Assignment-I (Interpretation of Financial

Statements)
On
Global IME Bank

Submitted by: Submitted to

Bonik Sthapit Hari Dallakoti
Section - B
 INTRODUCTION

Financial statements (or financial reports) are formal records of the financial activities and
position of a business, person, or other entity. Financial statements are reports prepared by a
company’s management to present the financial performance and position at a point in time. A
general-purpose set of financial statements usually includes a balance sheet, income statements,
statement of owner’s equity, and statement of cash flows. These statements are prepared to give
users outside of the company, like investors and creditors, more information about the
company’s financial positions. Publicly traded companies are also required to present these
statements along with others to regulatory agencies in a timely manner.

The components of financial statement are

Component of Financial
Statement

Income statement Balance Sheet Cash Flow Statement

1. Income Statement:
Income statement is prepared to determine the operational position of the concern. It is a
statement of revenues earned and the expenses incurred for earning that revenue. If there
is excess of revenues over expenditures it will show a profit and if the expenditures are
more than the income then there will be a loss. The income statement is prepared for a
particular period, generally a year. When income statement is prepared for the year
ending on an end of financial year then all revenues and expenditures falling due in that
year will be taken into account irrespective of their receipt or payment.
2. Balance Sheet:
A tabular statement of summary of balances (debits and credits) carried forward’ after an
actual and constructive closing of books of account and kept according to principles of
accounting.'” The purpose of the balance sheet is to show the resources that the company
has, i.e., its assets, and from where those resources come from, i.e. its liabilities and
investments by owners and outsiders. The balance sheet is one of the important
statements depicting the financial strength of the concern. It shows on the one hand the
properties that it utilizes and on other hand the sources of those properties. The balance
sheet shows all the assets owned by the concern and all the liabilities and claims it owes
to owners and outsiders. The balance sheet is prepared on a particular date.

3. Cash Flow Statement

A cash flow statement is a financial statement that provides aggregate data regarding all
cash inflows a company receives from its ongoing operations and external investment
sources. It also includes all cash outflows that pay for business activities and investments
during a given period. 
A company's financial statements offer investors and analysts a portrait of all the
transactions that go through the business, where every transaction contributes to its
success. The cash flow statement is believed to be the most intuitive of all the financial
statements because it follows the cash made by the business in three main ways—through
operations, investment, and financing. The sum of these three segments is called net cash
flow.
Annual report collection of Global IME bank for the period 1 Shrawan 2071 to 31
Ashad 2072 (17 July 2014 to 16 July 2015)
 INTERPRETATION OF STATEMENT

1. Income statement analysis ( profit and loss ) of Global IME bank for the period 1
Shrawan 2071 to 31 Ashad 2072 (17 July 2014 to 16 July 2015).

As in the income statement of Global IME Bank that the total operating expense of the
particular year is 11.87 million and operating profit/loss before provision for possible loss
is 2.27 million. The operating profit/loss is 3.96million and the non-operating income is
13.70 million. The profit/loss before extraordinary activities or net income before tax
(EBT) is 9.74 million (13.70 million– 3.96 million). The provision for staff and income
tax is 0.88 million and 3.75 million for the year. So the net income after staff and other
expenses is 5.10 million (9.74 million-0.88 million-3.75 million). So the income
statement states that the Global IME banks is earning a profit for the year 2015.

2. Balance sheet analysis of Global IME bank for the period 1 Shrawan 2071 to 31
Ashad 2072 (17 July to 2014 to 16 July 2015)
The assets side of the balance sheet of Global IME Bank is categories into 5 components.
We can see the cash balance is 0 as will usually appear at the top of the current asset
section of the balance sheet because these items are listed in order of liquidity. The
balance with Banks & Financial institution is 181.06 million. The investment done by the
bank for a particular year is 81.17 million. The fixed and other assets of the bank for the
particular year is 8.08 million and 17 million. So the total assets of Global IME banks for
the particular year is 287.33 million.

The capital and liabilities side of the balance sheet of Global IME bank is categories into
5 components. The share capital for the year is 100 million as it denotes the value of
funds that shareholders have invested in the company. When a company is first formed,
shareholders will typically put in cash. The reserve and surplus is 4.21 million as
reserves are usually money earmarked by the company for specific purposes and
surplus is where all the profits of the company reside. The proposed divided and other
liabilities are 10.52 million and 172.59 million for the particular year. So the total capital
and liabilities of Global IME banks for the particular year is 287.33 million.

So the assets and liabilities side is always balanced and the major reason that balance
sheet balances are the accounting principle of double entry. The total assets and capital
liabilities are 287.33 million which a good number is as businesses with strong balance
sheets are more likely to survive economic downturns and be ready to thrive when the
going gets good again. A strong balance sheet goes beyond simply having more assets
than liabilities. Entities with strong balance sheets are those which are structured to
support the entity’s business goals and maximize financial performance.

3. Cash Flow Statement ( profit and loss ) of Global IME bank for the period 1
Shrawan 2071 to 31 Ashad 2072 (17 July 2014 to 16 July 2015).
As in the cash flow of the Global IME Bank we can see cash flow from operating
activities is 317.89 million which denotes, how much cash is generated from a company’s
core products or services. As the amount is in good number which denotes that the
company is in a healthy state.
The cash flow from the investment is 521.78 million as this section records changes in
equipment, assets, or investments. Cash changes from investing are generally considered
“cash outflows” because cash is used to purchase equipment, buildings, or short-term
assets. When a company divests an asset, the transaction is considered a “cash inflow”. A
healthy company generally invests continually in plant, equipment, land and other fixed
assets.
The cash flow from financing activities is 84.56 million as this section of the statement of
cash flows measures the flow of cash between a firm and its owners and creditors. As the
value is positive that indicates cash has come into the company, which boosts its assets
levels.
The opening cash and bank balance was 7.74 billion as it is the amount of the closing
balance of the previous year and the closing balance is cash and bank balance is 7.65
billion which is the money Global IME banks has had at the end of the current year as it
is the whole summation of net cash flow and opening balance of the current year. We can
see the cash flow is positive which indicates that the company is adding to its cash
reserves and allowing it to reinvest in the company, payout money to shareholders, or
settle future debt payments.
CONCLUSION

The net income of the Global IME banks is in good surplus which determines that the
bank is healthy and stable. As the balance sheet is also shown good amount which help
the bank to operating it business as it has higher assets and liabilities and equity are also
in good amount which are supporting the assets. As the cash flow statement is also in
good number which regard that the cash is generated and used by the bank in effective
manner. As seeing the financial statement of Global IME bank we can say the banks was
in a healthy position for the year 2071