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# The balance sheets & trading and profit & loss accounts for the year ended 30th

## June 20X2 of S Ltd. & T Ltd. are given below

increased evenly throughout the year. You are required to :
(a) Calculate three of the following ratios separately for each company:
(1)net profit for the year as a percentage of net assets employed at 30 June 20X2; (2) net profit for the year as a percentage
year as a percentage of sales; (4) current assets to current liabilities at 30 June 20X2;(5)liquid ratio at 30 June 20X2;(6)stock
(b)Describe briefly the main conclusions which you draw from a comparision of the ratios which you have calculated for ea
S Ltd. & T Ltd. Balance Sheet as on 30 June 20X2
(Rs.)
S Ltd.
T Ltd.
Fixed assets at cost
60,000
30,000
Less: Provision for deprecaition
20,000
10,000
40,000
Current assets:
Stock
57,000
30,000
Debtors
22,000
20,000
Cash
11,000
10,000
90,000
60,000
Less: Current Liabilities
30,000
30,000
Net Current Liabilities
60,000
Net Assets
1,00,000
Paid-Up Share Capital
95,000
Revenue Reserve
5,000
1,00,000

20,000

30,000
50,000
45,000
5,000
50,000

S Ltd. & T Ltd. Trading and Profit and Loss Account for the ended 30 June 20X2
(Rs.)
S Ltd.
T Ltd.
Sales
160,000
120,000
Stock at July 1,20X1
39,000
20,000
1,14,000
85,000
1,53,000
1,05,000
Less: Stock at June 30,20X2
57,000
30,000
Cost of goods sold
96,000
75,000
Gross Profit
64,000
45,000
Less: General Expenses
56,000
39,000
Net profit for the year
8,000
6,000
3,000
1,000
11,000
7,000
Less: Dividend Paid
6,000
2,000
Balance Carried Forward
5,000
5,000
Solution:

2 of S Ltd. & T Ltd. are given below. You may assume that stocks have

profit for the year as a percentage of sales; (3) gross prfoit for the
uid ratio at 30 June 20X2;(6)stock turnover during the year.
which you have calculated for each company.

## Extracts from financial accounts of XYZ Ltd. are given below:

Sales amounted to Rs 3,50,000 in the first year & Rs 300,000 in the second year.You are required to comment on the solven
help of accounting ratios.
XYZ Ltd.

Stock
Debtors
Cash in hand
Sundry Creditors
Acceptances
Bank Overdraft

Solution:

Year I
Year II
Assets
Liabilities Assets
Liabilities
10,000
0
20,000
0
30,000
0
30,000
0
2,000
0
0
0
20,000
0
15,000
0
0
25,000
0
30,000
0
15,000
0
12,000
0
0
0
5,000
62,000
40,000
65,000
47,000

## equired to comment on the solvency position of the concern with

From the following information you are required to (a) analyze the relative position of ABC Ltd. in the industry & (b) point
improvements.
ABC Ltd. Balance Sheet as on 31st December 20X1
Share Capital
1,278,000 Fixed assets:
Current Liabilities:
Equipment
Creditors
1,50,000 Less: Depreciation
Bank Loan
3,00,000 Current assets:
Cash
Debtors
Stock
0 Prepaid Expenses
Total Capital
1,728,000 Total assets
ABC Ltd. Profit and Loss for the year ended
Sales
Cost of goods sold
Gross Profit
Operating expenses
Profit before interest and taxes
Interest
Profit before taxes
Tax
Profit after taxes
Solution:

600,000
80,000

## 31st December 20X1

3,45,000
1,50,000
1,95,000
90,000
1,05,000
24,000
81,000
27,000
54,000

520,000
180,000
240,000
660,000
128,000
1,728,000
(Rs.)

