Ratio Analysis
Content
RATIO ANALYSIS A. LIQUIDITY RATIOS - Short Term Solvency Formula Ratio 1. urrent Ratio urrent A!!et! urrent Lia"ilitie! Numerator Inventorie! # De"tor! # a!h $ %an& # Receiva"le! ' Accrual! # Short term! Loan! # (ar&eta"le Inve!tment! Denominator Sun)ry re)itor! *+or ,oo)!# Out!tan)in, ./0en!e! *+or !ervice!# Short Term Loan! $A)vance! * r.# %an& Over)ra+t ' a!h re)it # 1rovi!ion +or ta/ation # Proposed or Unclaimed Dividend Significance/Indicator A"ility to re0ay !hort-term commitment! 0rom0tly. *Short-term Solvency- I)eal Ratio i! 231.4i,h Ratio in)icate! e/i!tence o+ i)le current a!!et!.
2. Quic& Ratio or Aci) te!t ratio 5. A"!olute a!h Ratio 6
Quic& A!!et! Quic& Lia"ilitie!
urrent Lia"ilitie! urrent A!!et! Less : Inventorie! Less : %an& Over)ra+t Less : 1re0ai) ./0en!e! Less : a!h re)it a!h in 4an) # %alance at %an& *Dr.# (ar&eta"le Securitie! $ !hort term inve!tment!
A"ility to meet imme)iate lia"ilitie!. I)eal Ratio i! 1.5531
* a!"#(ar&eta"le Securitie!urrent Lia"ilitie!
Sun)ry re)itor! *+or ,oo)!- Availa"ility o+ ca!h to meet !hort# Out!tan)in, ./0en!e! *+or term commitment!. !ervice!# Short Term Loan! $A)vance! * r.# Bank Over)ra+t ' a!h re)it # 1rovi!ion +or ta/ation # 1ro0o!e) or Unclaime) Divi)en) Aaattal a!h./0en!e! 36 a!h ./0en!e! 8 Total ./0en!e! le!! De0reciation an) 9rite o++!. A"ility to meet reg!lar cash expenses"
7. Interval (ea!ure
Quic& A!!et! urrent A!!et! Cash Expenses 1er Day Le!! 3 Inventorie! Less : 1re0ai) ./0en!e!
N
P" C#PI$#% S$&UC$U&E &#$I'S ( In)icator o+ Financin, $echni)!es $ lon,-term !olvency 1. .:uity to Total Fun)! Ratio Sharehol)er;! Fun)! Total Fun)! .:uity Share a0ital #1re+erence Share a0ital # Re!erve! $ Sur0lu! Le!! 3 Accumulate) Lo!!e! Lon, Term %orro9e) Fun)!6 i.e. De"enture!6 Lon, Term Loan! +rom in!titution! Total Lon, Term +un)! em0loye) in "u!ine!! 8 De"t#.:uity. In)icate! Lon, Term Solvency< mo)e o+ +inancin,< e/tent o+ o9n +un)! u!e) in o0eration!. In)icate! the relation!hi0 "et9een )e"t $ e:uity< I)eal ratio i! 231.
2. De"t .:uity Ratio
De"t .:uity
.:uity Share a0ital #1re+erence Share a0ital # Re!erve! $ Sur0lu! Le!! 3 Accumulate) lo!!e!6i+ any
B" C#PI$#% S$&UC$U&E &#$I'S ( Indicator of *inancing $echni)!es + long(term solvenc, - Contd... 5. a0ital =earin, Ratio Fi/e) har,e %earin, a0ital .:uity Sharehol)er;! Fun)! 1re+erence Share a0ital # De"enture! # Lon, Term Loan! .:uity Share a0ital # Re!erve! $ Sur0lu! Le!!3 Accumulate) Lo!!e! Sho9! 0ro0ortion o+ +i/e) char,e *)ivi)en) or intere!t- "earin, ca0ital to e:uity +un)!< the e/tent o+ a)vanta,e or levera,e en>oye) "y e:uity !harehol)er!.
