# Stock Statement

stock statement is a business statement that provides information on the value and quantity of stock related transactions. This statement describes how much stock was purchased at what value and when, and is a matter of accounts and finance 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.

Loan providing banks are curious to know what its customers stock values are at a certain date. To ascertain this value, an accountant first needs to know the existing quantity of his company’s stock on that day. This quantity will then be multiplied by the rate of its market value and the result becomes the stock value. Making a statement of all kinds of stocks in a company’s store on that particular time becomes a “bank stock statement” and also known as “inventory statement”.

To know the existing quantity of stocks, an owner may count the materials in his store(s). If the amount of stocks is very large, the accountant can opt for the following formula:

Closing Stock = (Opening stock in cost+Purchase-sales) Say, Opening stock in hand in cost = 2,25 pieces Add: Purchase during the period = 5,50 pieces Less: Sales during the period = (4,25,000)pieces Closing stock = 3,50,000 pieces

After getting this figure 3.5 lakhs units an accountant would multiply with per piece market rate.(say Rs. 3.75 per unit)

Closing stock becomes = Rs. 3.75 into 3,50,000 units = Rs. 13,12,500 /-

Banks give loans at a specific margin rate. If this margin is 10% then for getting 20 lakhs rs. loan, a company needs to maintain the stock valuing Rs. 20,00,000+ 10% of 20,00,000 = 22 lakhs.

If the stock goes below 22,00,000 then the bank may take the stocks from his debtor company.

References

• Lopolorg