/---

Custom Valuation

Leave a Comment
Statement showing computation of assessable value for imported goods.

1. Value of Material (At Ex-Factory Price) XXX
2. Carriage, Freight, Insurance  upto the Port of Shipment in the Exporter's
Country. XXX
3.Charges for Loading on to the ship at the shipping Port  in the exporter's 
Country. XXX
4. Value of Goods and tooling supplied by the buyer . XXX
                   _______
FOB (Free on Board) XXXX

ADD: If not included in the above.

1.Commission and brokerage(except  buying commission)   XXX
2.Packing Cost ( except cost of durable and returnable packing)            XXX
3. Cost of engineering, development and plan or sketches                XXX
(Undertaken outside India)
4.Royalties and Licences fees    XXX
5.Value of subsequent resale (if payable to foreign supplier)    XXX
6.Cost of freight and Insurance upto the place of importation    XXX
Cost of Freight - If not specified : @ 20% of FOB 
(Cost of Actual Air Freight  Exceeds @ 20% FOB, only @ 20% FOB Price will be 
added)
Insurance : If not Specified  @ 1.125% fob 
7. Ship Demurrage charges on chartered vessels, Lighterage or Barge charges    XXX
LESS: If Included in the above:
1.Duties and Taxes in  India XXX
2.Cost of Erection Charges in India XXX
                  _______
CIF  Value(Cost Insurance Freight)           XXXX
ADD: Loading and Unloading Charges @ 1% on cif  XX
                _________
ASSESSABLE VALUE (AV)                          XXXXX
        -----------------

Note: 
1. Buying Commission : Fees paid by an importer to his agent for the service of - Representing him  abroad in the purchase of goods being valued .
2.Any expenditure like right to reproduce the imported goods in India  - Not to be added .
3. Apportioning the cost of  tools are not immediately consumed by the importer 
4. Demurrage charges payable to port trust authorities for delay in clearing of goods - not to be added to the transaction value.
5. Exchange Rate : 
Considered the Exchange rate of  ' CBE & C'  for finding the assessable value in Indian Rupees .
Exchange Rate
a. Exchange rate of CBE&C         b.More than one  CBE &C                                                                      Exchange rate of CBE & C as on the date of                                   Submission of   Bill of Entry.

6. Rate of determination of Basic Customs Duty.

Basic Customs Duty u/s 12
a. Rate of Duty at the time of Submission  
b. Rate of Duty at the time of   Bill of entry. entry inwards granted to  the vessel.
     whichever is LATER.

Eligibility of CENVAT credit :

a. If the importer is Manufacturer :
Eligible to avail the CENVAT credit of the following 
1. Additional Customs Duty ( CVD)
2. Special Additional Customs Duty(SPCVD)
b. If the importer is service provide
Additional Customs Duty (CVD)
c. If the importer is trader - who sells imported goods in India  after charging VAT 
Special  Additional Customs Duty ( SPCVD)

Rule 10 : Cost of services
The following Shall be added to the invoice price  ( i.e FOB value) to determine the transaction value of imported goods. 
1. Commission and Brokerage  ( except buying commission)
2. Packing Cost ( Except Cost of durable and returnable packing)
3. Cost of engineering,  development and plan or sketches (undertaken outside India)
4.Royalties and Licence fees 
5. Cost of subsequent re-sale if payable to foreign supplier 
6. Cost of freight and insurance upto the place of  importation
Cost of freight  - if not specified @ 20% of FOB
Insurance  - If not specified @ 1.125% of FOB
7. Ship demurrage charges on chartered vessels, Lighterage or Barge Charges.
----------------    XXXXX

The following  shall not be added to the Invoice price (i.e FOB  value) to determine the transaction value for imported goods.
1. Duties and Taxes  in India.
2. Cost of Erection Charges in India .
3. Cost of Transport and Insurance from port to factory of importer in India.
4. Cost of development Charges in connection with imported machinery.
5. Post demurrage charges and unloading charges in India.
6. Any other charges incurred after importation ( post shipment charges unless such  post shipment charges are precondition  for  importation).