7. Fi/e) A!!et to Lon, Term Fun) Ratio
Fi/e) A!!et! Lon, Term Fun)!
Net Fi/e) A!!et! i.e. =ro!! %loc& Less: De0reciation
Lon, Term Fun)! 8 Sharehol)er;! +un)! *a! in %1- # De"t +un)! *a! in %2-
@. 1ro0rietary Ratio *See Note "elo9-
1ro0rietary Fun)! Total A!!et!
.:uity Share a0ital # 1re+erence Share a0ital #Re!erve! $Sur0lu! Le!!3 Accumulate) lo!!e!
Sho9! 0ro0ortion o+ +i/e) a!!et! *lon,-terma!!et!+inance)"ylon,term +un)!. In)icate! the +inancin, a00roach +ollo9e) "y the ? +irm i.e. con!ervative6 matchin, or a,,re!!ive< I)eal Ratio i! le!! than one. Sho9! e/tent o+ o9ner;! Net Fi/e) A!!et! +un)! # Total urrent A!!et! *Only tan,i"le a!!et! 9ill "e utili!e) in +inancin, a!!et!. inclu)e).-
Note 3 1ro0rietary Fun)! +or %-@ can "e com0ute) throu,h t9o 9ay! +rom the %alance Sheet3 • Lia"ility Route 3 A.:uity Share a0ital # 1re+erence Share a0ital # Re!erve! $ Sur0lu!B Le!!3 Accumulate) lo!!e! • A!!et! Route 3 ANet Fi/e) A!!et! # Net Cor&in, a0italB Le!!3 Lon, Term Lia"ilitie!.
B" C'.E&#/E &#$I'S ( #0ilit, to Serve *ixed %ia0ilities De"t Service Ratio .arnin,! +or De"t Service Net 1ro+it a+ter ta/ation Intere!t on De"t *Intere!t#In!talment- A))3 Ta/ation overa,e A))3In!talmento+De"t A)) 3 Intere!t on De"t *0rinci0al re0ai)Fun)! A)) 3 Non-ca!h o0eratin, e/0en!e!*e.,. )e0reciation an) amortiDation!A)) 3 Non-o0eratin, a)>u!tment! *e.,.lo!! on !ale o+ +i/e) a!!et!2. Intere!t overa,e .arnin,! "e+ore Intere!t $ .arnin,! "e+ore Intere!t Intere!t on De"t Fun) an) Ratio Ta/ Ta/e! 8Sale! Le!! Intere!t Earia"le an) Fi/e) o!t! *e/clu)in, intere!t- *or- .AT # Ta/ation # Intere!t 5. 1re+erence .arnin,! a+ter Ta/ Divi)en) on 1re+erence .arnin,! a+ter Ta/ 8 Divi)en) 1re+erence Divi)en) Share .AT overa,e a0ital Ratio D" $U&1'.E& / #C$I.I$2 / PE&*'&3#1CE &#$I'S
In)icate! e/tent o+ current earnin,! availa"le +or meetin, commitment! an) out+lo9 to9ar)! intere!t an) in!talment< I)eal ratio mu!t "e "et9een 2 to 5 time!.
In)icate! a"ility to meet intere!t o"li,ation! o+ the current year. Shoul) ,enerally "e ,reater than I.
In)icate! a"ility to 0ay )ivi)en) on 0re+erence !hare ca0ital.
i. a0ital Turnover RatioD
Sale! a0ital .m0loye)
Sale! net o+ return!
See Note 1 below:
2. Fi/e) A!!et Turnover Ratio
Turnover Fi/e) A!!et!
Sale! net of return!
Net Fi/e) A!!et!
