Leena Makandar

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The Time-weighted rate of return is the geometric rate of return.

How are the geometric mean and geometric rate of return the same? Both concepts begin from the same formula.

The geometric mean is the root of the multiplication of observations of a variable.

If we set each observation to 1+ r, we would have:

We use the equation of the geometric mean to substitute it.

Let's look at the geometric rate of return formula.

They have a resemblance.

The TGR is different from the geometric mean because we subtract a 1 at the end of the root to remove the effect of the 1 that we have been adding throughout the root. Simple and annual sensitivities are what the returns are taken into account for.

The root index is the number of periods that the investment lasts.

Another way of expressing the TGR is by using the following.

There is a sign near the returns.

If the returns of an investment have been negative, then the formula written with negative signs is incorrect.

When we want to know the average annual return of investment, the TGR is used. It is a good way to know the accumulated profitability of an investment.

If your business consists of branches, subsidiaries, sister, and member companies, it can become difficult to monitor the health of your business group. You might have questions like how your business is doing overall, or how your different branches are performing. TallyPrime will help you find answers to all these questions and more.

You can create a group company in TallyPrime to conveniently view all your companies at one place. This group company can function as a single economic entity, where financial reports such as Balance Sheet, Profit and Loss A/c, and Trial Balance are consolidated without any impact on the transactions. Irrespective of whether your branches use the same GSTIN or multiple GSTINs, your data will be seamlessly consolidated.

Using the group company, you can compare the performance of your member companies and also keep a tab on the overall business. The consolidated data proves to be useful, especially at the end of the financial year, where you can get a picture of the total income, profit, and so on.

Let us assume that you own a textile business in Bangalore (Karnataka) called National Enterprises, which consists of sister concerns in the neighbouring cities of Chennai (Tamil Nadu) and Hyderabad (Telangana). The unit in Bangalore deals in fabrics, while the sister concerns in Chennai and Hyderabad deal in ready-made Western and ethnic clothing, respectively. You can create a group company in TallyPrime by adding your sister concerns.

However, before creating a group company, it is recommended that:

Now, you can proceed to create your group company.

In the Gateway of Tally, you can see the group company (in bold) along with the member companies. You can shut the other companies by pressing Ctrl+F3, and proceed to use the group company.

Next time you open a company in TallyPrime, the group company will now appear in the List of Companies.

When you create a group company, the data of financial reports such as Balance Sheet, Profit and Loss A/c and Trial Balance are consolidated without any impact on the transactions of the member companies. Thus, you can compare the performance of your sister concerns, and effectively measure the overall health of your business. You can also submit this consolidated data to internal and external stakeholders such as company management, investors, auditors, and so on.

Now you can compare the various components of the Balance Sheet between the member companies and the group company. Using this consolidated information, you can gain useful business perspectives, such as which of your member companies utilised the funds in the best way, or which company was the most profitable, and so on.

In TallyPrime, you can easily add or remove a member company, or update the contact details of your group company. You can also delete the group company if it is no longer required.

In this section

Let us assume that you are expanding your textile business by adding a new hosiery unit in Kohima (Nagaland). You can easily alter the group company to accommodate the new sister concern. Here’s how:

Let us assume that you are selling off your business in Imphal, and you no longer need the Imphal unit in the group company. You can easily alter the group company to remove this sister concern. Here’s how:

If you no longer need the group company, you can easily delete it without affecting the data of the member companies.