C Ltd. in the industry & (b) point out the deficiencies & suggest
ABC Ltd. Industry Averages
Current ratio
Quick ratio
Debt-equity ratio
Times interest earned
Inventory turnover
Fixed-assets turnover
Total assets turnover
Net profit margin
Return on assets
Return on equity

2.95
1.05
50%
2.60%
0.35
0.8
0.5
16%
15%
21%

N ( Rs.)
M (Rs.)
Sales
8,00,000
2,00,000
Total assets
40,00,000
6,00,000
Net profit
7,50,000
4,20,000
Solution:

## Compute return on investment for both firms.

Explain how the figures are similar and how they are di

## vestment for both firms.

es are similar and how they are different.

The summary BS & PL from 20X1 to 20X5 for J Ltd. is given.During this period the co' undertook a major expansion program
You are required to calculate important ratios for the five years and access the financial health of the company.
Also,explain the implications of the development of the financial health of the company for the shareholders.
J Ltd.
Balance Sheets

(Rs '000)
20X1

20X2

20X3

20X4

20X5

## Liabilities and Equity

Creditors
Debentures
Share Capital
Reserves
Total

25
250
1,000
225
1,500

25
1,000
1,000
225
2,250

25
1,750
1,000
225
3,000

25
2,500
1,000
225
3,750

25
3,250
1,000
225
4,500

Asset
Cash
Debtors
Stock
Fixed Assets(Net)
Total

50
50
400
1,000
1,500

50
50
650
1,500
2,250

50
50
900
2,000
3,000

50
50
1,150
2,500
3,750

50
50
1,400
3,000
4,500

## Profit & Loss Accounts(Summary)

20X1
Sales
COGS
Gross Profit
Operating Expenses
EBIT
Interest
PBT
Tax
Net Profit
No. of Shares
P/E ratio
Solution:

300
100
200
25
175
15
160
67.55
92.45
100
5

(Rs '000)
20X2
20X3
20X4
20X5
450
600
750
900
150
200
250
300
300
400
500
600
50
100
150
200
250
300
350
400
67.5
127.5
195
270
182.5
172.5
155
130
75.35
73.55
65.15
53.1
107.15
98.95
89.85
76.9
100
100
100
100
5
4
3.5
3.5

## rtook a major expansion programme.

ealth of the company.
or the shareholders.

Using the following data, complete the balance sheet given as below:
Gross Profit (Rs.)
Shareholder's Equity (Rs.)
Gross Profit Margin
Credit-sales to Total-sales
Total assets turnover
Inventory Turnover
Average Collection Period ( a 360 -day year)
Current Ratio
Long-term debt to equity ratio

## Note: Make a new Balance Shee

54,000
6,00,000
20%
80%
0.3 times
4 times
20 days
1.8
40%

BALANCE SHEET
Creditors
Long-term debt
Shareholder's Equity

Solution:

XXXXXX
XXXXXX
XXXXXX
XXXXXX
XXXXXX

Cash
Debtors
Inventory
Fixed assets

XXXXXX
XXXXXX
XXXXXX
XXXXXX
XXXXXX

## Note: Make a new Balance Sheet

SM & Sons are wholesale distributors of electric goods. Tables below contain their balance sheets & profit and loss statem
20X3. You are required to critically evaluate the firm's financial performance.
SM & Son's Comparative Balance Sheets
20X3
Liabilities & Capital
Creditors
65,994
Accured Expenses
2,645
Total Current Liabilties
68,639
Owner's Capital
2,08,812
Total
Assets
Cash
19,550
Debtors
86,784
Stock
61,661
Prepaid Expenses
2,667
Total Current Assets
1,70,662
Fixed Assets
99,285
Investments
7,504
Total non-current assets
1,06,789
Total
2,77,451
Solution:

20X2

(Rs.)
20X1

62,229
9,542
1,920 1,1,68
64,149
56,233
1,81,341 1,63,394

14,376
9,542
61,601
40,217
63,167
68,086
1,433
863
1,40,577 1,18,708
97,878
96,229
7,035
4,690
1,04,913 1,00,919
2,45,490 2,19,627