A"ility to ,enerate !ale! 0er ru0ee o+ lon,-term inve!tment. The hi,her the turnover ratio6 the "etter it i!. A"ility to ,enerate !ale! 0er ru0eey of Fi/e) A!!et
5. Cor&in, a0ital Turnover Turnover Ratio Net Cor&in, a0ital Q. Fini!he) =oo)! or Stoc& Turnover Ratio o!t o+ =oo)! Sol) Avera,e Stoc&
Sale! net o+ return! For (anu+acturer!3 O0enin, Stoc& # o!t o+ 1ro)uction Le!!3 lo!in, Stoc& For Tra)er!3 O0enin, Stoc& # 1urcha!e! Le!!3 lo!in, Stoc&
urrent A!!et! Le!! urrent A"ility to ,enerate !ale! 0er Lia"ilitie! ru0ee o+ Cor&in, a0ital. *O0enin, Stoc& # lo!in, In)icate! how +a!t inventory Stoc&i! 2 u!e) ' !ol). A hi,h turnover ratio or ,enerally (a/imum Stoc& # (inimum in)icate! +a!t movin, material 9hile Stoc& lo9 ratio may mean )ea) or 2 e/ce!!ive !toc&. O0enin, CI1 # lo!in, CI1 2 O0enin, Stoc& # lo!in, Stoc& 2 In)icate! the CI1 movement ' 0ro)uction cycle. In)icate! how +a!t ra9 material! are u!e) in 0ro)uction.
@. CI1 Turnover Ratio F. Ra9 (aterial Turnover Ratio
Factory o!t Avera,e Stoc& o+ CI1 o!t o+ (aterial on!ume) Avera,e Stoc&o+R(
(aterial! # Ca,e! # 1ro)uction Overhea)! O0enin, Stoc& o+ R( #1urcha!e! Le!!3 lo!in, Stoc&
re)it Sale! re)it Sale! net o+ return!Account! Receiva"le8 In)icate! !0ee) o+ collection Avera,e Account! De"tor! #%'R o+ Receiva"le Avera,e Account! Receiva"le cre)it !ale!. 8 O0enin, "al. # lo!in, "al. 2 H. re)ito6!Turnover re)it 1urcha!e! re)it 1urcha!e! net o+ Account!;1aya"le8 re)itor!# In)icate! velocity o+ )e"t Ratio Avera,e Account! return!6 i+ any %'1 0ayment. 1aya"le Avera,e Account! 1aya"le 8 O0enin, "al. # lo!in, "al. 2 1ote 4 5 Assets Route : Net Fi/e) A!!et! -t Net 9or&in, a0ital Liability Rowe : .:uity Share a0ital # 1re+erence Share a0ital # Re!erve! $ Sur0lu! # De"enture! an) Lon, Term Loan! Le!! Accumulate) Lo!!e! Le!! Non-Tra)e Inve!tment! 1ote 6 5 Turnover ratio! can al!o "e com0ute) in term! o+ )ay! a! 5F@ ' TO Ratio6 e.,. No. o+ )ay! avera,e !toc& i! hel) 8 5F@ ' Stoc& Turnover Ratio. E" P&'*I$#BI%I$2 &#$I'S B#SED '1 S#%ES I. =ro!! 1ro+it Ratio =ro!! 1ro+it a! 0er Sale! net o+ return! In)icator o+ %a!ic =ro!! 1ro+it Tra)in, 1ro+ita"ility. Sale! Account 2. O0eratin,;0ro+it ratio O0eratin, 1ro+it Sale! Sale! Le!! co!t o+ !ale! *orNet 1ro+it A))3 Non-o0eratin, e/0en!e! Le!! 3 Non-o0eratin, income! Net 1ro+it Sale! net o+ return! In)icator o+ O0eratin, 1er+ormance o+ "u!ine!!.
G. De"tor! Turnover Ratio
5. Net 1ro+it Ratio 7. ontri"ution Sale! Ratio
Net 1ro+it Sale! ontri"ution Sale!
Sale! net o+ return! Sale! net o+ return!
In)icator o+ overall 0ro+ita"ility. In)icator o+ 0ro+ita"ility in (ar,inal o!tin, *al!o calle) 1E Ratio-
Sale! Le!! Earia"le o!t!
