1. Financial accounting

2. Financial accounting
 Field that is concerned with the preparation of financial statements for decision makers, such as stockholders, suppliers, banks, employees, government agencies, owners, and other stakeholders

3. Pharma company financial management
Most common Source of funds
Pharma companies
Banks
(debt)
Shareholders
(equity)
Government sources
Venture capital
Operations and activities
Use money for
Balance sheet
Financial accounting
Profit and loss account

4. Profit and Loss Account(P&L account)
P&L account is a summary account.
It is prepared after the preparation of trading account.
A trading account does not disclose the net income or loss.
P&L account is opened with a gross profit(or a gross loss) which is transferred from the trading account.
It is prepared to ascertain the Net profit earned or net loss sustained by the trader during the trading year.
Net profit : It is the surplus remaining after charging against gross profit all the expenses including depreciation and other provisions.
Net Loss : Excess of all expenses over gross loss.

5. Profit and loss account (PNL)
PNL is a company's financial statement that indicates how the revenue (money received from the sale of products and services before expenses are taken out, also known as the "top line") is transformed into the net income (the result after all revenues and expenses have been accounted for, also known as the "bottom line"). It displays the revenues recognized for a specific period
Pharma company
Production & manufacturing
Sales (revenues)
Top line
(Less)Expenses
Profits
(Net income)
bottom line

6. Profit and Loss Account(P&L account)
Administrative expenses
Selling expenses
Distribution expenses
NEED AND IMPORTANCE
Knowledge of NP and NL
Ascertainment of ratio of NP with sales
Calculation of expenses ratio with sales
Comparing actual with the desired performance
Maintaining provisions and reserves
Determine future line of action

7. Pharma PNL account Brand P&L COGS (cost incurred to produce the goods)
Brand P&L
Rs.  1
Sales (Rs.)
Units X NR 2
Less Cost Of Goods (COGS)
0.0 3
Gross profit (Rs.) 4
Less Advt & Promo (A&P) (%)
0.0  5
Less Selling Expenses (%)
 0.0 6
Less Marketing expenses (%) 7
Less Distribution Expenses (%) 8
Net Profit Before Tax (PBT)
COGS (cost incurred to produce the goods)
Gross profit
Net profit

8. Balance Sheet - Introduction
A balance sheet is a statement of the financial position of the business at a given date.
It is a snap shot of the financial conditions of the business.
Entire situation of a business concern can be understood at a glance.
“ Balance sheet is the mirror of the business wherein the business can see its face”
Balance sheet is prepared after the preparation of the trading and the profit and loss account.
Balance sheet is not an account, but a statement of assets and liabilities of a business

9. Balance Sheet - Introduction
Assets- Things which are owned by the business
Liabilities – Things which are owed by the business
Definition of Balance sheet : Eric L. Kohler defines balance sheet as “ A statement of financial position of any economic unit disclosing as at a given moment of time , its assets, at cost, depreciated cost or other indicated value , its liabilities and its ownership equities”

10. Balance Sheet – Need and importance
Helps understand the financial position of the firm.
Ascertainment of current assets and liabilities.
Ascertainment of proprietors equity.
Ascertainment of working capital position.
Comparison of actual position and desired position
Comparison of current year’s position with last year’s position

11. Balance Sheet – Form A balance sheet is divided into two parts
Left hand side is called Liabilities
Right hand side is called assets
By preparing a Trading or a P&L account we can find only Net profit and Net loss.
But overall position of the business must also be known. E.g.
What is the capital of the business
Is it increasing or decreasing
How are investments in assets made
What are its creditors and debtors

12. Balance sheet format Liabilities is what we owe (example loan)
Assets is what we own (example land)
Capital is ownerships equity (funds)

13. Classification of Assets
Fixed Assets : They are assets of a permanent nature
which are used in business over and over again
Floating Assets : Assets which are held temporarily. e.g. Cash in hand, Cash in bank, sundry debtors, bills receivable.
Fictitious Assets : Not represented by anything concrete. No tangible property behind them.

14. Classification of Liabilities
Fixed Liabilities : These are redeemed after a long period of time. E.g. Long term loans and capital
Current liabilities : Those which are redeemed in the operating period, usually within a year. E.g. Sundry creditors, bank loans and bills payable
Contingent liabilities : These are not actual liabilities but their becoming an actual liability is contingent on the happening of certain events

15. Reference
B.K & accountancy by Chopde and choudhari (pg & pg )

16. THANK YOU -PHARMA STREET