IMPORTANT POINTS FOR IMPORTED GOODS:
1. Where the cost of insurance and cost of transportation are not ascertainable 
a. Cost of transportation is not ascertainable  - 20% of FOB  value .
b. Cost of insurance is not ascertainable  - 1.125% of FOB Value.
c. Landing Charges  - 1% of CIF  Value.
d. Cost of Freight  if the goods are imported by AIR - Restricted to 20% of FOB  Value 
i.e. Actual Air Freight  OR  20% of FOB  Value
Whichever is less.
2. Cost of  Freight  in case of goods imported by SEA 
Incase of goods imported by sea , stuffed in a container for clearance in  ICD (Inland Container Depot) or container Freight station ( CFS) - Cost of Freight from the port of entry to ICD / CFS / Shall not be included in the cost of transport.
3. FOB  VALUE:
Cost at the factory of exporter 
Carriage /Freight /Insurance upto the port of shipment in the exporter's Country 
Charges for loading onto the ship at the shipping port.
4. Exchange rate of CBE&C is relevant.
if this rate is not given  - Take the Govt of India rate 
5. Charges for bringing the goods from outer anchorage to jetty is known as - Barging / Lighterage  or Barge charges  - Included in the Assessable Value.
6.Ship demurrage on Charted vessels.
Demurrage Charges is payable when ship was not unloaded within the specified time - Included in the Assessable Value.
7. Cost of Post shipment expenditure 
a. Precondition for such import b. Not precondition for Importation 
Addable to the Assessable Value           Not addable to AV
8.Transportation of goods from port of entry to inland container depot ( ICD)  - Not addable to AV.
9.Importer imports machinery as well as accessories: 
Classified under two different headings with  different rate of duties.
a. Accessories are essential for Machinery.    b. accessories are not essential for operation  machinery.
Rate of Duty Applicable for machinery Rate of duties applies separately as is also applicable to the accessories. applicable to them.      
.
Note: Common expenditure  - Apportion in the ration of value of accessories and machinery. 
10. Additional Customs Duty ( CVD) 
Any article imported into India  - Liable to duty ( In addition to BCD  )  equal to the EXCISE  duty for the time being  leviable  on the like article if production or manufacture in India.
CVD - cannot be levied , if exemption from CED is based on 
a. Goods manufactured by SSI  Unit or 
b.Goods manufactured without aid of power.
CVD  can be levied  - only when the imported manufactured goods .
it means CVD  can be levied  - only if goods are obtained by a process of manufacture. 
If the goods manufactured in India  - are exempt from EXCISE Duty  - No CVD.
W.E.F  17.03.2012 CVD is equal to Basic Excise Duty ( Excluding Excise Duty ) 
If imported goods attract Excise duty in India as per Section 4A of Central Excise Act  - CVD will be calculated as per MRP  Basis only.
11. Persons shall be deemed to be "Related" , If one of them directly or indirectly controls the other.
Control : is Established when one enterprise holds  atleast 51% of the equity share holding of the other company.
12.According to explanation to Rule 10(1)  - Any Royalties / Licence fees / any other payment made for a process  - which carried out on the imported goods after importation there off  - Shall be included in the AV of imported goods 
a. If the same is related to the imported goods and  it is  paid as condition of sale.
13. Additional Customs Duty :
Excise duty payable as per tariff is 14% 
There is an excise exemption  notification which exempts the duty as in excess of 10%  - Excise Duty rate has to be considered after considering excise exemption  notification  i.e. Rate of CVD   = 10%.
14. Where FOB  Value  , Cost of Insurance and Cost  of Transportation  are not ascertainable: 
a. Cost of Transport ( i.e. Freight  not known ) 
= 20% X (FOB Value + Cost of Insurance )
Remarks : CIF  Value  X 20/120.
b. Insurance  ( Not Known)
= 1.125% X (FOB Value + Cost of Transport)
Remarks: CIF Value  X 1.125/101.125
c. FOB Value = CIF Value  - Cost of Transport  - Cost of  Insurance .
15. U/S 15 date for Determination of the rate of duty and tariff valuation of imported goods.
a. Goods entered for " Home consumption " u/s 46  - Dated on which bill of entry in respect  of such goods is presented under that section.
b. Goods cleared form a warehouse u/s 68 - Dated on which a bill of entry in respect of such goods is presented under that section.
c. Any other goods  - Dated of payment of duty .

