TOPIC Financial statements analysis. (12)
Question bank
1. Write the limitations of financial statement analysis.
3
2. What will be the operating profit ratio if operating ratio is 81.38% ?
1
3. Net profit after interest but before tax Rs 1,40,000; 15% long term
debts: 4,00,000; Shareholders fund: 2,40,000; Tax 50%. Calculate
return on capital employed. 2
4. Which ratio provide the information critical to the long term operation
of the firm?
1
5. Name the three items to be shown under the heading ‘Reserves and
Surplus ‘of company balance sheet as per schedule VI Part -I of the
company’s act 1956? 3
6. From the following compute current assets and current liabilities.
Current ratio 3;1, Quick ratio 1;1, Closing stock RS.60,000 2
7. Ram has total debts Rs.3, 90,000, long term debts RS.3, 00,000 and
working capital Rs.50,000. Calculate the current ratio 2
8. State any one objective of preparation of Balance Sheet? 1
9.
Name the three items to be shown under the heading
‘Miscellaneous Expenditure ‘of company balance sheet as per
schedule VI Part -I of the companies act 1956?
10.
From the Information given below, calculate any two of the
following ratios:
a) Gross Profit Ratio;
b) Debt Ratio and
c) Working Capital Turnover Ratio.
Information:
Net Sales 5,25,000 Current assets 4,25,000
Cost of goods sold 2,75,000 Equality share Capital 1,00,000
Current liabilities 1,50,000 Debentures 1,75,000 Loan 50,000
4
11. The stock turnover ratio of a company is 3 times. State, giving
reason, whether the ratio improves, declines or does not change because
of increase in the value of closing stock by Rs.5,000 1
12. . Show the major headings on the liabilities side of the Balance
Sheet of a company as per Schedule VI Part I of the Companies Act,
1956. 3
13. What are contingent liabilities? Mention any two examples.
14.
Prepare a comparative income statement with the help of the
following information:
Particulars
1996
1997
Sales
2,00,000
3,00,000
Cost of goods sold
60% of sales
70% of sales
Indirect expenses
50% of gross profit
40% of gross profit
Income Tax
50% of net profit before 50% of net profit before
tax
tax
4
15. Prepare the Balance Sheet of Pyramid Ltd. as on March 31, 2008 from
the following details:
Share Capital
Rs.12, 00,000/-
General Reserve
Rs. 3, 00,000/-
10% Debentures
Rs. 4, 00,000/-
Fixed Assets
Rs. 17, 00,000/-
Depreciation
Rs. 2, 40,000/-
Current Liability
Rs. 5, 60,000/-
Current Assets
Rs.11, 40,000/-
Discount on issue of Debentures
Rs.
40,000/-
Profit and Loss A/c (Credit Balance) Rs. 1, 80,000/- 4
16. The current ratio of a company is 2:1. State giving reasons which of the
following would improve, reduce or not change the ratio :
(1)
Repayment of a Current Liability.
(2)
Purchased goods on cash.
(3)
Sale of office equipment for Rs.4000/- (Book Value Rs.5000/-).
(4)
Sale of goods Rs.11000/- (Cost Rs.10000/-).
(5)
Payment of dividend.
17.Net credit sales for 2007-08 are Rs.3, 50000/- and Debtor turnover
ratio is 8 times calculate debtor at the end if debtors in the beginning
are Rs.14,000/- less than those at the end. 3
18.A Company had Current Assets of Rs.3, 00,000/- and Current
Liabilities of Rs.1, 40,000/-. Afterwards it purchases goods for Rs.20,
000/- on credit. Calculate Current Ratio after the purchase. 2
19.Current Ratio is 2.5, working capital is Rs.60, 000/-. Calculate the
amount of Current Assets and Current Liabilities.
20. Prepare Common Size Income statement from the following:
4
Particulars
2008 (Rs)
2009 (Rs)
Sales
4,00,000
5,00,000
Cost of goods sold
2,00,000
3,00,000
Administrative expenses
40,000
1,00,000
Other income
20,000
30,000
Income tax
60,000
70,000
21. Prepare Comparative Income statement from the following:
4
Particulars
2008 (Rs)
2009 (Rs)
Sales
5,00,000
6,00,000
Cost of goods sold
3,00,000
4,00,000
Administrative expenses
20,000
80,000
Other income
10,000
20,000
Income tax
40,000
60,000
22. Following figures have been extracted from the books of Elite
Producers:
Net sales
3000000
Cost of goods sold
2000000
Net profit
300000
Current assets
600000
Current liabilities
200000
Debentures
250000
Compute any two of the following ratios:
a. Gross Profit ratio
b. Operating ratio
c. Working capital turnover ratio
4
23. .
From the following information prepare a comparative Income
Statement of Victor Ltd:
Sales
Cost of goods sold
Indirect Expenses
2008
Rs.
15,00,000
11,00,000
20% of Gross Profit
Income Tax
2009
Rs.
18,00,000
14,00,000
125% of Gross Profit
50%
50%
24. From the following information calculate any two of the following ratios
(4)
i)
Net Profit Ratio
ii)
Debt-Equity Ratio
iii) Quick Ratio
Rs.
Paid up Capital
Capital Reserve
9% Debentures
Net Sales
20,00,000
2,00,000
8,00,000
14,00,000
Gross Profit
8,00,000
Indirect Expenses
2,00,000
Current Assets
Current Liabilities
3,00,000
Opening Stock
50,000
Closing Stock : 2% more than opening stock.
4,00,000
25. From the following information, prepare a comparative income
statement. (4)
Particulars
Net Sales
Cost of goods sold
2009 (Rs.)
2008 (Rs.)
10,00,000
6,00,000
70% on Sales
60% on
Sales
Office and Administrative Expenses
1,50,000
1,60,000
Selling and Distribution Expenses
90,000
60,000
Other Income
20,000
10,000
50%
50%
Rate of Income Tax
26.From the following information given below calculate any two of the
following ratios: (4)
a. Return on Investment
b. Current Ratio
c. Debt Equity Ratio
Information: Net profit during the year - Rs.40,000; Fixed Assets Rs.1,00,000; Closing Stock - Rs.5,000; Other Current Assets - Rs.50,000;
Current Liabilities - Rs.15,000; Equity Share Capital - Rs.50,000; 11%
Preference Share Capital - Rs.25,000; Reserve and Surplus - Rs.10,000;
13% Debenture(a) A company has a loan of Rs.60,00,000 as part of its
capital employed. Interest payable on the loan is 12% and ROI of the
company is 25%. The rate of income tax is 40%. What is the gain to the
shareholders due to the loan raised by the company. (2)
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