Unsecured loans and current liabilities

POSTED BY vj-manutdfan ON February 1, 2012 10:34 am COMMENTS (3)

Hi
I was going through the balancesheet of Ranbaxy laboratories,it has a huge amount of unsecured loans-4065.33.i have 2 questions regarding this
1)Where do they get the unsecured loans from?they get money from banks or in the form of raw materials from other companies.
2)Is it a bad thing.Is the company trying to project a better working capital by showing current liabilities as unsecured loans.
I also a have doubt about Current liabilities
1)Income statements show only operating expenses.It does not show the company pays its current liabilities.Should we assume that the current liabilities are for operating expenses?.

Does the same holds true for unsecured loans also Bcoz the interest shown in income statement indicate the amount paid for secured loans.Where can we find the info abt how unsecured loans and current liabilities are accounted for.

Thanks in advance
Vijay

3 replies on this article “Unsecured loans and current liabilities”

  1. Rahul says:

    > it has a huge amount of unsecured loans-4065.33

    Huge amount relative to what?? If their current and interest coverage ratio is good then a huge loan is not a problem.

    > 1)Where do they get the unsecured loans from?they get money from banks or in the form of raw materials from other companies.

    Generally its money received from banks but in some cases it can also be in the form of raw materials from other companies.

    > 1)Income statements show only operating expenses.It does not show the company pays its current liabilities.Should we assume that the current liabilities are for operating expenses?.

    No, Current liabilities are those liabilities/expenses which have to be paid in the current financial year. They may or may not include operating expenses.

    > interest shown in income statement indicate the amount paid for secured loans.Where can we find the info abt how unsecured loans and current liabilities are accounted for.

    I have not read the annual report of Ranbaxy but the interest in the annual report includes interest for secured and unsecured loans. You can get all this information in the footnotes/schedules to financial statements .

    > I’m sorry to say but your question is too much technical for common investors of this forum.

    Im sorry to say that there couple of people in this forum who can answer such technical questions.

  2. Dear Vijay, I’m sorry to say but your question is too much technical for common investors of this forum. If possible to you, please post this query either in economic times or moneycontrol or business standard or valueresearchonline.

    Thanks

    Ashal

    1. vj-manutdfan says:

      Thanks Ashal

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