ABBA NETWORK

German Finance Minister, Wolfgang Schaeuble, missing the extraordinary meeting of finance ministers of the EU, which will adopt a rescue fund to curb the spread of the crisis in Greece to countries like Spain and Portugal and has had to be hospitalized in Brussels after a negative reaction to a new medicine he took for the first time on Saturday.

Schaeuble, who is “under observation” has been replaced by the German Interior Minister Thomas de Maiziere, who had to travel to Brussels on an urgent basis to head the German delegation during the negotiations, said a Finance Ministry spokesman .

German Finance Minister is in a wheelchair since 1990 was the victim of an attack.

‘Block the taxes and loans to citizens in the affected regions, “said Prime Minister Silvio Berlusconi to the displaced of the flood that struck Messina, now housed in the tourist village of Messina,” Le Dune “. While in the prefecture is ongoing meeting of the Crisis, outside the context of the displaced are in place and activists of the No Net Bridge. “No more victims, we want security, no monumental works,” reads on
one of many signs of the protesters. Between the two groups were recorded tensions, because some displaced people who were protesting against the security of housing would not be “confused” with the No Net Bridge.

Funds for affected areas in the next Cabinet. The next Council of Ministers will give the
green light for an appropriation to assist the affected regions, to Messina, which will add to the fund already earmarked by the Regione Sicilia. The premier also announced that it is coming for a budget of one billion for the hydrogeological risk areas. “After the Eagle - the premier said - we spent a billion for emergency measures in the areas of seismic risk, I hope, speak with Economy Minister Giulio Tremonti, we can allocate a similar sum for the hydrogeological risk areas . The goal, said Berlusconi, is to start with interventions in areas most at risk, as the province of Messina, where 63% of the territory is at risk hydrogeology. The premier also said Raffaele Lombardo will be the special commissioner for the disaster at Messina.

New housing, as Aquila. Reach new homes in the wake of the experience of the Eagle. “The rebuilding is too expensive and not safe. So we all like ‘Aquila: new homes in other areas but still within the urban fabric. ” He said that Premier Silvio Berlusconi to the displaced Messina in one of the hotels where they are housed. This morning the prime minister has flown by helicopter - along with the Head of Civil Protection Guido Bertolaso, Matteoli and Prestigiacomo ministers and the mayor of Messina Giuseppe Buzzanca - areas of the Messina hit by a tremendous flood of mud by a tsunami, with waves that three meters high swept away homes, highways and railroads, spreading death and despair. The helicopter also flew over the crest of the hill from where you came off the ridge that has caused the landslide. “Those areas - said Berlusconi - no longer habitable. Will build new neighborhoods such as those made in L’Aquila. Money is not a problem, the government will put the necessary resources. Local authorities will deal with identifying the new building areas. Berlusconi has promised the creation of ‘housing with gardens, but also with negotiations to distribute the small trader.

We continue to dig in the mud. The situation in Messina remains complex, but is under control, said the Head of Civil Protection Guido Bertolaso. We continue to work and dig in the mud in search of 40 people who remain missing. The death toll is 22 dead at the time (of which up to now only 13 identified), while 95 are injured and 524 people displaced according to data Prefectural Messina. For assistance activities to the population and search for the missing work were 130 submissions and more than 1,100 men belonging to the Fire Department, Army, Carabinieri, Guardia di Finanza, State Police, State Forestry Corps, volunteers and Master’s port. It also works on the front of the road is reopened one lane per direction of the motorway A18 Palermo - Catania, while for the reopening of the highway 114 connecting Messina to Catania will take another 6 days.

Even isolated villages. The areas most affected are Brig Marina Giampilieri, Molino and ladder Marea. The road to Upper Giampilieri remained suspended for several hours due to a 3 meter high mountain of mud that was stuck under the railway bridge. Civil Protection reported that the village submerged by the mud has been completed the evacuation and relocation of displaced persons in some hotels in Messina. Remain isolated villages of Molino, Altilia and ladders.

Istanbul (Turkey), Oct 1 (EFE) .- The International Monetary Fund (IMF) has cut its growth forecasts for the Andean countries this year, but feels that, like the rest of Latin America, the group will show signs of stabilization and recovery in 2010.

In its report “World Economic Outlook, released today, the IMF maintains that all countries in the group will grow in the whole of 2009 less or nearly equal than expected six months ago.

In 2010, the GDP the region will increase more than forecast in the last report due to improved financial conditions globally and, especially in case of commodity markets.

In recent months, commodities exporters such as Venezuela, Colombia and Peru have blamed the fall in prices in international markets, with significant losses for countries highly dependent on energy exports, such as Bolivia and Ecuador.

But the recent spike in commodity prices has improved the prospects for the region, says the IMF report, which also stresses that the business and consumer confidence has increased.

