Statement of profit for the year ended 31st March
Sales40, 00, 000Less: Cost of Goods Sold30, 80, 000Gross Profit on Sales9, 20, 000Less: Operating Expenses6, 80, 000Net Profit2, 40, 000Less: Taxes (0.35)84, 000Net Profit after taxes1, 56, 000
Sundry Debtors and stock at the beginning of the year were Rs. 3, 00, 000 and Rs.4, 00, 000 respectively. Determine the following ratios of Aditya Mills Ltd.
Current RatioAcid Test RatioStock TurnoverDebtors TurnoverGross Profit RatioNet Profit RatioOperating RatioEarnings Per Share Rate of return on equity capitalMarket value of the share if price earnings ratio is 10 times
Indicate for each of the following transactions whether the transaction would improve, weaken or have no effect on the current ratio of the company.
Sell additional equity sharesSell 15% debenturesPay bills payableCollect 40% sundry debtorsPurchase additional plantIssue bills payable to creditorsCollect bills receivable from debtorsPurchase treasury billsWrite off bad debts
The following data are extracted from the published accounts of two companies, ABC Ltd and XYZ ltd in an industry.
Prepare a statement of comparative ratios showing liquidity, profitability, activity base of the two companies.
Presently the CA and CL of a company are Rs. 16 lakhs and Rs.8 lakhs respectively. Calculate the effect of each of the following transactions individually and totally on the current ratio of the company.
Receipt of a shipment of new materials at landed cost of Rs.5 lakhs, against which the bank finance obtained, is Rs 3 lakhs.
A partial list of trend and common-size percentages for ABC Ltd is given below.
March, Current YearMarch, Previous YearTrend percentages:Sales (net)120100Cost of goods sold?100Gross profit on sales?100Operating expenses and income taxes?100Net Income?100Common-size percentages:Sales (net)100100Cost of goods sold??Gross profit on sales40?Operating expenses and income taxes2025Net Income2010
Determine the missing trend and common size percentages
You have been supplied data for Royal Plastic Company Ltd. and its industry averages.
Determine the indicated ratios for the company.
Indicate its strength and weaknesses in terms of liquidity, solvency and profitability as revealed by your analysis.
Balance sheet as on 31st March</li></ul>LiabilitiesAmount (Rs.)AssetsAmount (Rs.)Equity Share Capital1, 00, 000Plant & Machinery1, 51, 00010% preference share capital40, 000Cash12, 300Retained Earnings27, 400Debtors36, 000Long-term debt34, 000stock60, 800Sundry Creditors31, 500Outstanding Expenses1, 200Other Current Libailities26, 0002, 60, 1002, 60, 100<br />Statement of profit for the year ended 31st March<br />Sales (net)2, 25, 000Less: Cost of goods sold1, 52, 500Selling expenses29, 500Administrative expenses14, 800R&D6, 500Interest2, 9002, 06, 200Earnings before taxes18, 800Less: Income taxes (0.35)6, 580Net income12, 220Dividends paid5, 000<br />Financial ratios of Industry<br />Current ratio2.2Stock Turnover (times)2.8Collection period (days)56Total debt/Shareholder’s equity0.45Fixed Charge Coverage Before Tax (times)10Turnover of Assets (times)1.35Income Before Tax /Sales0.119Rate of return on equity funds0.15<br /><ul><li>Given below are the selected ratios of two companies A and B, in the same industry, along with industry average.
RatioABIndustryCurrent ratio221561241Acid test ratio121301131Debt to assets ratio36535Operating expenses ratio1817.520Number of times interest paid 6125Stock turnover8.56.57Debtors turnover111511.4Rate of return on total assets171013
Can we say on the basis of the above ratios and information, that B is a better company than A because its ratios are better in six out of eight areas? Company B is also better than the industry average in the same six categories.
Given below are the selected ratios of Worst Ltd. for the three years ending 31st March.
RatioYear 1Year 2Year 3Current ratio200500150Acid test ratio11032080Debt to equity ratio154055Operating expenses ratio242532Number of times interest earned66(1)Stock turnover (times)543Debtors turnover (times)12106Rate of return on total assets15105
Outline the possible explanations for the drastic changes in some of the ratios from year 1 to year 2 and year 2 to year 3.
Given below are summarized accounts of Alok Ltd. for the years 1 and 2