COMSATS Institute of Information and Technology

Course Title Financial Accounting and Reporting Project on: Comparison of Financial Assets in Textile Industry Submitted to: Sir Farhan Ahmad Submitted By: MBA (15-A) Muhammad Tahir Majeed Mudassir Ramzan Bilal Ashiq Muhammad Waqas Farrukh Javed CIIT/FA10-MBA-043/LHR CIIT/FA10-MBA-059/LHR CIIT/FA10-MBA-021/LHR CIIT/FA10-MBA-069/LHR CIIT/FA10-MBA-025/LHR

What Is Financial Asset?

The term financial assets describe not just cash but also assets easily and directly convertible into known amounts of cash. These assets include cash, short- term investments (also called marketable securities), and receivables.

Cash
Accountants define cash as money on deposit in banks and any items that banks will accept for deposit. These items include not only coins and paper money, but also checks, money orders and travelers checks. Banks also accept drafts signed by customers using bank credit cards, such as Visa and Master Card.

Short term investments

Short term investments of a company mean accounts that include investments that will expire within one year. These accounts contain assets that can be liquidated quickly. For example, treasury bills and marketable securities.

Accounts receivable
Money owed by customers to another entity in exchange for goods or services that have been delivered or used, but not yet paid.

Importance of Financial assets

Financial Assets are the framework/skeleton that supports your business structure to provide stability for expansion and growth of your business. Without assets, you have no support and your business will crumble, falling to the ground in pieces

1. NISHAT MILLS LIMITED:

Nishat Mills Limited (NML) is the largest textile composite unit of Pakistan. It is engaged in the business of textile manufacturing, spinning, combing, weaving, bleaching, dyeing, printing, stitching, buying, selling and dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fibre and cloth, and to generate, accumulate, distribute and supply electricity. The company maintain its financial assets as under.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current, saving and deposit accounts and other short term highly liquid instruments that are

readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values.

Investment at fair value through profit or loss

Investment classified as held-for-trading and those designated as such are included in this category. Investments are classified as held-for-trading if these are acquired for the purpose of selling in the short term. Gains or losses on investments held-for-trading are recognized in profit and loss account.

Trade and other receivables

Trade debts and other receivables are carried at original invoice value less an estimate made for doubtful debts based on a review of all outstanding amounts at the year end. Bad debts are written off when identified.

2. CRESCENT TEXTILE MILLS LTD

The Crescent Textile Mills Limited is a Pakistan-based company. The Company is engaged in the business of textile manufacturing comprising of spinning, combing, weaving, dyeing, bleaching, printing, stitching, buying, selling and dealing in yarn, cloth and other goods, and fabrics made from raw cotton and synthetic fibers. It also operates a cold storage unit. The Company operates in two segments: textile and cold storage. The textile segment comprises of spinning, combing, weaving, dyeing, bleaching, printing, stitching, buying, selling and dealing in yarn. The Cold storage segment provides storage facilities to the farmers.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values.

Investments at fair value through profit or loss

Investments at fair value through profit or loss includes financial assets held for trading designated upon initial recognition as at fair value through profit or loss. Investments which are acquired principally for the purpose of generating profit from short term fluctuations in price or dealers margin are classified as held for trading. After initial recognition, these are stated at fair values with any resulting gains or losses recognized directly in the profit and loss account.

Trade debts
Trade debts originated by the Company are recognized and carried at original invoice amount less an allowance for any uncollectible amounts. Known bad debts are written off and provision is made against debts considered doubtful when collection of the full amount is no longer probable.

Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortized cost using the effective interest method. Gains and losses are recognized in profit and loss account when the receivables are derecognized or impaired, as well as through the amortization process.

3.Kohinoor textile mills limited

Kohinoor Mills Limited was incorporated as a Public limited Company on December 21st, 1987 and is located at 8th K.M., Manga Raiwind Road, and District Kasur. The Company produces greige cloth from cotton, blended and synthetic yarns. The project was initially established with 48 Sulzer Ruti shuttles-less looms of 153" width from Switzerland with modern ancillary machinery to produce high quality fabric for export markets.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at banks on current accounts, savings and deposit account and other short term highly liquid instruction that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in values.

Investments
The companys management determines the appropriate classification of its investments at the time of purchases. Investment are initially measured at fair value plus transaction costs directly attributable to acquisition, except for investment at fair value through profit or loose

Investment at fair value through profit or loss

Investment classified as held-for-trading and those designated as such are included in this category. Investments are classified as held-for-trading if they are

acquired for the purpose of selling in the short term. Gains or Losses on investment held-for-trading are recognized in profit and loss account.

4. Comparison in Their FINANCIAL ASSETS

COMPANY NAME YEAR Cash and Bank balances Short term investment Trade Debts Receivable Total assets Nishat Textiles 2009 2008
111494 1414310 1300366 323000 3149170 76549 1855827 1387146 377206 3696728

Crescent Textiles 2009 2008

18931 65256 2562348 61909 2708444 8572 231012 2106306 115274 2461164

Kohi noor Textiles 2009 2008

279446232 172525740 872369399 158649122 1482990493 53513454 1085586948 775013196 192858559 2106972157

Assets prove that Kohinoor is much stronger than Nishat and crescent in both years.