However, the international organization said that the GDP of all countries in the group will contract in 2009 compared to last year and stressed that the pace of recovery will be uneven.

Peru, for example, stalled in the first half of 2009 after several years of strong growth, but its economy will improve during the second half of the current financial year.

Venezuela registered the highest rate of inflation throughout the Americas due to heavy government spending and loose monetary policy.

Where appropriate, the situation has worsened by the decrease in revenues from the sale of oil, which prevents the application of economic stimulus policies.

PERU .- The Peruvian economy will grow this year by 1.5 percent, two percentage points less than expected six months ago and 5.8 percent in 2010.

Peruvian Inflation will be 3.2 percent in 2009 to drop to 2.0 percent in 2010 compared to 5.8 percent in 2008.

Lastly, record current account deficit of 2.1 percent of GDP in 2009 and 2.3 percent in 2010, below the 3.3 percent deficit of GDP 2008.

COLOMBIA .- The GDP Colombia in 2009 will shrink by 0.3, compared to zero percent forecast in the last report and 2.5 percent in 2008. In 2010 growth is 2.5 percent, above the 1.3 percent forecast six months ago.

Inflation for this year stands at 4.6 percent, before falling to 3.7 percent in 2010, down 7 percent from 2008.

Regarding the current account deficit, the IMF predicts will be placed this year at 2.9 percent GDP and 3.1 percent next, compared with 2.8 percent of 2008.

ECUADOR .- Ecuador’s economy will shrink this year by 1 percent, the only case in which the IMF improves prognosis compared with 2 percent decline announced in April.

In 2010, the GDP improve slightly with a rise of 1.5 percent versus 1 percent estimated six months ago.

For this year, the IMF forecasts an inflation rate of 5 percent and 3 percent in 2010, down from 8.4 percent in 2008.

The news is negative for the current account, for the Ecuadorian economy will have a deficit of 3.1 percent and 3 percent in 2010, compared with a surplus of 2.3 in 2008.

BOLIVIA .- The GDP Bolivia can not repeat this year growth of 6.1 percent in 2008 but will grow at least 2.8 percent in 2009 and 3.4 percent in 2010.

In its April report, the fund had estimated an increase of 2.2 percent for 2009 and another 2.9 percent in 2010.

The inflation rate will improve compared with 14 percent of 2008, it stood at 4.3 percent this year and 4.5 percent next.

Bolivia will achieve a surplus in its balance of payments of 1.1 percent of GDP in 2009, increasing to 1.3 percent in 2010.

VENEZUELA .- The 4.8 percent growth recorded by the GDP Venezuela in 2008 was not repeated in 2009, in which the economy will contract by 2.0 per cent, or 2010, with expected decline of 0.4 percent.

Six months ago, the IMF predicted a decline of 2.2 percent this year and another 0.5 percent in 2010.

Venezuela will post double-digit inflation, with rates of 29.5 percent in 2009 and 30 percent in 2009, lower, however, expected to last six months.

Despite what is stated in the last report, the Venezuelan economy will maintain its current account surplus, although it will be of only 1.8 of GDP this year. In 2010, it increased to 5.4 percent.

The Government approved on Saturday the General State Budget (PGE) for 2010, With a deficit of 5.4% for central government, three points less than previously forecast and expenditure cuts of 3.9%, representing an effort to contain spending on all non-priority items.

Salgado told most of the adjustment in employment has been done, but the rate of unemployment is 17.9% this year, In 18.9% in 2010 and 18.4% in 2011. “We hope that the measure does not exceed 19%,” he said, acknowledging, however, that, being an average, the rate may exceed this figure in some time next year.

In his view, the budget begins the road to rebalancing public accounts, but always under the condition of not removing the economic incentives and tax until the recovery is “bound”, as agreed yesterday the G-20 and as already highlighted the Ecofin. “Of course you are applying and good examples of this are the Budget,” he said.

It expects revenue to rise 21%

According to the figures, the revenue, after the transfer to local authorities, will reach 121.626 million euros next year, by 21.2% over the projected liquidation of 2009, while expenditures are set at 185,249 million euros, 3.9% less.

Of the 5810 million more revenue by tax increases about 2810 million will go to the local authorities. The other 3,000 million remain in the State during 2010 to reduce the deficit. This causes the expected state deficit now stands at 5.4% for 2010, three tenths less, and also in all public administrations, to 8.1%.

Asked about how he will get that revenue figure, Salgado said some measures implemented in 2009 will be offset, in part, in 2010, while the crisis will reduce its effects, allowing the collection of various taxes begin to recover next year, excluding VAT, which will down for loss of business profits.

On the expenditure item, reiterated that the limit is 185.249 million, slightly higher than that raised in the month of June, but said the government is failing in that month as approved by Parliament, because there just is approved a goal of deficit that follows after the spending limit.

