2024, Vol. 7, Issue 1

Purpose: The introduction of International Financial Reporting Standards (IFRS) around the world is one of the most significant development in the field of international accounting. IFRS differ from domestic accounting standards of various countries in many aspects and hence, financial statement preparers and users are concerned with the impact of these standards on financial statements and ratios. India converged to IFRS w.e.f financial year 2016-17 by introducing the Indian Accounting Standards or IND-AS. In this paper, an attempt has been made to measure the impact of IFRS on key financial statement items and ratios by taking a sample of 310 firms listed in India. The objective of this paper is to measure the impact of IND-AS on key financial statement items and ratios by comparing the AS & IND-AS financial statements for the year 2015-16.

Design: The impact on traditional ratios is analysed by measuring the difference between liquidity, profitability, market, turnover and solvency ratios calculated under both the standards for the same financial year i.e. 2015-16. The variability of these numbers under the two regimes has also been compared.

Findings: The results demonstrate that except Earnings per Share (EPS), Profit after Tax (PAT) & P/E ratio, all items and ratios are significantly different under IND-AS. The variability of the accounting numbers, however, is not statistically different except for Debt to Total Assets ratio.

Originality: This study contributes to the literature by analyzing the impact of IND-AS on all key ratios and financial statement items thus providing a comprehensive overview of the impact of transition. The results of this study provide direct evidence on the impact of IND-AS which is significant for majority of key accounting numbers and ratios. The formulae for IND-AS ratios have been revised keeping in mind the changes introduced by IND-AS which is a unique aspect of this study.