An operating cycle is the time between the acquisition of assets for
processing and their realization in cash or cash equivalents.

Where the normal operating cycle cannot be identified, it is assumed to
have a duration of 12 months.

Where a company is engaged in running multiple businesses, the
operating cycle could be different for each line of business. Such a
company will have to classify all the assets and liabilities of the
respective business into current and non current, depending upon the
operating cycle for the respective business.
CA Mahendra Mehta 19
LINE ITEMS FOR LONG TERM BORROWINGS
Particulars
Note
No.
Figures as at the
end of the current
reporting period
Figures as at the
end of the
previous reporting
period
Bonds/Debentures
Term loans
i. From Banks
ii.From other parties
Deferred payment liabilities
Deposits
Loans and advances from related parties
Long-term maturities of finance lease
obligations
Other loans and advances(specify nature)
Borrowings shall further be sub-classified as secured & unsecured. Nature of security shall be
specified separately in each case.
Where loans have been guaranteed by directors or others, the aggregate amount of such
loans under each head shall be disclosed
CA Mahendra Mehta 20
LINE ITEMS FOR OTHER LONG TERM LIABILITIES
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at
the end of the
previous
reporting period
Trade payables – A payable shall be
classified as a trade payable if it is in
respect of the amount due on account of
goods purchased or services rendered in
the normal course of business.
Others
Example: long term operating lease,
retention money from contractor’s bill,
etc.
CA Mahendra Mehta 21
LINE ITEMS FOR SHORT TERM BORROWINGS
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at the
end of the
previous reporting
period
Loans repayable on demand
I. From Bank
II.From Others
Loans and advances on related parties
Deposits
Other loans and advances(Specify nature)
Borrowings shall further be sub-classified as secured & unsecured. Nature of
security shall be specified separately in each case.
Where loans have been guaranteed by directors or others, the aggregate amount
of such loans under each head shall be disclosed
CA Mahendra Mehta 22
LINE ITEMS FOR OTHER CURRENT LIABILITIES
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at the
end of the
previous reporting
period
Current maturities of long-term debt
Current maturities of finance lease
obligations
Interest accrued but not due on borrowings
Interest accrued and due on borrowings
Income received in advance
Unpaid dividend
Application money received for allotment of
securities and due refund interest accrued
thereon
Unpaid matured deposits and interest
accrued thereon
Unpaid matured debentures and interest
accrued thereon
Other payables(Specify nature)
CA Mahendra Mehta 23
CLASSIFICATION OF CURRENT ASSETS
An asset shall be classified as current when it
satisfies any of the following criteria:
It is expected to be realised in, or is intended for sale or
consumption in, the company’s normal operating cycle;
(b) It is held primarily for the purpose of being traded;
(c) It is expected to be realised within 12 months after the
reporting date; or
(d) It is cash or cash equivalent unless it is restricted from
being exchanged or used to settle a liability for at least 12
months after the reporting date
All other assets shall be classified as non-current
(a)
CA Mahendra Mehta 24
LINE ITEMS FOR TANGIBLE ASSETS
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at the
end of the
previous reporting
period
Land
Buildings
Plant and Equipment
Furniture and Fixtures
Vehicles
Office equipment
Others(specify nature)
The revised Schedule VI requires that leasehold assets shall be separately
presented.
A reconciliation of the gross and net carrying amounts of each class of assets at the
beginning and end of the reporting period showing additions, disposals, acquisition,
through business combinations and other adjustments and the related depreciation
and impairment losses/reversals shall be disclosed.
CA Mahendra Mehta 25
LINE ITEMS FOR INTANGIBLE ASSETS
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at the
end of the
previous reporting
period
Goodwill
Computer Software
Brands/Trademarks
Mastheads and Publishing titles
Mining rights
Copyrights and patents and other
intellectual property rights, services and
operating rights
Recipes, formulae, models, designs, and
prototypes
Licenses and franchise
Others(specify nature)
CA Mahendra Mehta 26
CAPITAL WORK-IN-PROGRESS
Particulars
Requirement
Construction stage is normally
decomposed into the following three
stages:
 Preliminary stage
 Pre-acquisition stage
 Acquisition or Construction stage
The cost of an item of property, plant and
equipment shall be recognised as an
asset if, and only if:
a) It is probable that future economics
benefits associated with the item will
flow to the entity; and
b) The cost of the item can be measured
reliably.
Following are the type of the cost that cab be capitalized:
a) Costs of options to purchase the asset.
b) Incremental direct costs with independent third parties
c) Directly related employees benefit costs.
d) Depreciation and incremental costs of directly related equipment.
e) Cost of inventories consumed.
f) Property taxes.
g) Cost of site preparation and development.
CA Mahendra Mehta 27
INTANGIBLE ASSETS UNDER DEVELOPMENT
An internally generated intangible assets has to undergo through two
important phases – Research and Development Phases.
Research Phases
Development Phases
An intangible asset is not recognized
out of activities carried out in the
research phase. This is because an
entity cannot demonstrate probable flow
of economic benefits arising out of the
intangible asset which is just in the
research phase.
Conditions for recognition of development
phase activities as intangible asseta) Technical feasibility
b) Intention
c) Ability
d) Probable future economics benefits
e) Resources availability
f) Reliable measurement of cost
CA Mahendra Mehta 28
LINE ITEMS FOR NON CURRENT INVESTMENTS
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Investment property
Investments in Equity Instruments
Investments in preference shares
Investments in Government or trust
securities
Investments in debentures or bonds
Investments in Mutual Funds
Investments in partnership firms
Other non-current investments(Specify
nature)
 Disclose market value of quoted investments.
 Aggregate provisions made for diminution in value of investments.
CA Mahendra Mehta 29
LINE ITEMS FOR LONG TERM LOANS & ADVANCES
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Capital Advances
Security Deposits;
Loans and advances to related parties(giving
details thereof)
Other loans and advances(Specify nature)
It will further classified as:





Secured, considered good
Unsecured, considered good
Doubtful
Provision for doubtful debts due from directors
Amount due from partnership firms and private companies in which one of the directors are
partners or directors
CA Mahendra Mehta 30
LINE ITEMS FOR CURRENT INVESTMENTS
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Investments in Equity Instruments
Investments in preference shares
Investments in Government or trust
securities
Investments in debentures or bonds
Investments in Mutual Funds
Investments in partnership firms
Other non-current investments(Specify
nature)
 As per AS 13 current investments are measured at lower of the cost or fair value.
 Disclose market value of quoted investments.
 Aggregate provisions made for diminution in value of investments.
CA Mahendra Mehta 31
LINE ITEMS FOR INVENTORIES
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Raw materials
Work-in-progress;
Finished goods
Stock-in-trade(in respect of goods acquired
for trading)
Stores and spares
Loose tools
Others(specify nature);
 Goods-in-transit shall be disclosed under the relevant sub-head of inventories
 Mode of valuation shall be stated
CA Mahendra Mehta 32
LINE ITEMS FOR TRADE RECEIVABLES
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Due for a period of six months from the due
date of payment
Allowance for doubtful debts
Debts due
 By directors
 By other officers of the company
 By any of them either severally
 By jointly with any other person
 By firms
 By private companies respectively in
which any director is a partner or director
or member.
It will further classified as:



Secured, considered good
Unsecured, considered good
Doubtful
CA Mahendra Mehta 33
LINE ITEMS FOR CASH AND CASH EQUIVALENTS
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Balance with Banks
Unpaid Dividend
Margin Money
Bank deposits
Cheques, Drafts on hand
Cash-on -Hand
Others(Specify)
Other examples:
 Preference shares having remaining maturity of 3 months and insignificant risks.
 Investment in T-Bills and bonds issued by central and state Government , etc.
and which are having remaining maturity 3 months or less as on the reporting
date.
 Money market funds permitting withdrawal by cheque.
 Cheque from customers awaiting deposits
CA Mahendra Mehta 34
LINE ITEMS FOR SHORT TERM LOAN & ADVANCES
Particulars
Note
No.
Figures as at the
end of the
current reporting
period
Figures as at the
end of the
previous reporting
period
Loans and advances to related
parties(giving details thereof)
Others(specify nature)
It will further classified as:





Secured, considered good
Unsecured, considered good
Doubtful
Provision for doubtful debts due from directors
Amount due from partnership firms and private companies in which one of the directors
are partners or directors
CA Mahendra Mehta 35
PART – II : STATEMENT OF PROFIT & LOSS
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Revenue from Operations
Other Income
Total Revenue ( I + II)
Expenses
Cost of Materials Consumed
Purchases of Stock in Trade
Changes in inventories of finished goods
Work in progress and stock in trade
Employee Benefit expense
Finance Costs
Depreciation and amortization expense
Other expenses
Profit Before Exceptional and extraordinary items and
tax
Exceptional Items
CA Mahendra Mehta 36
PART – II : STATEMENT OF PROFIT & LOSS
Particulars
Note
No.
Figures as at the
end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Profit Before extraordinary items and tax
Extraordinary Items
Profit Before Tax
Tax Expense
Current Tax
Deferred Tax
Profit (loss) for the period from continuing
operations
Profit (loss) from discontinuing operations
Tax expense of discontinuing operations
Profit(loss) from discontinuing operations (after
tax)
Profit (loss) for the period
Earnings per equity share
Basic
Diluted
CA Mahendra Mehta 37
REVENUE FROM OPERATIONS
Particulars
(i)
Note
No.
Figures as at
the end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
Revenue from operations in respect of nonfinance company
(a) Sale of Products
(b) Sale of Services
(c) Other Operating Revenues
Less: Excise Duties
(ii) Revenue from operations in respect to Finance
company:
(a) Interest
(b) Other Financial Services
CA Mahendra Mehta 38
OTHER INCOME
Particulars
Note
No.
Figures as at
the end of the
current
reporting period
Figures as at the
end of the
previous
reporting period
a) Interest Income (other than a finance company)
b) i) Dividend from Subsidiary companies
ii) Dividend
c) Net Gain/Loss on sale of investments.
d) Other non-operating income (net of expense
directly attributable to such income)
e) Adjustment to the carrying value of investment
(Write-back)
f) Net gain/loss on foreign currency translation and
transaction(other than considered as finance
cost)
CA Mahendra Mehta 39
PRIOR PERIOD ITEMS
The Revised Schedule VI does not require separate presentation of prior
period items on the face of the Statement of Profit or Loss. It requires
separate disclosures under Clause 5(i)(l) of part II of the Revised Schedule
VI.
However, Paragraph 15 of AS 5 Net profit or Loss for the period, Prior
Period Items and Changes in Accounting policies requires:
“ The nature and amount of prior period items should be separately
disclosed in the Statement of Profit and loss in a manner that their impact
on the current profit or loss can be perceived”
The words “in the Statement of profit and loss” would mean on the face of
the profit and loss. The best approach to explain the impact would be to
add a separate line item before “V. Profit Before Exceptional and
Extraordinary Item” on the face of the Statement of Profit or Loss
CA Mahendra Mechta 40cc
EXCEPTIONAL ITEMS & EXTRAORDINARY ITEMS

Exceptional items – Material items which derive from events or
transactions that fall within the ordinary activities of the reporting entity
and which individually or if of a similar type, in aggregate, need to be
disclosed by virtue of their size or incidence if the financial statements
are to give a true and fair view.

Extraordinary items – Material items possessing a high degree of
abnormality which arise from events or transaction that fall outside the
ordinary activities of the reporting entity and which are not expected to
recur.
CA Mahendra Mechta 41
FEATURES OF NOTES TO ACCOUNTS

“Schedules” are now replaced by “Notes to Accounts”.

Notes to accounts shall
 contain supplementary information
 mark cross reference and
 maintain balance between providing relevant information and
information overload.