Read More...

Online VAT Registration Procedure - Uttar Pradesh (UP)

Leave a Comment
With The Introduction of new procedure of registration with UP-VAT Department, there has been a lot queries from the dealers all around the state as well as out of UP from those who wish to start business in Uttar Pradesh. Uttar Pradesh VAT Department has made it simpler for the new Dealers to get themselves registered with the Department by filing their application online, this in turn has reduced the various unnecessary time consuming procedures from the department. But it has also placed hardship in front of the dealers as there is a complete new procedure for the submission of the application.

In this post we are going to make the process simpler by bringing all the necessary steps at one place which are required to get the UP-VAT registration.



STEP 1- VISIT THE UP-VAT DEPARTMENT WEBSITE
The first step in the whole process is to visit the UP-VAT Department Website. The website address is: http://comtax.up.nic.in/

STEP 2- DOWNLOAD THE E-REGISTRATION FORM
The next step is to download the registration Form No. 7 offline tool. Below is the link from which the offline tool in PDF format can be downloaded:



STEP 3- FILL THE FORM 7 FOR TIN AND FORM A FOR CST

After downloading the file as mentioned above the dealer will have to fill in the required details. Dealer will have to provide a permanent address in Uttar Pradesh and accordingly they will have to select the sector code.


STEP 4- SELECT THE COMMODITIES FROM THE LIST OF COMMODITY CODES 

When filing the Online registration tool, there is a column to fill in the Commodity Codes. The dealer should download the commodity code list and should fill in the codes and also give exact description of the commodity. 

STEP 5- GIVE INTRODUCER DETAIL

Dealer should give the TIN number, Address, Dealer Name and Firm Name of one of the dealer registered in Uttar Pradesh and should be registered with the department for at least 3 years.


STEP 6- PAY THE FEES FOR REGISTRATION

After filling in the required details, dealer should pay the registration fees online, the registration fees are:

FOR UPVAT REGISTRATION- Rs. 100
FOR CST REGISTRATION- Rs. 25

The fees can be paid from the following link:


STEP 7 UPLOAD THE FORM 

After filing in all the details, please cross check the form and Click I ACCEPT given on Top left of the form and then Click SEND APPLICATION.

Application will be submitted and a Receipt will be generated which contains the Token number for Uploading Enclosures and for Tracking registration.


STEP 8 UPLOAD ENCLOSURES

After submitting Application the status of application will be "PARTIAL APPLICATION".
Dealer should Upload Enclosure to finally complete the Application process, the list of Enclosures are:

