In the file attached(Dabur.xls),a somewhat unique way(though nothing new) of analyzing Balance sheet is presented. Normally one sees common size statements (percentage of total sales) and trend percentages( first year assumed to be base year and 100) in the profit and loss account.
This is the first time I have come across it in Balance sheets like this. On the top, everything on the right is presented as a percentage of total assets which makes relative comparison easier. The first five columns represent the actual, absolute figures and the next five columns represent the same data as percentages of total assets. Therefore their totals are 100.
In the second presentation below, the first year is the base year and the rest are a percentage of the first year. This is not a strong relative comparison and needs further scrutiny.After the first five columns containing real absolute figuers, the first column of next five is missing as that is the base year and the rest are percentages of base year.
Investors are more obsessed with earnings than valuations and therefore profit and loss account generally has more importance. We used to peep in the balance sheet only to see the capital to free reserves or debt_equity ratio.This is quite a revelation.
Vision books has a new book Balance sheets- Analysis and Interpretation by Hemant R. Dani. It is good for both newbies and oldies from where I picked up the above analysis. It explains everything from scratch-How a balance sheet is made to how it is analyzed.
This is the first time I have come across it in Balance sheets like this. On the top, everything on the right is presented as a percentage of total assets which makes relative comparison easier. The first five columns represent the actual, absolute figures and the next five columns represent the same data as percentages of total assets. Therefore their totals are 100.
In the second presentation below, the first year is the base year and the rest are a percentage of the first year. This is not a strong relative comparison and needs further scrutiny.After the first five columns containing real absolute figuers, the first column of next five is missing as that is the base year and the rest are percentages of base year.
Investors are more obsessed with earnings than valuations and therefore profit and loss account generally has more importance. We used to peep in the balance sheet only to see the capital to free reserves or debt_equity ratio.This is quite a revelation.
Vision books has a new book Balance sheets- Analysis and Interpretation by Hemant R. Dani. It is good for both newbies and oldies from where I picked up the above analysis. It explains everything from scratch-How a balance sheet is made to how it is analyzed.
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