1 Prof. Mahesh Gala’s Siddhi Classes (S.

Y BAF- Sem -3) 1

Analysis and Interpretation of

Financial Statement

Q.1) Following are the balances as on 31-3-2014 in the books of accounts of Ratnagiri Mango
Products Ltd. You are required to prepare a Vertical Balance Sheet for financial analysis from
the same.
Particular Amount
TDS (Staff Salaries) 25,000
Share Issue Expenses 20,000
Land and Building 5,00,000
10% debentures 3,00,000
Trade Investment 2,00,000
Creditors 8,80,000
Plant & Machinery 3,70,000
Calls in arrears 10,000
Profit & Loss A/c (Cr. Balance) 3,85,000
Patents 50,000
Stock 4,35,000
Debtors 9,25,000
Equity Share Capital 5,00,000
Bank Overdraft 4,20,000

Q.2) The following balance appears in the books of M/s Laxman Ltd. as on 31 st March , 2014.
You are required to prepare a Balance Sheet in the vertical form.
Particulars Rs. Particulars Rs.
Sundry Debtors 2,00,000 Creditors 1,50,000
Trade Investments 2,50,000 Capital Reserve 1,50,000
Bank Overdraft 1,00,000 Short Term Investment 50,000
Public Deposits 3,00,000 Plant & Machinery 12,00,000
Bills Payable 7,90,000 Outstanding Expenses 1,20,000
General Receivable 1,00,000 Cash and Bank 7,00,000
Bills Receivable 2,00,000 Profit and Loss A/c (Credit) 4,00,000
Vehicles 9,00,000 Stock 5,00,000
10% preference Share Capital 8,00,000 Land and Building 12,00,000
Commission on Issue of Shares (not 40,000 Equity Share Capital 16,00,000
yet w/off)
Provision for Tax 1,00,000 Preliminary Expenses 10,000
(not yet w/off)
Bank loan 3,00,000 Debentures 5,00,000
Advance Tax 3,00,000 Proposed Dividend 3,00,000
Prepaid Expenses 1,00,000 Advance to Suppliers 60,000

Q.3) Following information regarding M/s Anvita Ltd. for the year ended 31st March, 2013 is
given.
Particulars Rs. Particulars Rs.
2 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 2

Sales 20,00,000 Return Inwards 50,000

Opening Stock of Raw Materials 1,10,000 Purchases of Raw Material 5,00,000
Staff Salaries 1,50,000 Commission Allowed 5,000
Salesmen salaries 25,000 Proposed Dividend 1,50,000
Bank Charges 10,000 Exhibition Expenses 35,000
Freight Inwards 40,000 Repairs of Computer 5,000
Office Rent and Insurance 45,000 Closing stock of work-in-progress 40,000
Debenture Interest 50,000 Wages 70,000
Loss on sale of machinery 10,000 Purchases of Finished Goods 80,000
Printing and Stationery 5,00,000 Interest received on Investment 40,000
Direct Expenses 50,000 Provision for Income Tax 2,00,000
Profit and Loss A/c (Credit) 2,40,000 Closing Stock of Raw Material 80,000
Depreciation on Patterns 10,000 Sale of Scrap 20,000
Depreciation on machinery 20,000
You are required to rearrange the above information and prepare vertical income statement, suitable
for analysis.

Q.4) Following summary financial statements for the year ended 31st March, 2014 are submitted
to you by the accountant of Star Ltd.
Trading and profit and Loss Account
Dr. for the year ended 31st March, 2014 Cr.
Particulars Rs. Particulars Rs.
To Opening Stock 70,000 By Sales 16,60,000
To Purchases 15,30,000 By Closing Stock 1,60,000
Less: Returns 30,000 15,00,000
To Gross profit 2,50,000
18,20,000 18,20,000
To Depreciation 36,000 By Gross Profit 2,50,000
To Administration Exp. 50,000 By Interest 10,000
To Selling & Distribution Exp. 24,000
To provision for Income-tax 40,000
To Proposed Dividend 16,000
To Profit Balance 94,000
2,60,000 2,60,000
Balance Sheet as at 31 March, 2014
st

Liabilities Rs. Assets Rs.

Share Capital 3,00,000 Goodwill 20,000
Profit and Loss Account 1,80,000 Cash in Hand 8,000
Proposed Dividend 16,000 Stock in Trade 1,60,000
Bank Overdraft 38,000 Sundry Debtors 1,78,500
Sundry Creditors 26,000 Land and Building 92,150
Provision for Depreciation 55,750 Plant and Machinery 1,28,600
Provision for Tax 40,000 Prepaid Expenses 1,500
Expenses on issue of Shares Short 7,000
Term Investments 60,000
3 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 3

6,55,750 6,55,750
Rearrange the above statements in a form suitable for analysis and determine Net worth, Quick Assets,
Quick Liabilities, Operating Profit and Retained earnings.

Q.5) Following is the Trial Balance of M/s Anupama Ltd. as on 31st March, 2013
Particulars Dr. Rs. Cr. Rs.
Sales - 20,00,000
Fixes Assets 10,00,000 -
Bills Receivable and Bills Payable 2,00,000 1,50,000
Cash and Bank Balance 50,000 -
Opening Stock 1,00,000 -
Bank Overdraft - 1,00,000
Purchases 12,50,000 -
Administrative Expenses 30,000 -
Legal Expenses 20,000 -
Salaries 50,000 -
Advertisement 40,000 -
Warehouse Rent 20,000 -
Depreciation on Machinery 50,000 -
Interest on Bank Overdraft 10,000 -
Equity Share Capital - 6,00,000
General Reserve - 1,00,000
Laptop repairs 20,000 -
Direct Expenses 20,000 -
Investment 40,000 -
Debtors and Creditors 1,00,000 50,000
30,00,000 30,00,000
Additional Information:
1. Closing stock on 31st March, 20123 was valued at Rs. 50,000.
2. Cash sales were 1/3 of credit sales.
You are required to prepare vertical income statement for the year ended 31st March, 2013 and vertical
Balance sheet as on that date for financial analysis.