PROOF OF IDENTITY- PAN CARD/VOTER ID CARD/PASSPORT/BANK PASSBOOK
PROOF OF ADDRESS- REGISTERED SALE DEED/ELECTRICITY BILL/TELEPHONE BILL/CERTIFICATE FROM TEHSILDAR/RENT AGREEMENT
PROOF OF BUSINESS PREMISES IN UP- REGISTERED SALE DEED/ELECTRICTY BILL/TELEPHONE BILL/CERTIFICATE FROM TEHSILDAR/RENT AGREEMENT
DOCUMENT RELATING TO CONSTITUTION- CERTIFICATE OF INCORPORATION, MOA & AOA/PARTNERSHIP DEED/HUF CREATION DOCUMENT/TRUST or SOCIETY DEED
IF BUSINESS CITY IS DIFFERENT FROM RESIDENTIAL CITY-REGISTERED SALE DEED/ELECTRICTY BILL/TELEPHONE BILL/CERTIFICATE FROM TEHSILDAR/RENT AGREEMENT
REGISTRATION UNDER OTHER ACTS- SERVICE TAX/MANDI ACT/CENTRAL EXCISE ACT/COMPANIES ACT/DRUG AND COSMETICS ACT/SOCIETY ACT 
CHALLAN
SECURITY- Either NSC/FDR/POST OFFICE DEPOSIT OF RS 25000.00 OR A SURETY BOND SIGNED BY 2 DEALERS HAVING REGISTRATION FROM ATLEAST 3 YEARS 

STEP 9 VISIT THE COMMERCIAL TAX DEPARTMENT

After Uploading All the documents, your application will reach Sector Office, for quick allotment of TIN, please visit the Sector Office with a photocopy of all the Documents and ask them to allot the TIN. The Assisstant Commissioner will verify the documents from that Uploaded and if found correct will issue the TIN.

STEP 10 SURVEY AND BIOMETRIC-

Within 1 month the Commercial Tax Officer will come for survey and will check the Enclosures with original and Clerk accompanied with him will take photos of Shop/Business Premises. After 1-2 day they will give date for Bio-metric for which dealer should visit the department.

STEP 11- DISPATCH OF REGISTRATION CERTIFICATE-

The RC will be dispatched through registered proof on Business premises address.



Read More...

Online verification of Service Tax Code

Leave a Comment
Service tax code verification can be done online using simple 3 steps. It is helpful to determine the genuineness of the party whom we are paying service tax. Here, we have explained the manner of verification of service tax number and basics of service tax number.
SERVICE TAX CODE VERIFICATION ONLINE:

WHY SERVICE TAX NUMBER VERIFICATION IS IMPORTANT?

If we are working with someone in the area of service and we take some services from such persons who provide the same service which we required but how we know about that whether the Service Tax Code Number Provide or mentioned on the bill is genuine or related with such entity who provide us the same service. For this we have an online system to verify the Service Tax Code Online.



Basically the Service Tax Code Number is  PAN Based in the New System of Service Tax, Service Tax Code Number is 15 Digit Code and Based on PAN Number.
First Ten (10) character are same as PAN ,11-12 digit is “ST” in all service tax code(In few cases “SD” is also used) ,13-15 is serial Number no for service tax number allotted against a pan number ,if you have applied for one service tax number against a pan than your service tax number will pan+st+001. So if you have a PAN number of the firm then checks service tax number as below:-

Assessee code to be digitized in case of Service Tax (major account head 0044) as:
1-10 digits: 10-digit PAN / TAN
11-12 digits: ST
13-15 digits: ZZZ
In case the Assessee is unable to provide a valid location code, the location code may be digitized as :
1-2 digits: any Commissionerate Code associated to the bank branch
3-6 digits: ZZZZ
If you have service tax number and just want to verify it is it correct or not than follow this steps:

Step 1:
Go to the  following Link:-

Following screen will be appeared:

Service Tax Code verification

Service Tax code verification
Step 2:
Click on assessee code based search 
Step 3:
Input Your Assessee Code and Verification Image you get the following result
INPUT:15 digit SERVICE TAX CODE
OUTPUT:
REGISTER UNDER SERVICE TAX/EXCISE
NAME OF ASSESSEE
ADDRESS OF ASSESSEE
LOCATION CODE.

Similar steps should be followed to determine excise number verification online. Hope this post helps you to do service tax code verification. 


Read More...

