Today, we are taking the balance sheet of National Thermal Power Corporation which is one of biggest Indian Public Sector Co. who has rank 341 among the companies of all world. Its main product is electricity. Our aim is following for showing NTPC's 2009 and 2010's balance sheet.
1st : We want to show this balance sheet as example of balance sheet of company. By seeing this example, beginners can learn, how can they prepare the balance sheet of company?
2nd : We also try to simplify balance sheet of NTPC's main items.
First we start from source of fund. Above balance sheet of NTPC is vertical form. Company has mainly three source of fund. One is equity share capital, second is secured loan and third is unsecured loan. This source of fund can be seen any type of balance sheet but amount in it is very important because with this we can learn many facts from balance sheet.
1. By seeing this balance sheet, we find that proportion of debt and equity. Debt - equity ratio has been increased. In 2009, company is using 4.1 units of total debt with his 1 unit of equity capital. But in 2010, company is using 4.5 units of total debt with his 1 unit of equity capital.
2. Company has increased its reserves from previous year. It shows company is also interested to increase retain earning for future security.
3. Now, we come to the asset side of its balance sheet. Fixed asset are in Gross block. Gross block is calculated by adjusting of new fixed asset and selling of old asset. After this, accumulated depreciation has been deducted from it because it will bring book value of fixed asset to its current value.
4. We are seeing capital work in progress in its balance sheet. You can surely ask, " What is capital work in progress in balance sheet?" Because NTPC is doing work for power generation and distribution. It means it has taken big projects in which it has invested its capital but still that project is not completed by it. So, capital work in progress is investment of uncompleted projects. So, it is also asset of company. For example, Loharinag Pala Hydro Power Project located on river Bhagirathi (a tributory of the Ganges).
5. Company has also invested his money which is more than previous year.
6. NTPC's balance sheet is showing that it has decreased its working capital. It happened due to liquidate of fixed deposits and increasing of current liabilities than other current assets.
7. Company's off balance sheet is showing contingent liabilities which is decreased to Rs. 40044 Crores.