*" P&'*I$#BI%I$2 &#$I'S ( '71E&8S .IE7 P'I1$ 1. Return on Total .arnin,! 1ro+it! a+ter ta/e! Inve!tment Total a0ital .m0loye) A))3 Ta/ation *ROI- or Return on A))3 Intere!t a0ital .m0loye) A)) 3 Non-tra)in, *RO .e/0en!e! Le!! 3 Non-o0eratin, income! li&e rent!6 intere!t an) )ivi)en)!
A!!et! Route3 Net Fi/e) A!!et! *inclu)in, intan,i"le a!!et! li&e 0atent!6 "ut not +ictitiou! a!!et! li&e mi!cellaneou! e/0en)iture not 9'o+#Net 9or&in, a0ital Lia"ility Route 3 .:uity Share a0ital # 1re+erence Share a0ital # Re!erve! R Sur0lu! #De"enture! an) Lon, Term Loan! Le!!3 Accumulate) Lo!!e! Le!!3 Non-Tra)e Inve!tment! Net Fi/e) A!!et! # Net Cor&in, a0ital Le!!3 ./ternal Lia"ilitie! *lon, term.:uity Share a0ital Face Ealue 0er !hare .:uity Share a0ital Face Ealue 0er !hare
Overall 0ro+ita"ility of the 0!siness +or the ca0ital emplo,ed9 in)icate! the return on the total ca0ital em0loye). om0ari!on o+ RO . 9ith rate o+ intere!t o+ )e"t lea)! to +inancial levera,e. I+ RO . I Intere!t Rate6 u!e o+ )e"t +un)! i! >u!ti+ie).
2. Return on .:uity RO.
.arnin,! a+ter Ta/e! Net Corth
1ro+it A+ter Ta/e!
1ro+ita"ility o+ .:uity Fun)! inve!te) in the "u!ine!!.
5. .arnin,! 1er Share .1S
1ro+it A+ter Ta/e! Le!t A1AT - 1re+erence 1re+erence Divi)en) Divi)en)B Num"er o+ .:uity Share!
Return or income 0er !hare6 9hether or not )i!tri"ute) a! )ivi)en)!. Amount o+ 1ro+it! )i!tri"ute) 0er !hare
7. Divi)en) 1er Share Divi)en)! 1ro+it! )i!tri"ute) to D1S Num"er o+ .:uity Share! .:uity Sharehol)er! @. Return on A!!et! *ROANet 1ro+it a+ter ta/e! Avera,e Total A!!et! Net 1ro+it a+ter ta/e!
Avera,e Total A!!et! or Net Income 0er ru0ee o+ Tan,i"le avera,e A!!et! or Fi/e) A!!et!6 i.e. IA +i/e) a!!et!. o+ O0enin, an) lo!in, %alance
Il!stration 4 5 &atio Comp!tation from *inancial Statements
From the +ollo9in, annual !tatement! o+ Su)har!han Lt)6 calculate the +ollo9in, ratio! 3 *a- =1 Ratio 3 "- O0eratin, 1ro+it Ratio < *c- Net 1ro+it Ratio < *)- urrent Ratio < *e- Li:ui) Ratio *+- De"t .:uity Ratio < ,- Return on Inve!tment Ratio < *h- De"tor! Turnover Ratio < *iFi/e) A!!et! Turnover Ratio. $rading and Profit and %oss #cco!nt for the ,ear ended 34st 3arch #mt" Partic!lars #mt" Partic!lars [email protected] %y Sale! To (aterial! on!ume)3 O0enin, Stoc& - [email protected] %y 1ro+it on Sale o+ Inve!tment! FJJ 1urcha!e! - @[email protected]@ %y Intere!t on Inve!tment! 