Q.6) The following is the balance appear in the books of M/s Suman Ltd. for the year ended 31st
March, 2014. You are required to prepare Revenue Statement and Balance Sheet in vertical form.
Particulars Rs. Particulars Rs.
Equity Share Capital 2,25,000 Sales 8,55,000
Plant and Machinery 45,000 Debentures 50,000
Purchases 6,55,000 Interim Dividend paid 15,000
Wages 85,000 Depreciation 15,000
Bank Overdraft 20,000 Office salaries 15,000
Office Rent 5,000 Dividend Received 5,000
Advertisement 20,000 Goodwill 25,000
Finance Expenses 8,000 Land and Building 48,000
Income Tax 15,000 Creditors 25,000
4 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 4

Preliminary expenses (Not yet 5,000 Trade Investment 75,000

w/off)
Bills Payable 15,000 Return to suppliers 5,000
Net Profit b/d from P.Y 13,000 Debtors 65,000
Opening Stock 75,000 Cash 42,000
Closing Stock on 31 March, 2014 is Rs. 80,000.
st

Q.7) M/s Sudesh Ltd. carrying on business furnishes their position as on 31st December, 2011,
2012, and 2013 as under:
Liabilities 2011 2012 2013 Assets 2011 2012 2013
Rs. Rs. Rs. Rs. Rs. Rs.
Equity Share 3,00,000 3,00,000 4,00,000 Fixed Assets 3,00,000 3,00,000 4,00,000
Capital
Preference 2,00,000 2,00,000 2,50,000 Investment 1,00,000 1,00,000 1,00,000
Share Capital
General 50,000 1,00,000 1,00,000 Debtors 1,00,000 1,50,000 2,00,000
reserve
Secured 1,00,000 1,00,000 50,000 Stock 50,000 50,000 50,000
Loan
Sundry 40,000 80,000 20,000 Advanced 50,000 50,000 50,000
Creditors Paid
Bills Payable 10,000 20,000 20,000 Cash 50,000 50,000 50,000
Bank 25,000 40,000 45,000
Discount on 25,000 10,000 5,000
issue of
Shares
7,00,000 8,00,000 9,00,000 7,00,000 8,00,000 9,00,000
Prepare vertical Trend Balance Sheet and offer your comments on net worth and working capital.

Q.8) From the following information prepare vertical Revenue Statement and Trend Analysis of Chiplun
products for all the years.
Particulars 31st March, 12 31st March, 13 31st March, 14
Rs. Rs. Rs.
Sales 1,00,000 150 2,00,000
Less: Cost of Sales 60,000 150 1,20,000
Gross Profit 40,000 150 80,000
Less: Management Expenses 10,000 100 10,000
Sales Expenses 20,000 125 30,000
Bad Debts (financial) 5,000 100 5,000
Income Tax 1,000 800 15,000
Bank Balance 5,000 200 20,000
Do not write comments.

Q.9) The following is financial information of ZN Ltd. for 3 years ended on 31st December every
year.
5 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 5

Particulars 2011 2012 2013

Rs. Rs. Rs.
Share Capital 1,50,000 1,80,000 1,90,000
Gross Profit 3,50,000 3,50,000 4,00,000
Current Liabilities 40,000 ? ?
Fixed Assets 2,40,000 2,50,000 2,35,000
Long Term Loan 1,00,000 ? 1,20,000
Costs of Goods Sold ? 4,00,000 3,00,000
Working Capital 60,000 45,000 1,40,000
Net Worth 2,00,000 2,20,000 2,55,000
Current Assets ? 1,20,000 2,00,000
Sales 5,50,000 7,50,000 ?
Capital Employed 3,00,000 ? ?
Reserve and Surplus ? 40,000 65,000
You are required to prepare vertical Trend Financial Statement taking 2011 as the Base.

Q.10) Summary Balance Sheet of Star Ltd. for the year ended 31st December, 2012 and 31st
December, 2013 are as follows:
Liabilities 31st Dec. 31st Dec. Assets 31st Dec. 31st Dec.
12 13 12 13
Equity Share Capital 8,00,000 8,00,000 Building 6,00,000 5,40,000
10% Pref. Share 6,00,000 6,00,000 Land 2,00,000 2,00,000
Capital
General Reserve 4,00,000 4,90,000 Plant 6,00,000 5,40,000
15% debentures 2,00,000 3,00,000 Furniture 2,00,000 2,80,000
Creditors 3,00,000 4,00,000 Stock 4,00,000 6,00,000
Bills Payable 1,00,000 1,50,000 Debtors 4,00,000 6,00,000
Tax payable 2,00,000 3,00,000 Cash 2,00,000 2,80,000
26,00,000 30,40,000 26,00,000 30,40,000
Prepare Comparative Balance Sheet in Vertical form suitable for analysis.

Q.11) Financial position of Santhhan Ltd. as at 31st March:

Liabilities 2013 2014 Assets 2013 2014
Rs. Rs. Rs. Rs.
Equity Share Capital 2,00,000 2,50,000 Building 3,00,000 3,20,000
10% Pref. Share Capital 2,00,000 1,50,000 Machinery 1,50,000 1,80,000
Reserve Fund 80,000 1,00,000 Furniture 40,000 35,000
Profit and Loss A/c 1,00,000 1,50,000 Investment 1,00,000 1,50,000
12% Debenture 2,00,000 3,00,000 Stock 1,50,000 2,00,000
Creditors 1,00,000 1,20,000 Debtors 1,00,000 1,20,000
Bank Overdraft 50,000 20,000 Bank Balance 90,000 85,000
From the above information of Santhan Ltd. as at 31 March, 2013 and 2014. You are required to
st

prepare comparative statement, after rearranging in suitable form for analysis.

6 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 6

Q. 12) Following are the Profit and Loss Accounts of M/s Prajakta Enterprises for the years
ended 31st March 2012 and 2013.
Particulars 2012 2013 Particulars 2012 2013
Rs. Rs. Rs. Rs.
To Cost of Sales 2,00,000 3,00,000 By Sales 3,00,000 4,00,000
To Salaries 20,000 20,000 By Interest 10,000 20,000
To Office Rent 10,000 15,000
To Advertisement Exp. 30,000 12,000
To Travelling Expenses 15,000 30,000
To Income Tax 5,000 10,000
To Net Profit c/d 30,000 33,000
Total 3,10,000 4,20,000 Total 3,10,000 4,20,000
Prepare a comparative Income statement from the above in the vertical form.

