By CA.

Mayank Agarwal
+91-7879084121

CA. Mayank Agarwal

 Current Assets:-assets which are realizable
within a period of on year either in cash or
kind. Example are FD in Bank without any
restriction, Cash, Stock in hand etc.

 Current Liabilities:-means all the liabilities

which are payable with in a period. Example
creditors, provisions etc

CA. Mayank Agarwal

 Quick Assets:-means assets realizable within
a period of two or three months. Example
cash, bank balance, shares in demate account
etc

 Quick Liabilities:-means liabilities which are

payable with in two or three months. Example
interest on CC account, salary, GST etc

CA. Mayank Agarwal

 Non Current Assets:-means assets which are
realizable/usable for more than one year.
Example Fixed Assets, Deposit to Govt., Back
ended Subsidy etc

 Non Current Liabilities:-means liabilities

which are payable after one year. Example
Term Loan, Unsecured loan in which bank
imposed some restriction etc

CA. Mayank Agarwal

 Current Ratio:- Current Assets/Current
Liabilities

 Quick Ratio:- Quick Assets/Quick Liabilities

 Net Working Capital:-Current Assets-Current

Liabilities(Including short term borrowings)

CA. Mayank Agarwal

 Gross Working Capital:-Current Assets-Current
Liabilities(Excluding short term borrowings)

 Tangible Net Worth:- Capital+ Reserve &

Surplus-Accumulated Losses-Intangible Assets

 Return on Investment (ROI):- Return/Capital

Employed (Return=Operating Profit + Interest on
long term borrowing) (Capital Employed=
Capital+R&S+Long Term Borrowing-Losses)

CA. Mayank Agarwal

 Return on Equity (ROE):-Earning to equity
share holders /Equity share holders find
(Earning=Net Profit-Dividend) (Equity Share
Holders Fund= Capital+R&S-Losses)

 Debt Equity Ratio:- Debt/Equity (all long term

borrowing includes in debt and equity mean
shareholders fund)

CA. Mayank Agarwal

 Fixed Assets Coverage Ratio:-Net Fixed
Assets/Long term borrowing

 Total Assets Coverage Ratio:-Total

Assets/Long and short term borrowing

 Debt Service Coverage Ratio:-(Profit after

tax+ Non cash Expenses, like dep + Interest
on long term borrowing)/(Principal+interest)

CA. Mayank Agarwal

 Interest Coverage Ratio:-Earning before
interest and tax/Interest

 Gross Profit Ratio:- Gross Profit/Net Sales

 Net Profit Ratio:- Net Profit/Net Sales

CA. Mayank Agarwal

 Break Even Point:-Fixed Cost/Margin per unit
(Margin per unit = sale perice p.u.-Variable
cost p.u.)

 Margin of Safety:-Actual Sales-Break Even

Sales

CA. Mayank Agarwal

Sr. No. Particulars Amount

1. Projected Turnover 5000

2. 25% of 1 1250

3. Margin 5% of (1) 250

4. Projected Net Working Capital (CA- 260

CL excluding bank borrowing)
5. PBF (2-3 or 4) whichever is lower 990

Note:- Normally most of the FIs calculated sales*20% and Normally

applicable exposure upto Rs.5.00Crore

CA. Mayank Agarwal

Sr. No. Particulars Amount

1. Total Current Assets 1000

2. Total Current Liablities excluding 200

bank borrowing

3. Working Capital Gap (1-2) 800

4. Less: Margin @25% of 3 200

5. MPBF (3-4) 600

i.e. current ratio would be 1.25:1

CA. Mayank Agarwal

Sr. No. Particulars Amount
1. Total Current Assets 1000
2. Total Current Liabilities excluding 200
bank borrowings

3. Working Capital Gap (1-2) 800

4. Less: Margin @25% of 1 250
5. MPBF (3-4) 550
i.e. Current ratio would be 1.33:1

CA. Mayank Agarwal

Sr. Particulars Amount Margin DP
No.
1. Stock 5000
2. Less: Creditors (1000)
3. Paid Stock (1-2) 4000 25% 3000
4. Debtors 2000 40% 1200
5. Maximum Drawing 4200
Power
6. Limit Sanctioned by 3000
FIS
7. Eligible Drawing 3000
Power (Lower of
6&7)

CA. Mayank Agarwal

 This is provided under Micro, Small and
Medium Enterprises Development (MSMED)
Act, 2006 (New definition is based on
Turnover but till date not replace the present
defination)

 Earlier SSI licensees are granted by the Govt.

but know Udhyog aadhar is sufficient to
classified a business as MSME

CA. Mayank Agarwal

 Manufacture or production, processing or preservation of goods
Micro Investment in plant and machinery <=Rs.25.00Lakh
Small Investment in plant and machinery >Rs.25.00Lakh
but<=Rs.5.00Crore
Medium Investment in plant and machinery >Rs.5.00Crore
but<=Rs.10.00Crore

Rendering of services and whose investment in equipment

Micro investment in equipment <=Rs.10.00Lakh
Small investment in equipment >Rs.10.00Lakh
but<=Rs.2.00Crore
Medium investment in equipment >Rs.2.00Crore
but<=Rs.5.00Crore

CA. Mayank Agarwal

Type of Micro Small Medium
Enterprises

Manufacturing A B C

Services D E F

UAM No. MH33D0008890

Note: If udhyog aadhar show A, that mean Micro enterprises

manufacturing and so on.