5JJ [email protected]@ lo!in, Stoc& - *[email protected]@ 1672@ To arria,e In9ar)! To O++ice ./0en!e! [email protected] To Sale! ./0en!e! 56JJJ To Financial ./0en!e! [email protected] To Lo!! on Sale o+ A!!et! 7JJ To Net 1ro+it [email protected] [email protected] Total [email protected] Total Balance Sheet as at 34st 3arch %ia0ilities Share a0ital3 2JJJ e:uity !hare! o+ R!.1J each +ully 0ai) u0 Re!erve! 1ro+it $ Lo!! Account Secure) Loan! %an& Over)ra+t Sun)ry re)itor!3 For ./0en!e! For Other! Total #mt" 2J6JJJ 56JJJ F6JJJ F6JJJ 56JJJ 26JJJ H6JJJ 7H6JJJ #ssets Fi/e) A!!et! 3 %uil)in,! 1lant urrent A!!et!3 Stoc& in Tra)e De"tor! %ill! Receiva"le %an& %alance! Total #mt" [email protected] H6JJJ 176JJJ G6JJJ 16JJJ 56JJJ 7H6JJJ
illustration 2 : Computing AC P alculate the Avera,e ollection 1erio) +rom the +ollo9in, )etail! "y a)o0tin, a 5FJ-)ay year. *a- Avera,e Inventory - R!.5FJJJJ *"- De"tor! - R!.27JJJJ *c- Inventory Turnover Ratio - F *)- =1 Ratio - 1JL *e- re)it Sale! to Total Sale! - 2JL Illustration 3 : PE Ratio Computation alculate 1'. Ratio +rom the +ollo9in, in+ormation 3 .:uity Share a0ital *o+ R!.2J each- [email protected] la&h! Fi/e) A!!et! - R!.5J la&h! Re!erve! an) Sur0lu! - R!.@ la&h! Inve!tment! - R!.@ la"! Secure) Loan! at [email protected] - R!.2@ la&h! O0eratin, 1ro+it *!u">ect to Ta/ o+ @JL- R!.2@ la&h! Un!ecure) Loan! at [email protected] - R!.1J la&h! (ar&et 1rice 0er !hare - [email protected]
Illustration 4 : Statement o Proprietar! "un#s From the following information relating to a Limited Company, prepare a Statement of Proprietors' Funds. *or+ing Capital - Rs.0",,,, Reser1es and Surplus Current Ratio - 2 Rs.",,,,, 2an+ 31erdraft - Rs.!,,,,, Li uid Ratio - !." Fi#ed $ssets % Proprietary Funds - &!' (here are no long-term loans or fi)titious assets. Illustration 5 : Statement of Proprietar! Funds *or+ing capital of a company is Rs. !,&",,,, and current ratio is 2.5. Li uid ratio is !." and the proprietary ratio 0.75. Bank Overdraft is Rs.30,000 there are no long term loans and fictitious assets. Reserves and surplus amount to Rs. -,,,,, and the gearing ratio !"uity Capital%Preferen)e Capital. is 2. From the a#ove, as)ertain /
1G. 1 H
OST A
OUNTIN= AND FINAN IAL (ANA=.(.NT
$i% &urrent assets $ii% &urrent lia4ilities $iii% 'et 4lo)+ $iv% Proprietary fund $lso draw the statement of property Fund Illustration $ : %alan&e S'eet Preparation
$v% (uick lia4ilities $vi% (uick assets $vii% )tock and $viii% *reference and e"uity