## SM & Son's Summarized Profit & Loss Accou

(Rs.)
Sales
Cost of goods sold
Gross Profit
Operating Expenses
Net Profit

e sheets & profit and loss statements during the period 20X1 to

## s Summarized Profit & Loss Account

20X3
20X2
4,81,053 4,57,172
3,10,720 2,75,514
1,70,333 1,81,658
1,41,377 1,37,984
28,956
43,674

(Rs.)
(Rs.)
20X1
3,99,291
2,29,878
1,69,413
1,20,593
48,820

The following are the comparitive financial statements for 3 years for PW Ltd. You are required to comment on the firm's f
the new areas which require management's attention.
PW Ltd. Comparative Balance Sheets
20X3
Liabilities & Capital
Bank Borrowing
30,525
Creditors
3,31,127
Accured Expenses
21,510
Provision for the dividends
20,350
Provision for the taxes
56,367
Total current liabilties
4,59,879
Long-term loan
71,225
Total Liabilties
5,31,104
Share Capital
4,07,000
Reserves & Surplus
80,983
Net Worth
4,87,983
Total Funds
10,19,087
Solution:

(Rs.)
20X2

20X1

10,175
1,47,725
14,361
20,350
88,435
2,81,046
Nil
2,81,046
4,07,000
88,826
4,95,826
7,76,872

0
1,13,980
20,350
20,350
86,111
2,40,791
Nil
2,40,791
4,07,000
67,067
4,74,067
7,14,858

Assets
Cash
Debtors
Stock:
Raw material
Work in progress
Finished Goods
Prepaid Expenses
Total Current Assets
Buildings,Plant & Equipment
Misc. Fixed Assets
Total Non-Current Assets
Total Assets

## lant & Equipment

Current Assets

20X3

(Rs.)
20X2

20X1

99,164
35,922
13,930
2,15,356 2,07,780 2,11,196
133,577 1,07,409
47,882
50,179
266,534 177,788
17,350
13,726
779,863 592,804
229,314 177,047
9,910
7,021
239,224 184,068
1,019,087 776,872

98,411
42,230
174,892
12,697
553,356
161,502
0
161,502
714,858

T Ltd. is the largest private sector company in Steel mfg..Given below are the PL & BS for the last 7 years for the co'.
You are required to provide an analysis of the company's financial performance.
Balance Sheet as on 31st March

(Rs crore)
1995

1996

1197

6,962.89
1,749.41
5,213.48
220.65

7,408.46
2,014.90
5,393.56
410.94

7,850.82
2,324.42
5,526.40
664.9

Total Assets

865.34
1,341.87
175.51
162.44
2,545.16
31.33
7,835.11

1,076.57
1,723.63
365.75
437.09
3,603.04
197.99
9,209.78

## 1,021.11 1,039.70 1,016.51

2,178.76 1,948.40 1,874.17
479.77
453.03
399.51
251.38
462.96
336.19
3,931.02 3,904.09 3,626.39
278.32
896.98 1,118.53
9,920.87 11,274.16 11,992.83

## Capital & Liabilities

Networth
Share capital
Equity capital
Preference capital
Reserves & Surplus
Total Borrowings
Current Liabilities & Provison
Current Liabilities
Sundry creditots
Others
Provisons
Tax Provisons
Dividend Provisions
Other Provisions
Total Liabilities

2,668.04
336.87
336.87
0
2,351.17
3,582.73
1,564.34
1,421.51
1,256.72
164.79
142.83
21.24
118.24
3.35
7,835.11

3,742.40
367.23
367.23
0
3,375.17
3,842.07
1,625.31
1,326.82
1,203.97
122.85
298.49
18.96
156.97
12.56
9,209.78