Cost Record and Audit - Companies Rule 2014

Leave a Comment
Main Points
- Application Of Cost Records
- ( First) Companies Engaged In The Production Of Following Goods In Strategic Sectors, Such As:-
  • Machinery And Mechanical Appliances Used In Defence, Space And Atomic Energy Sectors Excluding Any Ancillary Item Or Items.
  • Turbo Jets And Turbo Propellers
  • Arms And Ammunitions
  • Propellant Powders; Prepared Explosives, (Other Than Propellant Powders); Safety Fuses; Detonating Fuses; Percussion Or Detonating Caps; Igniters; Electric Detonators; Radar Apparatus, Radio Navigational Aid Apparatus And Radio Remote Control Apparatus Tanks And Other Armoured Fighting Vehicles, Motorised, Whether Or Not Fitted With Weapons And Parts Of Such Vehicles, That Are Funded

Above clause shall be applicable only if if the net worth of the company is rupees five hundred crore or more or the turnover is rupees five hundred crore or more

(Second) Companies Engaged In An Industry Regulated By A Sectoral Regulator Or A Ministry Or Department Of Central Government:
Port services 
Aeronautical services 
Telecommunication services 
Generation, transmission, distribution and supply of electricity 
Roads and other infrastructure projects
Drugs and Pharmaceuticals
Fertilisers
Sugar and industrial alcohol
Petroleum products regulated by the Petroleum and Natural Gas Regulatory Board 
Rubber and allied products being regulated by the Rubber Board
 For the purposes of above clause, the thresholds limit shall be as under:- 
(i) in the case of a multi-product or a multi services company, any product or a service for which the individual turnover is rupees fifty crore or more; 
(ii) in the case of a company, producing any one specific product or service, if the net worth of the company is rupees one hundred and fifty crore or more or the turnover is rupees twenty five crore or more.

In the case of companies engaged in an industry regulated by a sectoral regulator, the requirements of sectoral regulator regarding cost records shall be taken into account.

(Second) Companies operating in areas involving public interest such as: 

Railway or tramway locomotives, rolling stock, railway or tramway fixtures and fittings, mechanical traffic signalling equipment’s of all kind
Mineral products including cement
Ores
Mineral fuels (other than Petroleum), mineral oils etc
Base metals
Inorganic chemicals, organic or inorganic compounds of precious metals, rare-earth metals of radioactive elements or isotopes, and Organic Chemicals
Jute and Jute Products
Edible Oil under Administrative Price Mechanism
Construction Industry
Companies engaged in health services viz. functioning as or running hospitals, diagnostic centres, clinical centres or test laboratories
Companies engaged in education services, other than such similar services falling under philanthropy or as part of social spend which do not form part of any business. 
For the purposes of above clause the thresholds limit shall be as under:-
(i) In the case of a multi-product or a multi services company  any product or a service for which the individual turnover (from such specific product or such specific service) is rupees fifty crore or more; 
(ii) In the case of a company producing any one specific product or service, if the net worth of the company is rupees one hundred and fifty crore or more or the turnover is rupees twenty five crore or more.

(Others) Companies (including foreign companies other than those having only liaison offices) engaged in the production, import and supply or trading of following medical devices, namely:- 
Cardiac Stents
Drug Eluting Stents
Catheters
Intra Ocular Lenses
Bone Cements
Heart Valves
Orthopaedic Implants
Internal Prosthetic Replacements
Scalp Vein Set
Deep Brain Stimulator
Ventricular peripheral Shud
Spinal Implants
Automatic Impalpable Cardiac Deflobillator
Pacemaker (temporary and permanent)
patent ductus arteriosus, atrial septal defect and ventricular septal defect closure device
Cardiac Re-synchronize Therapy 
Urethra Spinicture Devices
Sling male or female
Prostate occlusion device
Urethral Stents
For the purposes of above clause the thresholds limit shall be as under:-
(i) in the case of a company engaged in multiple products, any product or device for which the individual turnover (from such specific product or device) is rupees ten crore or more, or one third of the turnover, whichever is less. 
(ii) (ii) in the case of a company engaged in one specific product or device, if it has net worth of rupees one hundred and fifty crore or more or the turnover is rupees twenty five crores or more;

Applicability for cost audit

Every company engaged in a strategic industry and covered under (First) shall be required to get its cost records audited in accordance with these rules.