2ased on the following information, prepare the 2alan)e Sheet of Star 5nterprises as at &!st 6e)em4er Current Ratio - 2." Cost of 7oods Sold to Net Fi#ed $ssets - 2 Li uidity Ratio - !." $1erage 6e4t Colle)tion Period - 2.' months Net *or+ing Capital - Rs.8 la+hs Sto)+ (urno1er Ratio 9 " Fi#ed $ssets to Net *orth - ,.:, 7ross Profit to Sales - 2,; Long (erm 6e4t to Capital and Reser1es - 0%2" Illustration (: %alan&e S'eet Preparation From the following information relating to *ise Ltd., prepare its summari<ed 2alan)e Sheet. Current Ratio 9 2." $)id (est Ratio 9 !." 7ross Profile to Sales Ratio 9 ,.2 Net *or+ing )apital to Net *orth Ratio 9 ,.& Sales % Net Fi#ed $ssets Ratio 9 2., Sales % Net *orth Ratio 9 !." Sales % 6e4tors Ratio 9 8., Reser1es % Capital Ratio 9 !., Net *orth % Long (erm Loan Ratio 9 2,., Sto)+ =elo)ity 9 2 months Paid up share Capital 9 Rs. !, la+hs
Illustration ) : %alan&e S'eet Preparation From the following information of *iser Ltd, prepare its proforma 2alan)e Sheet if its sales are Rs.l8 la+hs. Sales to Net *orth - 2.& Current Ratio - 2.- times> fitness Current Lia4ilities to Net *orth - '2; Sales to Closing ?n1entory - '." times> (otal Lia4ilities to Net *orth - 0"; $1erage Colle)tion Period - 8' days @>- Ratio figures are re)ast in a more understanda4le wayA
Illustration *: %alan&e S'eet Preparation From the following information and ratios, prepare the profit and Loss $))ount and 2alan)e Sheet of B%s. Si1apra+asam C )o., an e#port Company @(a+e ! year D &8, days. Current $ssets to Sto)+ - &/2 Current Ratio - &.,, $)id (est Ratio D !.,, Finan)ial Le1erage - 2.2, 5arnings Per Share Eea)h of Rs.!,A - Rs.!,.,, 2oo+ =alue per share - Rs.',.,, $1erage Colle)tion Period - &, days Sto)+ (urno1er Ratio - ".,, Fi#ed $sset (urno1er Ratio - !.2, (otal Lia4ilities to Net *orth - 2.0" Net *or+ing Capital - Rs.!, la+hs Net Profit to Sales - !,; =aria4le Cost - 8,; Long (erm Loan ?nterest - !2; (a#ation 9 N?L
Illustration +, : "inan&ial Statements Preparation From the following information of Su+anya C Co. Ltd, prepare its finan)ial statements for the year Fust ended. Current Ratio - 2." *or+ing Capital - Rs.!,2,,,,, Gui)+ Ratio - !.& 2an+ 31erdraft - Rs.!",,,, Proprietary Ratio @Fi#ed $ssets%Proprietary Fund. - ,.8 Share Capital - Rs.2,",,,,, 7ross Profit - !,; of Sales Closing Sto)+ - !,; more than 3pening Sto)+ 6e4tors =elo)ity - ', days Net Profit - !,; of Proprietary Funds Sales - Rs.0,&,,,,, Illustration ++ : "inan&ial Statements Preparation 2elow is gi1en the 2alan)e Sheet of Sunrise Ltd., as on &!st Bar)h, 2,H!/ Lia4ilities Rs. $ssets Fi#ed $ssets Share Capital/ !'; Preferen)e Shares !,,,,,,, $t Cost 5 uity Shares 2,,,,,,, +ess , 6epre)iation !,8,,,,, 7eneral Reser1es ',,,,, Sto)+ in trade Rs.