Q. 13) Prepare comparative income statement and comparative balance sheet in vertical form.
Dr. Profit & Loss for the year ended 31st March 2013 and 2014. Cr.
Particulars 2013 2014 Particulars 2013 2014
Rs. Rs. Rs. Rs.
To Opening Stock 44,000 40,000 By Sales 1,90,000 2,00,000
To Purchases 84,000 72,000 By Closing Stock 46,000 44,000
To Wages 40,000 36,000 By Interest Received 20,000 -
To Factory Expenses 32,000 28,000
To Establishment Exp. 8,000 6,000
To Management Exp. 2,000 2,000
To Selling Expenses 6,000 10,000
To Interest 6,000 8,000
To Loss on Sale of Assets 2,000 2,000
To Provision for Taxation 22,000 24,000
To Net Profit trf. To Reserve 10,000 16,000

Total 2,56,000 2,44,000 Total 2,56,000 2,44,000

Summary Balance Sheets as at

Liabilities 2013 2014 Assets 2013 2014
Rs. Rs. Rs. Rs.
Equity Capital 50,000 70,000 Fixed Assets 70,000 82,000
Preference Capital 70,000 - Investments 20,000 10,000
Reserves 50,000 68,000 Current Assets
Secured Loans 22,000 24,000 Excluding Bank Bal. 1,00,000 1,50,000
Unsecured Loans 30,000 - Loans & Advances 40,000 30,000
Creditors 20,000 25,000 Preliminary Exp. 12,000 10,000
Outstanding Expenses 6,000 5,000 Bank Balance 10,000 20,000
Provisions 54,000 50,000
Unclaimed Dividend - 2,000
Total 2,52,000 2,44,000 Total 2,52,000 2,44,000
7 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 7

Q. 14) Complete the following Comparative Statement of M/s Sahyadri Products by ascertaining the
missing figures.
Particulars Year ended Year ended Increase/ %Increase/
31-03-13 31-03-14 (Decrease) (Decrease)
Rs. Rs. Rs. Rs.
Operating Net Profit ? ? 1,00,000 100.00
Add: Non Operating Income ? 1,00,000 80,000 400.00
NPBT 1,20,000 ? 1,80,000 ?
Less: Provision for Tax 36,000 90,000 ? 150.00
NPAT ? ? 1,26,000 150.00

Q. 15) Following is the Balance Sheet of M/s Surendra Ltd. As on 31st March,2013.
Balance Sheet as on 31st March 2013.
Liabilities 2014 Assets 2014
Rs. Rs.
Equity Share Capital 2,50,000 Land and Building 2,00,000
10% Preference Share Capital 1,50,000 Machinery 2,50,000
General Reserve 2,00,000 Furniture 2,00,000
Bills Payable 50,000 Investment 90,000
8% Debentures 1,50,000 Stock 35,000
Creditors 1,00,000 Debtors 50,000
Cash 40,000
Bills Payable 30,000
Preliminary Expenses 5,000
Total 9,00,000 Total 9,00,000
Prepare a common-sized Balance Sheet from the above in vertical form.

Q.16) From the following Income Statement of M/s Anant Traders prepare a Common-size
Revenue Statement in a form of suitable for analysis.
Dr. Profit & Loss Account for the year ended 31st March, 2014. Cr.
Particulars Rs. Particulars Rs.
To Administrative Exp. 5,00,000 By Gross Profit c/d 16,00,000
To Selling Expenses 2,00,000 By Other Income 30,000
To Interest 90,000
To Income Tax 2,60,000
To Net Profit c/d 5,80,000
16,30,000 16,30,000
8 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 8

Cash Sales- Rs.12,00,000, Credit Sales- Rs.48,30,000, Sales Returns- Rs.30,000. Treat interest as
operating expenditure.

Q. 17) From the following Income Statement of M/s Shritej Ltd., prepare the common- size
Revenue statement with amount and percentage in vertical form suitable for analysis.
Income Statement for the year ended on 31st March, 2014.
Particulars Rs. Particulars Rs.
To Opening Stock of Finished 2,00,000 By Sales of Finished goods 10,00,000
Goods
To Material Consumed 6,00,000 By Closing Stock of finished 45,000
goods
To Wages 1,25,000 By Goods distributed as free 5,000
sample
To Factory overhead 1,25,000
To Gross Profit -
10,50,000 10,50,000
To Staff Salaries 17,500 By Gross Profit 2,65,000
To Telephone charges 10,000 By Commission 2,65,000
To Directors fees 10,000

To Depreciation on Office 32,500

Furniture
To Advertisement Expenses 12,000
To Free Samples 5,000
To Publicity Expenses 80,000
To Interest on Debentures 5,000

To Interest on Loan 5,000

To Net Profit 88,000
2,65,000 2,65,000
To Proposed Dividend 70,000 By Balance c/d 1,00,000
To Balance Tfd. To Balance 1,18,000 By Net Profit 88,000
Sheet
1,88,000 1,88,000

Q. 18) Coast Ltd. submits following summary statements for the year 2013:
Dr. Profit and Loss Account for the year ended 31st December, 2013. Cr.
Particulars Amt. Particulars Amt.
(Rs. In Thousand) Rs. (In
Thousand)
To Opening Stock 200 By Sales 5,000
To Purchases 4,000 By Closing Stock 200
To Office Expenses 80 By Income from Assets Letout 640
To Selling Expenses 160
9 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 9

To Depreciation on Assets 400

Letout
To Provision for Tax 320
To Net Profit 680
5,840 5,840

Balance Sheet as on 31st December, 2013.