In the case of a multi-product or a multi services company specified in(Second) , the requirement for cost audit shall apply to a product or a service for which the individual turnover (from such specific product or such specific service) is rupees one hundred crore or more; 

In the case of a company producing any one specific product or service specified in (Second), the requirement for cost audit shall apply if the net worth of the company is rupees five hundred crore or more or the turnover from such product or such service is rupees one hundred crore or more.

In the case of a company engaged in medical products or devices referred to in (Others) 

which has multiple products or devices (i.e. a company producing, importing and supplying or trading in more than one medical device or product), the requirement for cost audit shall apply to a medical device or product for which the individual turnover (from such specific medical device or product) is rupees ten crore or more, or one third of the turnover, whichever is less
which has only one product or device (i.e. a company producing, importing and supplying or trading one medical device or product), the requirement for cost audit shall apply if the net worth of the company is rupees one hundred fifty crores or more or the turnover is rupees twenty five crores or more.

Read More...

DVAT Registration Procedure

Leave a Comment
DVAT Registration

Delhi Value Added Tax or in short DVAT is a tax applicable on sale of goods within Delhi. Any person with turnover within Delhi exceeding Rs. 10,00,000 is required to be registered under DVAT and is liable to collect and pay DVAT tax to the Delhi Government. Further, any person purchasing or selling good from/to outside Delhi is also liable to be registered under DVAT in addition to registration under Central Sales Tax Act (CST).

A person can also apply for voluntary DVAT registration with or without CST even if he is not required take compulsory registration.

There are two types of DVAT registration i.e.
Normal DVAT Registration
Registration under DVAT Composition Scheme



DVAT Composition Scheme
DVAT Composition scheme is a easy version of DVAT introduced with DVAT Act for easy compliance by small businessmen. This scheme is applicable to small dealers only i.e. dealers with turnover less than Rs. 40 Lakhs (Rs. 40,00,000). Further, the dealer should only Purchase or Sale goods within the state of Delhi only. The salient feature of DVAT Composition scheme is given below
Applicability of DVAT Composition Scheme
Turnover of Dealer should not exceed Rs. 40 Lakhs (Rs. 40,00,000)
The dealer should exclusively sell / purchase goods within the State of Delhi
Terms & Conditions of DVAT Composition Scheme
The dealer can purchase goods only from other Registered Dealers within Delhi only after payment of full VAT
Composition Dealer cannot claim any credit of VAT paid on purchase of goods
Composition Dealer cannot charge VAT to its customers on the invoice
VAT liability of Composition Dealer shall be 1% of its total turnover

DVAT Registration Procedure

1. Prepare documents required for DVAT registration
2. Arrange for DVAT Surety 
3. File From DVAT 4 along with all documents and surety with DVAT Department
4. If also require CST registration file Form A along with DVAT 4
5. Get DVAT Registration Certificate along with TIN Number
6. Vat Inspector will visit your business premises within 15 days of TIN Registration
DVAT Registration Documents
The documents required for DVAT Registration are different depending on the constitution of the dealer i.e. weather the dealer is a Proprietorship, Partnership, Company or any other organisation. The documents required for DVAT registration for each different type of organisation structure is given below. Any documents required for reduction of DVAT Surety is to be given in addition to the documents mentioned below.
For Proprietorship
Identity Proof of Proprietor
3 Photographs of Proprietor
Address Proof of Proprietor
Address Proof of Proprietorship 
o if self owned then copy of Electricity Bill / Property Tax Receipt / Sale Deed
o if rented then NOC from Landlord, Rent Agreement, Electricity Bill / Property Tax Receipt / Sale Deed of Landlord
Bank Account Details and Latest Bank Statement of Proprietorship
List of Goods to be dealt in along with goods required for packing, if any
For Partnership
Identity Proof of all Partners
3 Photographs of all Partners
Address Proof of all Partners
Address Proof of Partnership 
o if self owned then copy of Electricity Bill / Property Tax Receipt / Sale Deed
o if rented then NOC from Landlord, Rent Agreement, Electricity Bill / Property Tax Receipt / Sale Deed of Landlord
PAN Card of Partnership Firm
Bank Account Details and Latest Bank Statement of Partnership
Copy of Partnership Deed
List of Goods to be dealt in along with goods required for packing, if any