&,',,,, 8,,,,,
!2; 6e4entures Current Lia4ilities (otal
8,,,,, !,,,,,,, ",,,,,,,
Sundry 6e4tors Cash (otal,
:,,,,, 2,,,,, ",,,,,, ,
(he following information is a1aila4le / !. Fi#ed assets )osting Rs.!,,,,,,, to 4e installed on !st $pril, 2,H! and would 4e)ome operati1e on that date, payment is re uired to 4e made on &!st Bar)h, 2,H2. 2. (he Fi#ed $ssets-(urno1er Ratio would 4e !." Eon the 4asis of )ost of Fi#ed $ssetsA. &. (he Sto)+-(urno1er Ratio would 4e !'.' Eon the 4asis of the a1erage of the opening and )losing sto)+A. '. (he 4rea+-up of )ost and profit would 4e as follows / Baterials - ',;I La4our - 2";I Banufa)turing 5#penses - !,;I 3ffi)e and Selling 5#penses - !,;/ 6epre)iation - ";I Profit - !,; and Sales - !,,; (he profit is su4Fe)t to interest and ta#ation J ",;. ". 6e4tors would 4e !%-th of sales. 8. Creditors would 4e !%"th of materials )ost. 0. $ di1idend J !,; would 4e paid on e uity shares in Bar)h 2,H2. :. Rs. ",,,,,, !2; de4entures ha1e 4een issued on $pril !, 2,H!. Prepare the fore)ast 2alan)e Sheet as on 51!t (arch 2JM2. Illustration +2 : -se o Ratios an# Ratios as In#i&ators. E$A ?ndi)ate the a))ounting ratios that will 4e used 4y ea)h of the following/ aA $ Long (erm Creditor interested in determining whether his )laim is ade uately se)ured. 4A $ 2an+ whi)h has 4een approa)hed 4y the Company for Short (erm Loan % 31erdraft )A $ Shareholder who is e#amining his portfolio and who is to de)ide whether he should hold or sell hi/ shares in a Company. E2A *hi)h a))ounting ratio will 4e useful in indi)ating the following sym ptoms K Bay !--& EFA EiA Low )apa)ity utilisation EiiA Falling demand for the produ)t in the mar+et EiiiA ?na4ility to pay interest Ei1A 2orrowing for short term and in1esting in long-term assets E1A Large in1entory a))umulation in anti)ipation of pri)e rise in future E1iA ?neffi)ient )olle)tion of de4tors E1iiA ?na4ility to pay dues to finan)ial institutions E1iiiA Return of shareholder's funds 4eing mu)h higher than the o1erall return of in1estment Ei#A Li uidity )risis E#A ?n)rease in a1erage )redit period to maintain sales in 1iew of falling demand
Illustration +3 : Compre'ensi/e ROI Anal!sis - 0upont C'art (he Finan)ial Statements of 5#)el $BP 7raphi)s Limited are as under / 2alan)e Sheet as at 6e)em4er &!, 2,,!
1articular! Source! o+ Fun)! Sharehol)er! Fun)! .:uity a0ital Re!erve! an) Sur0lu! Loan Fun)! Secure) Loan! Finance Lea!e o"li,ation! Un!ecure) Loan! Total #pplication o+ *!nds 5 Fi/e) A!!et! =ro!! %loc& Less : De0reciation Net %loc& a0ital Cor& in 0ro,re!! Inve!tment! urrent A!!et!6 Loan! $ A)vance! Inventorie! Sun)ry De"tor! a!h an) %an& %alance! Loan! an) A)vance! Less : urrent Lia"ilitie! 1rovi!ion! Net urrent A!!et! Net De+erre) Ta/ Lia"ility
6::4 ;&s" in Crores< 16121 [email protected] G7 1G1
2JJJ *R!. in rore!K5I G6KKK [email protected] 11@
1J6JG 1
H6K5J
27@ 1J651F
5G7 K65J7
F6FFG 56 1 @ J [email protected] 2G 26GJK K67FH 562JF 26 J 7 5 1G6 72F 1J61JK @15 1J6F22 *52J-
[email protected] 2HH