Notes to accounts shall contain information in addition to that presented
in the Financial Statements and shall provide where required:
a) narrative descriptions or disaggregation of items recognised in those
statement and
b) Information about items that do not qualify for recognition in those
statements.
CA Mahendra Mehta 42
NOTES TO ACCOUNTS
Notes to accounts shall disclose details of:
1.
Significant accounting policies
2.
Share Capital
3.
Reserves and Surplus
4.
Long term borrowings
5.
Other Long term liabilities
6.
Long term provisions
7.
Short-term borrowings
8.
Other current liabilities
9.
Short-term provisions
10. Tangible assets
11. Intangible assets
12. Non-current investments
CA Mahendra Mehta 43
NOTES TO ACCOUNTS
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Other long term loans and advances
Other non-current assets
Current investments
Inventories
Trade receivables
Cash and cash equivalents
Short-term loans and advances
Other current assets
Contingent liabilities and commitments
Revenue from operations
Other Income
Cost of materials consumed
Purchase of traded goods
CA Mahendra Mehta 44
NOTES TO ACCOUNTS
26.
27.
28.
29.
30.
31.
32.
Changes in inventories of finished goods, work-in-progress and
stock-in-trade
Employee benefits expense
Finance cost
Other expenses
Exceptional items, if any
Extraordinary items, if any
Additional information to the financial statements.
CA Mahendra Mehta 45
COMPUTATION OF OPERATING CYCLE
Particulars
Months
Holding period Raw Materials
5 months
Holding period of finished products
4.5 months
Production cycle
0.5 months
Collection period of trade receivables
3
Payment period of trade payables
3 months
Gross Operating Cycle
13 Months
months
Operating cycle means gross operating cycle. Payment period for
trade payable is not deducted.
CA Mahendra Mechta 46
WEIGHTED AVERAGE RAW MATERIAL HOLDING
PERIOD
Raw material
inventories
Holding
period
Average Weight Weighted average
inventory
raw material
holding
holding period
RM 1
5
300
15.92%
0.80
RM 2
3
200
10.61%
0.32
RM 3
2
100
5.31%
0.11
RM 4
1
800
42.44%
0.42
RM 5
1
485
25.73%
0.26
1885
1.90
CA Mahendra Mechta 47
WEIGHTED AVERAGE PRODUCTION CYCLE
Production Average
Average
cycle
production Work-intime
Progress
Weight
Weighted
average
production cycle
Pro 1
0.5
500
31.25%
0.16
Pro 2
0.75
400
25.00%
0.19
Pro 3
0.25
700
43.75%
0.11
1600
0.45
CA Mahendra Mechta 48
WEIGHTED AVERAGE FINISHED GOODS HOLDING
PERIOD
Finished
Goods
Related Average Average
Work-in- holding inventory
Progress period
Weight Weighted average
finished goods
holding period
FG 1
P1
5
1000
31.25%
1.56
FG 2
P2
4
1200
37.50%
1.50
FG 3
P3
3
1000
31.25%
0.94
3200
100%
4.00
CA Mahendra Mechta 49
WEIGHTED AVERAGE COLLECTION PERIOD
Trade
Receivables
Wholesalers
having net
worth >
Rs.10000
Collection
Average
Weight
Period
receivables
Weighted
average
collection period
TR1
3
1100
35.48%
1.06
TR2
4
2000
64.52%
2.58
Wholesalers
having net
worth <
Rs.10000
3100
3.65
CA Mahendra Mechta 50
Summary
Months
Weighted average raw material holding period
1.90
Weighted average production cycle
0.45
Weighted average finished goods holding period
4.00
Weighted average collection period
3.65
Operating cycle
10
Any specific inventory purchased for a special purpose, a special
production lot or a special sale contract are not taken into account
as that will distort the normal operating cycle of an enterprise.
CA Mahendra Mechta 51
QUOTE FROM SWAMI VIVEKANANDA
Knowledge can only be got in one way,
the way of experience;
there is no other way to know.
CA Mahendra Mehta 52
Thank you
These are personal views of the author and shall neither be considered as
professional advise nor be constructed to be the views of ICAI, any of its
Region / Branch / Study Circle.
CA Mahendra Mehta 53