Curbing spending

Salgado said that the fall of 3.9% should be compared with the cost eventually executed in 2009, rising at 16.898 million due to tax measures and additional items for social protection, especially to the unemployed to overcome the effects of the crisis.

In particular, said that personal spending will grow by 2.7% in 2010 due to salary increases of 0.3% for general government, 0.3% for the financing of pension plans for public employees, the freeze the salaries of officials and reducing the supply of public employment.

This increase was allocated mainly to the ministries of justice and home affairs and should not be both salary increases and a higher staffing to meet the modernization of justice.

Social spending is half of the expenditure

However, 51.6% of spending is allocated to social spending, 21% for transfers to other government, 6.3% R & D and infrastructure, 6.6% for the payment of debt interest , 6.2% to finance basic public services and the remaining 8.3% to other economic activities.

Salgado said that the budgets are based on the macroeconomic prepared in June by the Executive, which provides year fall of 3.6% of GDP for 2009 and 0.3% for 2010. In his view, the Government still agrees with these forecasts, as indicated by recent data.

RATIO ANALYSIS: It involves three steps. First, the financial manager selects from the statements those sets of data which are relevant to his objective of analysis and calculates appropriate ratio for the firm.

The second step calls for a comparison either with the industry standards or with the ratio of the same firm relating to past. After such comparison the conclusions may be draw and presented in the shape of reports.

MEANING OF RATIO: Ratios are simply a means of highlighting in arithmetical terms the relationship between figures drawn from various financial statements.. Robert Anthony defines a ratio as simply one number expressed in teims of another.

A great number of ratios can be computed from the basic financial statements - balance sheet and profit and loss account.

RATIO ANALYSIS: To evaluate the financial condition an performance of a firm the financial executive needs certain yardsticks. The yardstick frequently used is ratio analysis. The constroction of ratio is a major analytical tool in the hands of financial executives. Mostly fmancial statements are expressed in absolute figures.

The use of ratios aids the financial manager and other analysts in pointing out the relative importance of the various items appearing in the financial statements. Each major item in the balance sheet and the income statement has a relationship with one or more items in either or both statements which can be expressed in ratio.

By using ratio, comparisons with financial statements of other firms are facilitated and comparison of a firm’s financial performance too can be made over a period of time.

1. Define Cash-flowand spell out objects of Cash-flow Analysis?
2. Draw difference between funds-flow and Cash-flow?
3. Briefly describe the utility of cash-flow analysis?
4. How do you prepare cash-flow statement and what limitations you confront with?
5. What are the sources of cash? What are the uses of cash?
6. ‘Funds Flow statement presents a decisional view of business’ - Comment?

Dividend paid
Decrease in unsecured loans, deposits, etc.,
Total applications (2)
Closing Balances:
Cash Balance
Bank Balance

Ratio Analysis
Introduction
Meaning of Ratios
Ratio Analysis
Objects and Utility of Ratio Analysis Importance
Inter-Firm and Intra-Firm Comparison Advantages of Ratio Analysis
Classification of Ratios
Categories of Ratios
Considerations of Ratios
Limitations of Ratio Analysis

LIMITATIONS OF CASH FLOW ANALYSIS
Cash flow analysis is a useful tool of financial analysis. However, it has its own limitations. These limitations are as under.

1. Cash flow statement can not be equated with the income statement. An Income Statement taken into account both cash as well as non-cash items and, therefore, net cash flow does not necessarily mean net income of the business.

2. The cash balance as disclosed by the cash flow statement may not represent the real liquid position of the business once it can be easily influenced by postponing purchases and Other payments.

3. Cash flow statement can not replace the income statement or the funds flow statement. Each of them as a separate function to perform.

Inspite of these limitations, it can be said that cash flow statement is useful supplementary instrument. It discloses the value as well as the speed at with the cash flows in the different segments of the business.

These help the management in knowing the amount of capital tide up in a particular statement of the business. The technique of cash flow analysis, when used in conjunction, with ratio analysis, serves as a barometer in measuring the profitability and financial position of the business.

FORMAT OF A CASH FLOW STATEMENT
A cash flow statement can be prepated in the following form:
CASH FLOW STATEMENT For the_year ending on …. ; Balance as on 1.1.19…
Cash Balance
Bank Balance
Add: Sources of Cash:
Issue of Shares
Raising of long-term loans
Sale of fixed assets
Short-term borrowings
Cash from operations
Profit as per profit and loss account

Add/Less:
Adjustment for non-cash items

Add: Increase in current liabilities
Decrease in current assets

Less: Increase in current assets
Decrease in current liabilities
Total Cash available(1)
Less: Applications of Cash:
Redemption of redeemable preference shares
Redemption of long-term loans
Purchase of fixed assets
Decrease in deferred payment liabilities Cash outflow on account of operations Tax paid