Liabilities Amt. Assets Amt.
(Rs. in Thousand) (Rs. in Thousand)
Share Capital 800 Cash 40
Reserve and Surplus 1,392 Debtors 800
Creditors 640 Stock 200
Bank Overdraft 200 Letout Assets (Cost) 3,200 -
Provision for Tax 320 - Less: Depreciation 1,200 2,000
Less: Tax paid 312 8 - - -
3,040 3,040
Prepare Vertical Common-size Statements.

Q. 19) Complete the following Income Statement of Narayan Enterprises for the year ended 31st
March, 2014 and also prepare common-sized Revenue statement.
Particulars Amount

Net Sales 16,00,000

Less: Cost of Goods Sold ?
Gross Profit (25% of Sales) ?
Less: Operating Expenses ?
Operating Net Profit 2,00,000
Add: Non Operating Income 1,00,000
Less: Non Operating Expenses ?
Net Profit before Tax 2,80,000

Narayan Enterprises
Common-size Revenue Statement for the year ended 31-03-2014.
Particulars Step Amount %
Net Sales 16,00,000 100.00
Less: Cost of Goods Sold (COGS) 1 12,00,000 75.00
Gross Profit (25% of Sales) 2 4,00,000 25.00
Less: Operating Expenses 3 2,00,000 12.50
Operating Net Profit 2,00,000 12.50
Add: Non Operating Income 1,00,000 6.25
Less: Non Operating Expenses 4 20,000 1.25
Net Profit before Tax 2,80,000 17.50
Working Notes/Steps:
Working Amount
10 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 10

1. COGS 75% * 16,00,000 12,00,000

2. Gross Profit 25% * 16,00,000 4,00,000
3. Operating Expenses G.P – N.P= 4,00,000-2,00,000 2,00,000
4. Non- Operating Expenses Operating Net Profit+ Non-operating
Income – NBPT
= 2,00,000+ 1,00,000 - 2,80,000. 20,000
Q. 20) From the following balances relating to Kankavli Products Ltd., Prepare a common-size
Income Statement in Vertical form.
Particulars Amount
Shareholders Fund 7,15,000
10% Debentures 2,00,000
Current Assets 4,15,000
Current Liabilities 2,00,000
Investments (Long Term) 1,30,000
Fixed Assets ?
Do not write the Comments.

************
11 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 11

Ratio Analysis
Q. 1) From the following given below prepare Balance Sheet in a Vertical form, suitable for analysis
and calculate the following ratios:
(a) Capital Gearing Ratio (b) Proprietory Ratio
(c) Current Ratio (d) Liquid Ratio.
(e) Stock to Working Capital
Particulars Amount Particulars Amount
Cash at Bank 12,500 Land & Building 2,00,000
Expenses paid in Advance 15,500 Stock 68,250
Creditors 1,01,500 Debtors 1,30,750
Bills Receivable 5,250 Plant & Machinery 1,36,000
12% Debentures 62,500 Loan from Director (Repayable 1,00,000
after three years)
Equity Share Capital 2,50,000
Profit & Loss A/c (Cr.) 54,250

Q. 2) Following is the Balance Sheet of Bliss and Happiness Ltd., as at 31st March, 2013.
Balance Sheet as on 31st March, 2013.
Liabilities Amount Assets Amount
Equity Share Capital 1,00,000 Machinery 2,96,000
General Reserve 70,000 Investments 1,12,000
10% Preference Capital 1,80,000 Stock in Trade 1,01,000
15% Debentures 1,20,000 Bills Receivable 20,000
Trade Payables 1,22,000 Trade Receivables 49,000
Bank Overdraft 20,000 Cash and Bank 38,000
Provision for Tax 18,000 Profit and Loss A/c 14,000
Total 6,30,000 Total 6,30,000
Sales for the year - Rs. 7,00,000; Gross Profit Rate -25% and Opening Stock- - Rs.1,09,000. Profit
before Tax for the year ending 31-03-2013 is Rs. 2,10,000.
You are required to compute the following ratios and comment on Current Ratio.
(i) Current Ratio (ii) Acid Test Ratio
(iii) Stock Turnover Ratio (iv) Capital Gearing Ratio
(v) Proprietory Ratio (vi) Debt Equity Ratio
(Debt/ Net worth)
(vii) Return on Capital Employed
12 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 12

Redrafting the given Balance Sheet in Vertical Format is not expected.

Q.3) The following figures relate to the trading activities of Z Ltd., for the year ended 31st
March, 2014.
Particulars Amount
Sales 10,57,000
Purchases 4,60,000
Closing Stock 8,35,000
Loss on Sales of Assets 45,000
Advertising 32,750
Rent 18,750
Profit on Sale of Shares 25,000
Provision for Taxation 1,00,000
Salaries 35,750
Salesman’s Salaries 14,250
Depreciation 36,000
Sales Return 57,000
Depreciation on Delivery Van 8,000
Printing & Stationery 17,500
Audit Fees 12,000
Opening Stock 2,25,000
Dividend received on Shares 15,000
You are required to rearrange above Income Statement in vertical form and compute the following
ratios.
(a) Gross Profit Ratio. (b) Operating Ratio. (c) Operating Profit Ratio.
(d) Selling and Distribution Expenses to Sales Ratio. (e) Net Profit Ratio.

Q.4) Profit and Loss A/c and Balance Sheet of Sidharth Ltd., for the year ended 31st March,
2014.
Dr. Cr
Particulars Amount Particulars Amount
To Opening Stock 70,000 By Sales 9,00,000
To Purchases 5,40,000 By Closing Stock 80,000
To Wages 2,14,000
To Gross Profit c/d 1,56,000
9,80,000 9,80,000
To Salaries 26,000 By Gross Profit b/d 1,56,000
To Rent 5,000 By Interest on Investment 5,000
To Miscellaneous Expenses 15,000
To Selling Expenses 10,000
To Depreciation 30,000
To Interest 5,000
13 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 13

To Provision for Tax 20,000

To Net Profit c/d 50,000
Total 1,61,000 Total 1,61,000

Balance Sheet as on 31st March, 2014.