## 3,974.02 4,064.88 4,164.42

367.38
367.55
367.77
367.38
367.55
367.77
0
0
0
3,606.64 3,697.33 3,796.65
4,082.49 5,212.44 5,503.26
1,864.36 1,996.84 2,325.15
1,385.47 1,414.66 1,463.35
1,251.00 1,296.61 1,340.17
134.47
118.50
123.18
478.89
582.80
861.70
111.40
150.58
185.53
165.66
147.25
147.11
201.83
284.35
529.16
9,920.87 11,274.16 11,992.83

Assets
Gross Fixed Assets
Less: Depreciation
Net fixed assets
Invetsments
Current Assets
Inventories
Recievables
Marketable investments
Cash & Bank Balance

## Profit & Loss Accounts as on 31st March

Income
Sales
Less: Excise
Net Sales
Other income
Cahnage in stocks
Non-recurring income
Total Income

## (Rs crore) (Summary)

1995
1996
4,993.39
440.77
4,552.62
44.58
-17.35
16.03
4,595.88

6,349.35
592.61
5,756.74
76.18
66.24
0.35
5,899.51

1998

1999

8,948.52 10,032.17
2,648.48 2,973.59
6,300.04 7,058.58
626.08
588.84

1197

1998

1999

6,919.40
696.49
6,222.91
150.52
42.12
11.2
6,426.75

7,012.35
724.34
6,288.01
117.16
4.8
27.59
6,437.56

6,885.12
710.09
6,175.03
96.73
46.18
139.84
6,457.78

PBDIT(EBITDA)
Less:Dep
PBIT
Less:Interest
PBT
Less:Tax
PAT
Appropriation of Profit
Equity dividends
Dividend Tax
Retained earnings
Other Finnancial Terms
Cash Profit
Value of output
Solution:

808.1
262.26
545.84
281.4
264.44
0.25
264.19

1,212.74
297.61
915.13
348.91
566.22
0.43
565.79

1,260.45
326.83
933.62
390.66
542.96
73.75
469.21

1,030.38
343.23
687.15
323.42
363.73
41.65
322.08

1,058.26
382.18
676.08
360.35
315.73
33.5
282.23

118.24
0
145.95

156.97
0
408.82

165.66
16.57
286.98

147.25
14.73
160.1

147.11
16.18
118.94

530.35
684.14
4,504.29
1,501.19
1,238.93

867.3
638.86
5,795.26
2,174.54
1,876.93

801.69
881.3
6,238.20
2,205.36
1,878.53

665.31
880.44
6,257.51
2,055.30
1,712.07

664.41
1,007.98
6,189.62
1,998.68
1,616.50

## he last 7 years for the co'.

2000

2001

10,668.33 11,258.17
3,241.95 3,720.18
7,426.38 7,537.99
818.89
850.83
944.85
921.77
1,868.77 2,060.70
342.35
381.38
232.87
239.78
3,388.84 3,603.63
828.12
920.29
12,119.88 12,531.46

4,558.40 4,888.43
517.77
507.77
367.77
367.77
150
140
4,040.63 4,380.66
4,946.52 4,672.56
2,614.96 2,970.47
1,492.55 1,696.38
1,345.65 1,574.35
146.90
122.03
1,122.41 1,274.09
167.04
180.20
147.11
183.89
808.26
910.00
12,119.88 12,531.46

2000

2001

7,015.16
796.86
6,218.30
68.51
-33.19
152.44
6,406.06

7,822.58
920.83
6,901.75
86.53
-56.74
13.15
6,944.69

1,291.98
426.54
865.44
388.35
477.09
54.5
422.59

1,507.68
492.25
1015.43
412.39
603.04
49.6
553.44

154.86
17.14
250.39

196.09
21.52
335.83

849.13
1,323.94
6,154.84
2,273.55
1,847.01

1,045.69
1,718.70
6,812.71
2,732.10
2,239.85

The following financial data relates to 10 agro-chemicals and pesticides companies for the year ending in 31st March 20X2.
Provide a detailed analysis of the profitability and the market performance of the companies.
How have these companies performed in relation to the industry performance?Show computations?
A Agro-chemicals & Pesticides Industry
Financial Data for the year ending on 31st March 20X2