For Company
Identity Proof of all Directors
3 Photographs of all Directors
Address Proof of all Directors
Address Proof of Company 
o if self owned then copy of Electricity Bill / Property Tax Receipt / Sale Deed
o if rented then NOC from Landlord, Rent Agreement, Electricity Bill / Property Tax Receipt / Sale Deed of Landlord
Bank Account Details and Latest Bank Statement of Company
Memorandum & Articles of Association
Board Resolution
List of Goods to be dealt in along with goods required for packing, if any
DVAT Surety
For DVAT registration it is compulsory to provide surety of Maximum Rs. 1,00,000 and Minimum Rs. 50,000 to the DVAT Department. The surety can be provided in various modes which are provided below, however, the more popular modes are either in way of Registered Dealer Surety i.e. where another registered dealer provides surety bond or Bank Guarantee. The method of determination of surety is also provided below.
Modes of Providing DVAT Surety
Registered Dealer Surety
Bank Guarantee
Fixed Deposits
Cash Deposit with DVAT Department
Determination of DVAT Surety Amount
The Surety for DVAT registration has been prescribed at Rs. 1,00,000. However, the same can be reduced to a minimum of Rs. 50,000 by providing the documents mentioned below. The amount of surety reduced is also mentioned against each document.
Reduction sought (Maximum reduction available Rs. 50,000)
1. Proof of ownership of principle place of business Rs.30,000
2. Proof of ownership of residential property by proprietor/ managing partner Rs. 20,000
3. Copy of passport of proprietor/ managing partner Rs. 10,000
4. Copy of Permanent Account Number in the name of the business allotted by the Income Tax Department Rs. 10,000
5. Copy of last electricity bill (The bill should be in the name of the business and for the address specified as the main place of business in the registration form) Rs. 10,000

6. Copy of last telephone bill (The bill should be in the name of the business and for the address specified as the main place of business in the registration form) Rs. 5,000



Read More...

Ratio Analysis - Analyze the business

Leave a Comment
1)      Profitability Ratio:-

   G/P ratio =  Gross Profit  *100
                        Net Sales    


2)      Operating ratio:-

            Cost of goods sold + operating exps *100
                           Net sales

a)      Cost of goods sold  =  Opening stock + Purchase + Direct exps + Manufacturing   Exps – Closing stock or Sales – G/P.

b)      Operating exps = Administrative + Selling & distribution exps.

3)      Expenses Ratio:-

         a)  Material consumed                               :-     Material Consumed *100
                                                                                          Net sales

         b)  Conversion cost                                   :-     Labour exps + Manufaturing Exps * 100
                                                                                          Net sales
   
         c)  Administrative Expenses Ratio            :-   Administrative Expenses Ratio * 100
                                                                                          Net sales


        d)  Selling & Distribution Expenses          :-   Selling & Distribution Expenses *100
                                                                                          Net sales


        e)  Operating Profit Ratio                          :-    Operating Profit *100
                                                                                 Net sales

                                                                      OP=GP+Operating Income-Operating Exps

        f)  Net Profit Ratio                                     :-    Net Profit *100
                                                                                Net sales


