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Financial Analysis of Bata India Ltd

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EVALUATION OF THE CURRENT FINANCIAL STATEMENTS OF BATA (PRIMARY COMPANY), RELAXO, AND LIBERTY Corporate Financial Analysis & Reporting

FINANCIAL STATEMENT ANALYSIS
Apoorv Varma 0068/51 Arnav Chawla 0074/51 Ashish Gupta 0080/51 Ashwani Sachdeva 0083/51 Mayank Verma 4021/21

Summary of key findings
Select Accounting Policies:
Leases
Bata has recognized a lot of residential, office, warehouse and shop premises under operating leases. Stating leases as operating rather than financial improves its leverage ratios as well as overstate profits and ROA in the initial years.

Financial Statement Analysis:
Cash Flow Statement:
1. The cash flow statement shows an increase of 95% in Net change in cash. Though the cash flow from operating activities decreased by 1% as compared to the last year, this was compensated by an even greater reduction in the cash out-flow from investing activities, which decreased by 9%. The biggest adjustment towards finding cash flow from operations was due to Increase in Trade Payables, which was 50% of CFO and increased by a significant 53%. This could be a cause for concern, as Bata seems to be increasing the amount it buys on credit, hence increasing its cash in the short term. In the major out-flows in CFO, increase in Inventories was as much as 66% of Cash from operating activities, an extremely high 70% increase from last year. This could be due to decrease in efficiency as the company seems to have bought much more inventory than it could sell compared to last year hence leading to an increase. The negative cash flow in CFI is majorly due to the payment of the dividends, which forms 83% of the cash flow from financing activities. This payment of the dividends has remained constant showing that dividend distribution policy of Bata India hasn’t changed, providing a stable and consistent source of income for shareholders. It was

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