Liabilities Amount Assets Amount
Equity Share Capital 1,50,000 Fixed Assets 1,60,000 1,30,000
(-) Depreciation 30,000
8% Preference Share Capital 1,00,000 Investment 1,00,000
(Rs. 100)
Reserve and Surplus 62,000 Stock 80,000
10% Debenture 50,000 Debtors 60,000
Bank Loan 40,000 Bills Receivable 50,000
Creditors 60,000 Cash 85,000
Provision for Tax (C.Y.) 20,000 Preliminary Expenses 5,000
Bank Overdraft 20,000
Proposed Pref. Dividend 8,000
Total 5,10,000 Total 5,10,000
Note: Market value of Equity share is Rs. 12 and Dividend paid per Equity share is Rs. 2. Calculate
the following ratio:
(a) Acid Test Ratio (b) Capital Gearing Ratio
(c) Operating Ratio (d) Dividend Payout Ratio
(e) Debt Service Ratio (f) Creditors Turnover Ratio
(g) Stock Turnover Ratio

Q. 5) Following is the Profit & Loss A/c and Balance Sheet of Adhiraj Ltd.
Profit & Loss Account for the year ended 31st March, 2014.
Particulars Amount Particulars Amount
To Opening Stock 20,000 By Sales 4,50,000
To Purchases 2,00,000 By Closing Stock 80,000
To Wages 50,000
To Factory Expenses 70,000
To Gross Profit c/d 1,90,000
5,30,000 5,30,000
To Administrative Expenses 60,000 By Gross Profit b/d 1,90,000
To Selling Expenses 40,000 By Interest Received 5,000
To Interest on Loan 5,000
To Debenture Interest 8,000
To Net Profit c/d 82,000
1,95,000 1,95,000
To Tax Provision 20,000 By Net Profit 82,000
To Proposed Dividend 20,000
To Balance Profit 42,000
82,000 82,000
14 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 14

Balance Sheet as on 31st March, 2014.

Liabilities Amount Assets Amount
Equity Share Capital (Rs.10) 2,00,000 Land & Building 1,75,000
9% Preference Share Capital 1,50,000 Machinery 1,50,000
8% Debenture 1,00,000 Furniture 1,00,000
Reserve 50,000 Goodwill 50,000
P & L Account 30,000 Patents 50,000
Short Term Loan 1,00,000 Vehicles 1,40,000
(Repaid within) one year
Bank Overdraft 75,000 Investment 50,000
Sundry Creditors 1,40,000 Stock 80,000
Bills Payable 30,000 Debtors 90,000
Provision for Tax 20,000 Bills Receivable 30,000
Proposed Dividend 20,000
9,15,000 9,15,000
Treat Interest on short-term loans as operating expenses. Calculate the following ratios:
(a) Acid Test Ratio () Capital Gearing Ratio
(c) Stock Turnover Ratio ()Debtors Turnover Ratio
(e) Creditors Turnover Ratio ()Return on Capital Employed Ratio
(g) Stock Working Capital Ratio ()Operating Ratio

Q. 6) Pawan Ltd., has the following Trading & Profit and Loss Account for the year ended 31st March,
2014 and Balance Sheet as at that date.
Trading and Profit and Loss Account
Dr. for the year ended 31st March, 2014. Cr.
Particulars Amount Particulars Amount
To Opening Stock 3,50,000 By Sales
To Purchases – Credit 16,50,000 Cash 6,00,000
To Carriage Inward 5,00,000 Credit 24,00,000 3,00,000
To Gross Profit c/d 8,00,000 By Closing Stock 3,00,000
Total 33,00,000 Total 33,00,000
To Administrative Expenses 1,92,000 By Gross Profit b/d 8,00,000
To Selling Expenses 50,000 By Other Income 18,000
To Interest 94,000
To Income Tax 1,30,000
To Depreciation 1,00,000
To Net Profit c/d 2,52,000
Total 8,18,000 Total 8,18,000

Balance Sheet as on 31st March, 2014.

Liabilities Amount Assets Amount
Equity Share Capital (Rs.10) 7,00,000 Plant & Machinery 2,00,000
10% Preference Share Capital 4,00,000 Less: Depreciation 5,00,000 15,00,000
Debentures 6,00,000 Goodwill 2,80,000
15 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 15

Reserves & Surplus 4,00,000 Stock 3,00,000

Long Term Loan 1,00,000 Debtors 2,00,000
Accrued Expenses 40,000 Prepaid Expenses 50,000
Creditors 1,20,000 Marketable Securities 1,50,000
Bills Payable 40,000 Cash 50,000
Provision for Tax 1,30,000
Total 25,30,000 Total 25,30,000
The Market Price of the Share of the Company on 31st March, 2014 was Rs. 9.25
Rs. Rs.
Reserves at Beginning 2,93,000
Net Profit during the year 5,52,000 5,45,000
Interim Dividend 1,45,000
Reserves at the close of the year 4,00,000
Calculate the following ratios:
(a) Return on Proprietors Fund (b) Acid Test Ratio
(c) Inventory Net Current Asset Ratio (d) Capital Gearing Ratio
(e) Debt Service Ratio (f) Creditors Turnover Ratio
(g) Operating Ratio (h) Stock Turnover Ratio
Note: No need to convert the statements into vertical form.

Q. 7) The following is the Summarized Balance Sheet of M/s. Sambodhi Ltd. as on 31st March, 2014.
Liabilities Amount Assets Amount
Equity Share Capital (Rs.10) 4,00,000 Goodwill 1,25,000
9% Preference Share Capital 2,00,000 Furniture & Fittings 3,00,000
(Rs. 100 each)
Profit & Loss A/c 1,00,000 Land & Building 4,00,000
General Reserves 1,00,000 Stock 1,00,000
10% Mortgage Loan 2,00,000 Debtors 2,00,000
Accounts Payable 1,00,000 Prepaid Expenses 40,000
Advance from Customers 50,000 Preliminary Expenses 15,000
Proposed Dividend 40,000 Cash and Bank Expenses 60,000
Provision for Tax 60,000 Discount on Issue of Debentures 10,000
Total 12,50,000 Total 12,50,000
The following further information is also given for the year:
Total Sales- Rs. 10,00,000
Net Profit Rate- 15%
Out of Total Sales 20% are Cash Sales.
Purchases – Rs. 5,00,000
No. of days in a year – 360.
Calculate the following ratios:
(a) Acid Test Ratio (b) Creditors Turnover Ratio (c) Proprietory Ratio
(d) Capital Gearing Ratio (e) Operating Ratio
Preparing Balance Sheet in Vertical form is not expected.
16 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 16