Sales
PBDIT
Dep.
PBIT
Int.
PBT
Tax
PAT
EPS
DPS
Book Value
Market Value
Solution:

(Rs crore)

Cynaide Excel
Khaitau Monsanto Montari Paushak
218.43
100.46
175.31
26.85
14.32
59.69
12.3
33.69
15.15
39.83
5.12
1.72
7.61
1.5
5.33
1.91
4.12
1.3
0.04
1.22
0.2
28.36
13.24
35.71
3.82
1.68
6.39
1.3
17.07
11.17
28.12
1.18
1.32
1.95
0.61
17.07
11.17
28.12
1.18
1.32
1.95
0.61
8.25
5.09
9.5
0
0.7
0
0.08
8.82
6.08
18.62
1.18
0.62
1.95
0.53
54.38
11.56
26.87
2.34
6.2
3.18
6.24
24
3.5
10.1
2.5
2.3
2.2
1.7
268.5
52.23
62.37
19.21
25.4
14.67
27.18
2100
280
630
47.5
250
120
130

## ear ending in 31st March 20X2.

Searle
UP Straw United
74.36
1600
101.17
9.71
1.77
22.75
1.14
0.5
1.34
8.57
1.27
21.41
5.99
0.96
18.21
5.99
0.96
18.21
1.8
0
4
4.19
0.96
14.21
8.03
3.54
20.01
2.5
0
5
57.85
15.72
33.72
280
58
590

The financial data for the B Ltd. glass manufacturing companies for the year 20X1 and 20X2.
Comment on the profitability and the market performance of the companies.
How do they compare with the industry average?
Financial Data
Sales
PBIT
Interest
Tax
PAT

20X1
20X2
20X1
20X2
20X1
20X2
20X1
20X2
20X1
20X2

Alembic Ashi
Borosil
Excel
19.8
19.3
24.7
9.7
28.2
26.4
31.1
13.5
1.6
1.9
3.8
0.7
2.7
4.2
5.9
1.2
1.6
1.5
1.9
8.4
1.7
2.1
2.1
0.6
0
0.1
0.7
0.1
0
0
1.8
0.1
0.3
0.3
1.2
0.2
1
2.1
2
0.5

(Rs crore)
Fgp.
Hind.
Indo.
29.4
66.2
54.3
30.8
76.7
83
4.7
6.3
12.3
4
8.2
12.6
1.4
3
1.6
1.6
3
1.3
1.2
0
1.7
0.4
0
6
2.1
3.3
9
2
4.4
5.3

EPS
DPS
BV
MV
Solution:

20X1
20X2
20X1
20X2
20X1
20X2
20X2

Alembic Ashi
Borosil
Excel
Fgp.
Hind.
Indo.
11.3
1.7
3.1
1.5
3.5
22.8
27.8
38.5
11.2
5.6
3.7
3.1
30.5
8.2
0
1
2.5
1.4
2.2
1
4
0
1.5
0.25
1.8
2.2
1
23
93.8
12.3
45.4
20.4
31.4
96.5
63
129.6
22.5
48.6
22.2
32.3
126.9
45.6
575
227.5
85
75
85
35
145

Maha
9.7
12.4
1
1.5
0.5
0.6
0
0.4
0.5
0.5

Triveni
Victory
Industry
31.5
7.8
271.5
48.2
8.2
338.5
6.2
1
39.6
14.9
1.4
56.5
0.8
0.6
13
0.7
0
15.3
2
0
5.7
6.3
0
15.1
3.4
0.4
20.9
7.9
0.6
26.1

3.7
3.7
1.4
1.4
17.7
20
6

Triveni
Victory
29.2
3.5
67.7
4.9
3
1.5
3.6
2
115
17.1
180.3
20
675
45

Maha