Hi Mahesh,
There is no sure shot way of finding out vendor overinvoicing I know of. There maybe some rules of thumb. Earlier, until 2011, you would get quantity of raw materials used and you can find per unit costs to see if it is in line with market. But then what is to stop them from taking it out via rent and ‘other misc. expenses’. So you may want to see longitudinally if there is any line item out of line over time, in relation to sales.
Ultimately these show up in Return on Equity computed as Net Profits divided by Opening Net Worth for the year, and see it over time, esp in businesses that make and sell products, for over say two business cycles.
Warm regards,
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