How to prepare producure every month of bank
stock statements for cc and OD loans.
Stock statement is also called as Inventory Statement. A firm doing businesses with high inventory value, generally faces issues related to working capital as high value is blocked in stocks of raw material or finished goods, which can be converted into money only after sale and recovery from debtors. The ability of a firm for converting its stock into sales in measured through Inventory turnover ratio. To meet its working capital requirement, such firms may contact his banker to provided CC against stocks. Banks provides CC limit for working capital against value of stock available in a firm. For this, a stock statement is prepared by the firm and submitted to the bank every month/quarter. Generally banks ask for Stock Audit which conducted by a practicing CA firm and stock audit report is prepared and submitted to the bank along with complete stock statement. Following points may be important while preparing stock statement:-
- Stock statement is prepared for a particular period and closing stock indicate stock on last date of that period. Hence all purchases or sale after this date should not be included in stock statement if it takes more than one day in finalizing it.
- Stock statement should include Item description, Storage location, item wise opening stock, Item wise purchases, item wise sales and item wise closing stock, rate of each item and Value of closing stock.
- Stock statement should include separate section for raw material, work in progress and finished goods.
- Closing stock item wise is multiplied by rate to arrive at value of closing stock.
- Cost or market price whichever is lower, may be used to drive value of inventory.
- If inventory items are not identifiable then FIFO method may be used.
- Method of valuation or any other assumption should be displayed in notes at the bottom of statement.
- Inventory statement must include name of company, name of bank and period.
- We should not hide or overstate our inventory as it may results in legal action against the firm.