***********

Cash Flow statement

Q.1) Telestar ltd. gives you the following summary sheets for the year ended 31st mqarch 2013 and
2014. Prepare a cash flow statement for the year ended 31st march 2014 as per AS-3 by indirect
method
Liabilities 31-3-13 31-3-14 Assets 31-3-31 31-3-14
17 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 17

Equity share capital 5% 1,20,000 1,20,000 Land 2,10,000 2,70,000

Preference share capital 90,000 60,000 Building 2,85,000 2,70,000
General Reserve Stock 27,000 36,300
Profit & Loss A/c 30,000 42,330 Debtors 40,440 38,460
Provision for Tax 15,240 28,080 Prepared expenses 25,880 17,000
Creditors 17000 8000 Bank balance 15,480 3,240
3,37,920 3,81,990 Misc. expenditure 6,000 5,400
Total 6,10,160 6,40,400 Total 6,10,160 6,40,400
Other information for the year ended 31st march, 2014:
1) The company has paid interim dividend of 5% on Equity shares.
2) Preference shares were redeemed during the year at 10% premium.
3) Income Tax paid during the year Rs.15000.

Q.2) The summary balance sheet of Dinesh Ltd. are as follows:

Liabilities 2013 2014 Assets 2013 2014
Rs. Rs. Rs. Rs.
Equity Share Capital 3,00,000 5,00,000 Goodwill 1,10,000 90,000
General Reserve - 60,000 Land & Building 1,60,000 1,80,000
Profit & Loss A/c - 58,000 Plant & Machinery 80,000 2,00,000
Debentures 2,00,000 - Stock 84,000 1,06,000
Sundry Creditors 1,14,000 92,000 Debtors 1,80,000 1,56,000
Bills Payable 60,000 12,000 Adv. Income Tax - 40,000
Prov. for Income Tax - 50,000 Bills Receivables 16,000 24,000
Proposed Dividend - 40,000 Prepaid Expenses 12,000 8,000
Cash in Hand 20,000 8,000
Profit & Loss A/c 12,000 -
6,74,000 8,12,000 6,74,000 8,12,000
Additional Information:
1) During the year ended 31-3-2014 Depreciation of Rs. 16,000 and Rs. 20,000 have been charged
on Land & Building and Plant & Machinery respectively.
2) An Interim Dividend of Rs. 15,000 was paid during the year ended on 31-3-2014
3) During the year Machinery having book-value of Rs. 16,000 was sold for Rs. 14,000.
Prepare Cash Flow Statements by Indirect Method for the year ended 31st March, 2014 as per AS-3.

Q.3) Following are summarized Balance Sheet of BDM Ltd. as on 31st march, 2013 and 2014.
Balance Sheet
Liabilities 2013 2014 Assets 2013 2014
Rs. Rs. Rs. Rs.
Equity Share Capital 2,00,000 2,50,000 Bank 35,000 16,000
12% Debentures 1,00,000 80,000 Stock 40,000 75,000
10% Pref. Share 50,000 80,000 Debtors 90,000 1,50,000
Capital
Bank Loan 70,000 1,10,000 Machinery 75,000 60,000
Reserve 20,000 25,000 Furniture 10,000 8,000
Profit & Loss A/c 50,000 60,000 Land 1,70,000 2,80,000
Creditors 60,000 75,000 Buildings 1,40,000 99,000
18 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 18

Bills Payable 40,000 33,000 Goodwill 30,000 25,000

5,90,000 7,13,000 5,90,000 7,13,000
Additional Information:
1) Depreciation charged during 2014 was Rs. 4,000 on Furniture, Rs. 12,000 on Machinery and Rs.
20,000 on Buildings.
2) Part of Machinery was sold for Rs. 15,000 at a loss of Rs. 4,000.
3) During 2014 interim dividend was paid Rs. 10,000 & Income Tax was paid Rs. 5,000.
4) During the year part of the building was sold at book-value.
You are required to prepare Cash Flow Statement as per AS 3.

Q.4) from the following summary Balance Sheet of XYZ Ltd. as on 31-3-2013 and 31-3-2014, prepare cash flow
statement for the year ended 31-3-2014 as per AS-3 by indirect method:
Liabilities 2013 2014 Assets 2013 2014
Rs. Rs. Rs. Rs.
Equity Share Capital 45,00,000 52,50,000 Land 15,00,000 11,50,000
General Reserve 3,00,000 5,00,000 Machinery 13,50,000 28,70,000
Capital Reserve - 3,00,000 Investment 9,00,000 7,00,000
Profit & Loss A/c 3,00,000 4,00,000 Stock 14,00,000 16,00,000
Creditors 6,00,000 9,00,000 Debtors 9,00,000 13,50,000
Provision for Tax 5,00,000 5,50,000 Bills receivables 2,45,000 2,90,000
Proposed Dividend 3,95,000 4,50,000 Cash & Bank Bal. 3,00,000 3,90,000
65,95,000 83,50,000 65,95,000 83,50,000
Additional Information for the year ended 31 March, 2014.
st

1) During the year Machinery was sold for Rs. 2,00,000 (E.D.V. Rs. 2,25,000)
2) During the year Depreciation provided on Machinery was Rs. 3,00,000.
3) Profit on sale of land was transferred to Capital Reserve.
4) Interim Dividend paid during the year Rs. 2,00,000.
5) Profit on sale of Investment was transferred to General Reserve.
6) Income Tax paid during the year 2014 is Rs. 4,50,000.
Q. 5) From the following summary Balance Sheets of Z Ltd. prepare a Cash Flow Statement as per
AS-3 for the year ended 31st March, 2014 by indirect method.
Liabilities 2013 2014 Assets 2013 2014
Rs. Rs. Rs. Rs.
Equity Share Capital 2,00,000 2,50,000 Fixed Assets 3,02,500 2,85,000
10% Pref. Share 1,00,000 - Debtors 60,000 70,000
Capital
5% Debentures - 50,000 Stock 1,00,000 90,000
(issued on 1-7-2006)
Capital Redemption - 50,000 Bank 45,000 30,000
Reserve
Profit & Loss A/c 1,25,000 30,000 Preliminary Exp. 30,000 20,000
Creditors 75,000 70,000
Bills Payable 37,500 45,000
5,37,500 4,95,000 5,37,500 4,95,000
Additional Information:
19 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 19

