Analyzing a Companies Accounts

bonnor

Hey Guys, I am currently trying to analyze a companies accounts for a college project and am trying to figure out why at the end of 2015 500k would be moved from a long term liability to a short term liability and still be showing as a stl in 2018. Note this is a small company I am talking about and dont publish full accounts

davindub

bonnor wrote: »

Hey Guys, I am currently trying to analyze a companies accounts for a college project and am trying to figure out why at the end of 2015 500k would be moved from a long term liability to a short term liability and still be showing as a stl in 2018. Note this is a small company I am talking about and dont publish full accounts

Long term > 12 months
Short term < 12 months.

Every year the short term is paid off and the next years payments are bought from long term to short term.

If there has been no further movement in the long term liability, there are a few possible reasons - no repayments made, additional finance obtained (can you see years between 15 and 18?) or an error (repayments posted to expenses)

Have you checked to see if LT has been decreasing year on year?

Seve OB

eg, a mortgage with 124,000 outstanding on it
1,000 per month repayment
lets assume no interest for simplicity and all payments are met on time

year 1
short term liability at year end will be 12,000
long term liability will be 112,000

year 2
short term liability at year end will be 12,000
long term liability will be 100,000

Marcusm

bonnor wrote: »

Hey Guys, I am currently trying to analyze a companies accounts for a college project and am trying to figure out why at the end of 2015 500k would be moved from a long term liability to a short term liability and still be showing as a stl in 2018. Note this is a small company I am talking about and dont publish full accounts

The terms of the liability might have changed to make it repayable at will. Not unusual to ensure that interest need not be imputes for accounting purposes.

Bobby1984

bonnor wrote: »

Hey Guys, I am currently trying to analyze a companies accounts for a college project and am trying to figure out why at the end of 2015 500k would be moved from a long term liability to a short term liability and still be showing as a stl in 2018. Note this is a small company I am talking about and dont publish full accounts

This could possibly have been changed because some long term loans (loans from directors) which were at below market interest rates need to be recorded at present value of future payments discounted at a market rate of interest for similar debt instruments and then measured at amortised cost. This is due to the introduction of FRS102 around 2015-2017 depending on when the company commenced using it. Prior to this loans were measure at the cost so if a director gave a loan of €500K to the company, the company would usually repay €500K and there was no need to adjust for interest if it was not paid.

This would not be standard procedure to transfer from long term to short term for no reason.

TiGeR KiNgS

bonnor wrote: »

Hey Guys, I am currently trying to analyze a companies accounts for a college project and am trying to figure out why at the end of 2015 500k would be moved from a long term liability to a short term liability and still be showing as a stl in 2018. Note this is a small company I am talking about and dont publish full accounts

The company is probably in financial difficulty and the long-term loan is now deemed payable on demand like an overdraft.