A stock statement is a business statement that provides information on the value and quantity of
stock
Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...
-related transactions. This statement describes how much stock was purchased at what value and when, and is a matter of
accounts and
finance
Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...
supplied by the cash credit account holder (e.g. a private limited company) to banks providing loans at a regular interval. It details opening and closing balances for transacted items as well.
Banks providing
loan
In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money.
The document evidencing the deb ...
s wish to know their customers' stock values as of a certain date. To ascertain this value, an accountant first needs to know the existing quantity of the company's stock on that day. This quantity will then be multiplied by the rate of its market value. The result will be the
stock value. Making a statement of all kinds of stocks in a company's store on that particular date becomes a "bank stock statement", also known as an "inventory statement".
"inventory statement"
/ref>
To know the existing quantity of stocks, an owner may count the materials in the company's store(s). If the amount of stocks is very large, the accountant can opt for the following formula:
Closing stock = (opening stock in cost) + purchases - sales
For example:
*Opening stock in hand in cost = 100,000 pieces
*Add: Purchases during the period = 200,000 pieces
*Subtract: Sales during the period = (75,000) pieces
*Closing stock = 225,000 pieces
After getting this figure, an accountant would multiply with per-piece market rate, for example Rs. 3 per unit.
Closing stock becomes = Rs. 3 multiplied by 225,000 units = Rs. 675,000.
Banks give loans at a specific margin
Margin may refer to:
Physical or graphical edges
*Margin (typography), the white space that surrounds the content of a page
* Continental margin, the zone of the ocean floor that separates the thin oceanic crust from thick continental crust
*Leaf ...
rates. If this margin is 10% then for a loan of Rs. 100,000, a company needs to maintain stock with a value of Rs. 100,000 + (10% of 100,000) = Rs. 110,000. If the stock goes below 110,000 then the bank may take the stocks from the debtor company.
References
{{reflist
Banking terms
Working capital management