1) Preference Shares were redeemed at 10% premium on 1-10-2013 with half yearly dividend.
2) Fixed assets were purchased for Rs. 97,500 on 1-1-2014.
3) Dividend of Rs. 20,000 on equity shares was paid.
4) Fixes Assets having original cost of Rs. 1,00,000 on which accumulated Depreciation was Rs.
30,000 was sold on 31-3-2013 at Rs. 40,000.

Q.5) Following are Summary Balance Sheets of Z Ltd. as on 31st March, 2013 and 31st March, 2014.

Liabilities 31/3/13 31/3/14 Assets 31/3/13 31/3/14

Rs. Rs. Rs. Rs.
Share Capital 10,00,000 10,00,000 Land & Building 10,00,000 9,50,000
General Reserve 3,00,000 3,00,000 Plant & Machinery 8,00,000 7,00,000
Profit & Loss A/c 1,52,000 1,00,000 Sundry Debtors 3,08,000 5,14,000
Bank Loan 3,00,000 3,50,000 Equipments 80,000 70,000
Provision for Tax 1,00,000 1,00,000 Stock 1,40,000 2,00,000
Proposed Dividend 50,000 40,000 Cash 20,000 6,000
Sundry Creditors 4,60,000 5,50,000 Goodwill 14,000 -
23,62,000 24,40,000 23,62,000 24,40,000
Additional information:
1. Dividend of Rs. 50,000 was paid during the year ended 31st March, 2014
2. Depreciation was provided on Land and Building, Plant & Machinery & Equipments for the year
ended 31st march, 2014.
3. Machinery of Rs. 50,000 and equipment of Rs. 20,000 were acquired during the year ended 31st
March, 2014.
4. Income Tax provision was made for the year ended 31st March 2014 of Rs. 1,30,000.
Prepare Cash Flow Statement by Indirect Method as per AS-3 for the year ended 31st march 2014.

Q.6) Following are the Summary Balance Sheets of Abhishek products Ltd.
Liabilities 31/3/13 31/3/14 Assets 31/3/13 31/3/14
Rs. Rs. Rs. Rs.
Equity Share Capital 10,00,000 12,00,000 Fixed Assets 11,00,000 13,00,000
10% Pref. Share 5,00,000 3,00,000 Investments 2,60,000 2,60,000
Capital
Capital Redemption - 2,00,000 Stock 7,40,000 8,99,000
Reserve
Profit and Loss A/c 57,000 1,00,000 Sundry Debtors 10,50,000 9,90,000
Sundry Creditors 13,73,000 12,50,000 Bills Receivable 1,50,000 2,10,000
Proposed Equity 1,50,000 1,80,000 Bank Balance 1,00,000 80,000
Dividend
Provision for Taxation 1,70,000 2,10,000 Cash in Hand 30,000 20,000
Provision for 2,00,000 3,35,000 Preliminary Exp. 20,000 16,000
Depreciation
34,50,000 37,75,000 34,50,000 37,75,000
Additional information:
20 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 20

1. Preference shares were redeemed on 1-4-201. Company pays preference dividend on 31st March
every year.
2. Fixed Assets of Rs. 2,00,000/- were purchased on 31-3-2014 against which equity shares of Rs.
2,00,000/- were issued at par.
3. Dividend received on investment was Rs. 26,000/-.
4. Proposed Equity Dividend for 2012-13 Rs. 1,50,000/- was paid during 2013-14.
5. Provision for Taxation for 2012-13 Rs. 1,70,000 was paid during 2013-14.
Prepare Cash Flow Statement for the year ended 31st March, 2014 by indirect method as per AS-3
from the above information.

Q.7) Following are the Summary Balance Sheets of Wada Enterprises Ltd.:
Liabilities As on As on Assets As on As on
31/3/13 31/3/14 31/3/13 31/3/14
Rs. Rs. Rs. Rs.
Equity Share Capital 6,00,000 8,00,000 Fixed Assets 7,40,000 8,30,000
10% Pref. Share Capital 4,00,000 5,00,000 Investments 2,00,000 1,50,000
Securities Premium - 20,000 Stock 5,80,000 5,60,000
Profit and Loss A/c 2,50,000 4,50,000 Sundry Debtors 7,60,000 6,60,000
Sundry Creditors 7,50,000 2,30,000 Adv. Income Tax 1,20,000 50,000
Provision for Dep. 3,20,000 4,50,000 Bank Balance 1,25,000 3,75,000
Proposed Equity Dividend 1,80,000 2,40,000 Cash Balance 75,000 1,25,000
Provision for Taxation 1,00,000 60,000
26,00,000 27,50,000 26,00,000 27,50,000
Additional Information:
1. On 1-4-2013, 10% Preference Shares of Rs. 1,00,000 were issued for cash.
2. Equity shares of Rs. 2,00,000 were issued at a premium of 10% on 1-1-2014.
3. During the year 2013-14, a Fixed asset having original cost of Rs. 1,10,000 was sold at a profit of
Rs. 10,000. Depreciation for the year was Rs. 2,30,000.
4. Investment costing Rs. 50,000 was sold for Rs. 90,000 during the year 2013-14.
5. Proposed Equity Dividend for 2012-13 was paid on 7-4-2013. Company pays Preference dividend
on 31st March every year.
6. Income tax for 2012-13 was assessed at Rs. 1,00,000 on 31-12-2013 and refund of Income-tax of
Rs. 20,000was received on 15-1-2014.
Prepare cash Flow Statement for the year ended 31st March, 2014 by Indirect Method as per AS-3
from the above information.