CA. Mayank Agarwal

 Scheme is applicable upto Rs.2.00Crore exposure

 Taken of partial collateral security is allowed now

 Retail traders are also eligible now

 Various government scheme reimburse

guarantee fees

 Revised Application form contained various

financial data

CA. Mayank Agarwal

 Mr. A and Mr. B is partner in A&B
Constructions. They have taken Term loan of
Rs.50.55Lakhs and Rs.3.70Lakhs as Cash
Credit Limit and balance amount contributed
as margin money of Rs.20.75. To secure
these loans they are provided land on which
building is constructed and Mr. A house as
collateral Security. Further Mr. A and Mr. B
both are provided their personal guarantee.

CA. Mayank Agarwal

 Profit and Loss for the year ended is as under:
Particulars Amount (Rs. In Lakhs)
Sales 46.00
Change in Stock (ALL) 6.50
Total 52.50
All Direct & Indirect Exp 34.50
Depreciation 8.80
Interest on Cash Credit 0.41
Interest on Term Loan 5.57
Profit for the Year 3.22

CA. Mayank Agarwal

 Financial position is under:
Liabilities Amount(in
lakhs)
Capital 20.75
R&S 11.47
Principal of Term Loan payable after one year 41.88
Principal of Term Loan payable within one year 05.98

Cash Credit Limit 3.70

Other Current Liabilities 0.35
Total 84.13

CA. Mayank Agarwal

 Financial position is under:
Assets Amount (in
Lakhs)
WDV of Fixed Assets 61.08
FD for Subsidy (Lock in Period 3 11.25
year)
Sundry Debtors 3.68
Stock 6.50
Cash and Bank 0.12
Advances to Suppliers 1.50
Total 84.13

CA. Mayank Agarwal

 Borrower is eligible for CGTMSE as borrowing
is less than Rs.2.00Crore

 Personal guarantees given by partners are not

considered as third party guarantee

 As per new model partial collateral security is

also eligible

CA. Mayank Agarwal

 Current Ratio:- “1.17”
(1.50+0.12+6.50+3.68)/(5.98+3.70+0.35)

 Quick Ratio:-”18.91”
(6.50+0.12)/(0.35) (Assume Stock is fast
moving)

Net Working Capital:-”1.77”

(1.50+0.12+6.50+3.68)-(5.98+3.70+0.35)

CA. Mayank Agarwal

Gross Working Capital:-”5.47”
(1.50+0.12+6.50+3.68)-(5.98+0.35)

 Tangible Net Worth:-”32.22”

(20.75+11.47)

 Return on Investment:-”11.86%”
(3.22+5.57)/(20.75+11.47+41.88)

CA. Mayank Agarwal

 Return on Equity:-”09.99%”
(3.22)/(20.75+11.47)

Debt Equity Ratio:-”1.30”

(41.88)/(20.75+11.47)

Fixed Assets Coverage Ratio:-”1.28”

(61.08)/(41.88+5.98)

CA. Mayank Agarwal

Assets Coverage Ratio:-”1.63”
(84.13)/(41.88+5.98+3.70)

Debt Service Coverage Ratio:-”2.13”

(3.22+5.57+8.80)/(8.25)

Gross Profit Ratio:-”20.00%”

{(46.00+6.50)-(34.50+8.80)}/(46.00+6.50)

CA. Mayank Agarwal

Net Profit Ratio:-”6.13%”
(03.22)/(46.00+6.50)

CA. Mayank Agarwal

Sr. No. Particulars Amount

1. Projected Turnover 46.00

2. 25% of 1 11.50

3. Margin 5% of (1) 02.30

4. Projected Net Working Capital 1.77

{(3.68+6.50+0.12+1.
50)-
(5.98+3.70+0.35+)
5. PBF (2-3 or 4) whichever is lower 9.20

Note:- Normally most of the FIs calculated sales*20% and Normally

applicable exposure upto Rs.5.00Crore

CA. Mayank Agarwal

Sr. No. Particulars Amount
1. Total Current Assets 11.80(3.68+6.50+0.1
2+1.50)
2. Total Current Liabilities excluding 0.35
bank borrowings

3. Working Capital Gap (1-2) 11.45

4. Less: Margin @25% of 3 2.86
5. MPBF (3-4) 8.59

CA. Mayank Agarwal

Sr. No. Particulars Amount
1. Total Current Assets 11.80(3.68+6.50+0.1
2+1.50)

2. Total Current Liabilities excluding 0.35

bank borrowings

3. Working Capital Gap (1-2) 11.45

4. Less: Margin @25% of 1 2.95
5. MPBF (3-4) 8.50

CA. Mayank Agarwal

Sr. Particulars Amount Margin DP
No.
1. Stock 6.50
2. Less: Creditors (3.70)
3. Paid Stock (1-2) 2.80 25% 2.10
4. Debtors 3.68 40% 2.21
5. Maximum Drawing 4.31
Power
6. Limit Sanctioned by 3.70
FIS
7. Eligible Drawing 3.70
Power (Lower of
6&7)

CA. Mayank Agarwal

CA. Mayank Agarwal