Barwa fainancial Case Study Example | Topics and Well Written Essays - 750 words

Barwa fainancial - Case Study ExampleThe main amounts are cash in hand 79, balances with reputed banks 16,663 (7,497+9,166), and wakala placements 942,500 (in thousands of Qatari Riyals). The Barwa keeps comparatively low cash balance in hand as a part of its credit risk limiting strategy. b. Barwas total Cash and Cash equivalents at the end of the year 2009 represent 979,217,000 Riyals (Barwa annual report). From Barwas consolidated articulatement of cash flows for the year stop 31st December 2009, it is evident that the organization used cash for a variety of purposes. Accounts payables constitute unmatched of the major cash uses for the year. Similarly, the cash flow statement reflects that the Barwa used cash for ranges of investing activities including payments for acquisitions of property nether development and investment property, payments for establishment and acquisition of associates, payments for the purchase of financial assets, and payments for the purchase of plant a nd equipment (Barwa annual report). In addition, the organization has dealt with some financing activities include payments for purchase of land and dividend payments. Social contributions, office and administrative expensed and otherwise miscellaneous expenses were the other items that contributed to cash expenditure. c. Barwa mainly practices evil fees in its accounting practices. As per the annual report, the impairment allowances represent Barwas estimated incurred losses in its receivables and balances from financing activities. From the framed accounting practices of Barwa, it is obvious that a limited loss component constitutes the main part of this allowance and it is directly associated with individually significant exposures. The element of allowance is visible in the organizations construction contracts. During the progress of the construction contract, an allowance is maintained for disaster mechanism and it relates to gross margin recognition. It is computed on the basis of percentage of completion certified. Similarly, in order to state the receivables and balances from financing activities, the impaired allowances are deducted from the obtained amortized cost and the resultant figure is recorded. It is observed that due from various parties is not completely recoverable hence, the Barwa has also marinated impairment allowances for such receivables. d. Barwa has conjecture specific provisions for classifying its receivables from financial activities. These formulated provisions clearly comply with the Qatar Central Bank requirements. For this purpose, the Barwa classifies the receivables due for more than 90 to 180 geezerhood as substandard whereas the organization considers it doubtful when the receivables due for more than 181 to 270 days. Finally, those receivables which are due fore more than 270 days are considered to be loss assets (Barwa annual report). This classification seems to be more practical so that it would increase the re liability of financial statements. The firm does not write off any dues before the maturity period of nine months. This time period gives maximum opportunity to the debtors to clear their accounts therefore, this provision assists the organization to avoid future corrections to a large extent. Probably,