Q.8) Following are the summarized Balance sheet of M/s Sanghi Bros. Ltd.
Balance Sheet
Liabilities 31/3/13 31/3/14 Assets 31/3/13 31/3/14
Rs. Rs. Rs. Rs.
Equity Share Capital 1,00,000 1,00,000 Cash on Hand 22,000 8,000
General Reserve 30,000 30,000 Cash at Bank 23,000 37,000
Profit and Loss A/c 45,000 33,000 Sundry Debtors 33,000 22,000
12% Debentures 45,000 35,000 Marketable 55,000 38,000
(F.V. Rs. 100 each) Investments
 21 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 21

Current Liabilities s 55,000 54,000 Stock in Trade 41,000 52,000

Land & Building 75,000 60,000
Plant & Machinery 26,000 35,000
2,75,0000 2,52,000 2,75,0000 2,52,000
Additional Information:
1. Interim Dividend @ 10% was paid during the year 2013-14.
2. New machinery for Rs. 15,000 was purchased and an old machine costing Rs. 6,000
(accumulated depreciation Rs. 3,000) was sold at book value.
3. Debentures were redeemed by purchasing from open market @ Rs. 90 per debenture and profit
credited to profit and Loss A/c.
You are required to prepare Cash Flow Statement for the year ended 31st March, 2014 in accordance
with the AS-3 using indirect method.

Q.9) M/s Tarun Pvt. Ltd. a newly formed company, commenced its business on 1st April, 2013.
Following are its opening transactions.
1. Issued 5,100 Equity Shares of Rs. 10 each.
2. Issued 2,200, 10% Debentures of Rs. 100 each.
3. Purchased Land and Building Rs. 1,15,000 and Plant and Machinery Rs. 65,000.
The projected Income Statement for the year ended 31st March, 2014 was as follows:
Particulars Rs.
Net sales 5,55,000
Less: Cost of Goods Sold:
Opening Stock Nil
Purchases 4,44,000
Wages 22,000
4,66,000
Closing Stock 88,000 3,78,000
Establishment Expenses 22,000
Selling and Distribution Expenses 33,000
Debenture Interest 22,000
Depreciation 18,000
Net Profit 82,000
It is expected that on 31 March, 2014:
st

1. Sundry debtors Rs. 77,000/-

2. Interest on debentures is outstanding Establishment Expenses Rs. 2,000
3. Sundry creditors Rs. 25,000/-
4. Outstanding Wages Rs. 3,000/-
5. Outstanding Establishment Expenses Rs. 2,000
Prepare projected Cash Flow Statement for the year ended 31st March, 2014 as per AS-3 using Indirect
Method.

Q.10) The Balance Sheet of M/s Virat Ltd. as on 31st March, 2013 and 31st March, 2014 were as follows:
Liabilities 31/3/13 31/3/14 Assets 31/3/13 31/3/14
Rs. Rs. Rs. Rs.
Equity Share Capital 3,00,000 3,00,000 Land & Building 1,50,000 1,46,250
 22 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 22

General Reserve 1,00,000 1,00,000 Plant & Machinery 3,00,000 3,22,750

Profit & Loss A/c - 63,000 Furniture & Fixture 60,000 40,000
12% Debentures 1,90,000 1,00,000 Stock 86,000 80,000
Creditors 60,000 1,40,000 Book Debts 95,000 1,63,000
Outstanding Expenses 20,000 20,000 Cash 15,000 5,000
Provision for Tax 1,10,000 1,00,000 Bank 10,000 6,000
Proposed Equity Dividend 30,000 33,000 Advance Tax 84,000 90,000
Unclaimed Dividend - 2,000 Preliminary Exp. 10,000 5,000
8,10,000 8,58,000 8,10,000 8,58,000

Additional Information:
New Machinery costing Rs. 80,000 was bought on 31st March, 2014 and an old Machinery costing Rs.
18,000 (accumulated depreciation Rs. 12,000) was sold on 1st April, 2013 for Rs. 11,000.
Prepare Cash Flow Statement as per AS-3. (Use Indirect Method).

Q.11) Balance Sheets of Power Play Ltd. are given below:

Balance Sheet as at
Liabilities 31/3/13 31/3/14 Assets 31/3/13 31/3/14
Rs. Rs. Rs. Rs.
Equity Share Capital 6.50 8.00 Land & Building 2.80 2.30
9% Pref. Share Capital 4.00 3.00 Plant & Machinery 9.30 12.60
General Reserve 0.64 0.89 Investments 2.25 2.85
Profit & Loss A/c 1.19 1.64 Inventory 4.19 4.01
Trade Payable 4.14 3.95 Trade Receivable 1.48 2.29
Bank Overdraft 2.18 3.10 Advance Income Tax 1.10 1.35
Pr10% Debentures 1.00 2.60 Cash Balance 0.18 0.10
Outstanding Expenses 0.25 0.32 Disc. On issue of Deb. 0.40 0.30
Proposed Dividend 0.65 0.80
Provision for Tax 1.15 1.50
21.70 25.80 21.70 25.80
You are required to prepare Cash Flow Statement as per AS-3 by Indirect Method after considering
the following:
1. 9% Preference Share Capital was partially redeemed on 1-4-2013 and preference dividend is paid
in March every year.
2. Additional 10% debentures were issued on 1-4-2013.
3. Depreciation provided during the year on land and Building was Rs. 50,000 and on Plant and
Machinery was Rs. 80,000.
4. Investments of Rs. 50,000 were sold at a profit Rs. 10,000.
5. Income Tax assessment was completed for the year ended 31-3-2013 on 1-1-2014 at Rs. 1,15,000.
All the amounts in this cash flow statement should be depicted as Rs. In Lakhs.

Q.12) Following are the Balance Sheets of Yash Ltd.

Liabilities 31/3/13 31/3/14 Assets 31/3/13 31/3/14
Rs. Rs. Rs. Rs.
 23 Prof. Mahesh Gala’s Siddhi Classes (S.Y BAF- Sem -3) 23

Equity Share Capital Land & Building

15% Pref. Share Capital Plant & Machinery