4)      Return on Capital Employed             :-                       N/P                  * 100
                                                                                     Capital Employed


  a) Net Profit :- N/P after depreciation before interest on fixed liabilities dividend on    shares and taxation.


   b) Capital Employed :- Fixed Assets + Current Assets – Current Liabilities

OR

Equity Shares + Preference Share + Undistributed Profit +    Reserves & Surplus + Fixed Liabilities – Fictitious Assets

5)     Return on Share Holders                      :-                         N/P                 *100
                                                                                      Shareholders Funds


a)      Net profit :-  N/P after payment Taxes, Interest on long term liabilities & Preference   dividend.

b)      Share holder Fund :- Equity Share Capital + Preference Share Capital + Capital Reserve +Revenue Reserve.

6)            Return on Total Assets                         :-           N/P After Tax *100
                                                                                  Total Assets

7)      Debt Service Ratio                                :-           N/P Before Interest & Tax
                                                                                  Interest on fixed debenture

8)      Earning per Share                                :-           Net Income – Preference Dividend
                                                                                    Number of Equity Shares



9)     Price Earning Ratio                                :-           Market Price Per Equity Share
                                                                                         Earning per Share

 
10)    Payout Ratio                                  :-           Dividend per Equity Share
                                                                                     Earning per share


11)   Dividend Yield Ratio                           :-            Dividend Per Share  *100
                                                                                      Market Price Share

12)   Turn Over Ratio  :-                            


       a) Capital Turn Over Ratio                      :-                    Sales                                        
                                                 Capital Employed (Shareholder fund +long term Liabilities


       b) Fixed Assets Turnover Ratio:-            :-                   Sales           *100
                                                                             Net fixed Assets


      c) Working Capital Turnover Ratio         :-                   Sales  * 100
                                                                                     CA -CL

             
      d) Total Assets Turnover Ratio                :-               Net Sales *100
                                                                                     Total Assets


      e) Stock Turnover Ratio                                         :-          Cost of Goods Sold
Average Stock (Op+Clo stock)
2

       f) Debtors / Receivable Turnover Ratio                   :-       Net Credit Sales
                                  Average Drs (op Dr/Bill Receivable + clo Dr’s/ Bills Payable)
2
Collection Period = 365/DTR

       g) Creditor’s Turnover Ratio                  :-     Average Credit Purchase
                                                                             (Creditors + B/P)



      h) Average Payable                                 :-     Month/Days in a year
                                                                            Creditors Turnover Ratio

 13)  Financial Ratio

       i) Current Ratio                                      :-       Current Assets
                                                                             Current Liabilities


       j) Liquid Ratio                                        :-    Quick Assets
                                                                         Current Liabilities

       k) Absolute Liquid Ratio        :-   Cash in Hand & Bank +Short Term Securities                                    
                                                                         Current Liabilities

14) Inventory Turnover Ratio         :-    Inventory/Working Capital
                                                         Working Capial= Current Assets- Current Liaballities

15) Fixed Assets Ratio                      :-    Fixed Assets
                                                              Capital Employed



16) CA to Fixed Assets                     :-    CA/FA


17) Debt to Equity Ratio                  :-   Long Term Debts
                                                        Shareholders Funds + Long Term Debts


       a) Proprietary Ratio                      :-  Shareholder Funds
                                                                  Total Assets

18) Capital Gearing Ratio                :- Fixed Interest Bearing Securities
                                                               Equity Share Capital

19) Leverages Ratio                              

     a) Operating Leverage                    :-  Marginal Contribution
                                                         Earning Before Interest & Tax (EBIT)
                                MC= Sales-Variable Cost     EBIT=Marginal Contribution- Fixed Cost


     b) Financial Leverage                    :-    EBIT
                                           Earning Before Tax (EBT)

                                                                           EBT= EBIT- Interest

      C) Combined Leverage            :-               Operating Leverage * Financial Leverage

Read More...