@6G7G 26 @ F 561HF 2H [email protected] K672H FF2 16G12 176572 G6KJ2 @G2 H6 7 G 7 -
56217 222
F6HJ7 *52J-
@6HFH -
Total
1J651F
K65J7
Profit and %oss #cco!nt for the year en)e) Decem"er 516 2JJ1 Decem"er 516 2JJJ 1G6H7K Income 3 Sale! an) Service! 25675F 5JF Other Income 52J [email protected] Expenses 3 o!t o+ (aterial! [email protected] 1J6KKF 1er!onnel ./0en!e! [email protected] 262K5 Other ./0en!e! [email protected] 26H1@ 5H5 - *F- 85GG De0reciation Le!! 3 Th. +rom Revaln. Re!. 71K - *G- 712 8 1F7 216H77 HH Intere!t Profit Before $ax 16K12 1rovi!ion +or Ta/ 3 urrent Ta/ [email protected] 5G1 De+erre) Ta/ *F777 Profit #fter $ax 167FH
1H61@ @
[email protected] K [email protected] 5G1 1621@
i. Compute and analyse the Return on Capital 5mployed ER3C5A in a 6u-pont Control Chart Framewor+. ii. Compute and analyse the a1erage in1entory holding period and a1erage )olle)tion period. iii. Compute and analyse the Return on 5 uity ER35A 4y 4rining our)learly the impa)t of finan)ial le1erage
S'%U$I'15 I *a- =ro!! 1ro+it Ratio *"- O0eratin, 1ro+it Ratio 8 1G.JFL O Net 1ro+it Ratio *)- urrent Ratio urrent A!!et! urrent Lia"ilitie! *e- Li:ui) Ratio Quic& A!!et! Quic& Lia"ilitie! *t- De"t .:uity Ratio De"t .:uity *,- Return on Inve!tment Return S!dharshan %imited 8 =ro!! 1ro+it ' Sale! 8 7JL 8 O0eratin, 1ro+it ' Sale!8 [email protected]#7JJ N FJJ N 5JJB ' [email protected] 8 Net 1ro+it ' Sale! 8 [email protected] JJJ ' [email protected] [email protected] 8 urrent A!!et! ' urrent Lia"ilitie! 8 [email protected] ' 156JJJ 8 1.K2 8 Stoc& De"tor! %ill! receiva"le # %an& 8 176JJJ#G6JJJ#16JJJ#56JJJ [email protected] 8 Sun)ay re)itor! +or e/0en!e! $ Other! # %an& over)ra+t 8 26JJJ#H6JJJ#56JJJ 8156JJJ 8 Quic& A!!et! ' Quic& Lia"ilitie! 8 116JJJ' 1J6JJJ 8 1.1 time! 8 urrent a!!et! N Stoc&8 [email protected] N 176JJJ8 116JJJ 8 urrent Lia"ilitie! N %an& over)ra+t 8 156JJJ N 56JJJ8 1J6JJJ 8 F6JJJ ' 2K6JJJ8J.21 time! 8 Secure) loan! 8 F6JJJ 8 .:uity !hare ca0ital # Re!erve! # 1 $ L account 2J6JJJ # 56JJJ # F6JJJ8 2K6JJJ 8 Return ' a0ital .m0loye)8 [email protected] ' [email protected] 8 71.75L 8 Net 0ro+it # Lo!! on !ale o+ a!!et! ;&s"<
a0ital em0loye) *h- De"tor! Turnover *i- Fi/e) A!!et! Turnover 85.FK time!
1ro+it on !ale o+ inve!tment! - Intere!t on inve!tment! 8 [email protected] # 7JJ - FJJ - 5JJ8 [email protected] 8 De"t # .:uity 8 F6JJJ # 2K6JJJ [email protected] 8 Sale! ' Avera,e Receiva"le! 8 [email protected] ' AG6JJJ # 16JJJB 8 Turnover ' Fi/e) A!!et! 8 [email protected] ' [email protected] # H6JJJB
81J.F2@ time!
II" S'%U$I'1 5 *a- Inventory Turnover 8 o!t o+ ,oo)! !ol) ' Avera,e inventory8 F time! Avera,e inventory *,ivenThere+ore o!t o+ ,oo)! !ol) 8 56FJ6JJJ M F *"- =ro!! 0ro+it ratio There+ore co!t o+ ,oo)! !ol) 4ence !ale! 8 216FJ6JJJ ' KJL *c- re)it !ale! 8 2JL o+ 276JJ6JJJ *)- De"tor! Turnover 8 re)it !ale! ' Avera,e )e"tor! 8 Avera,e ollection 0erio) 8 5FJ ' De"tor! turnover
*R!.8 56FJ6JJJ 8 216FJ6JJJ 8 1JL 8 KJL 8 276JJ6JJJ 8 76HJ6JJJ 76HJ6JJJ ' 267J6JJJ
8 2 time! 8 1HJ )ay!
III" Sol!tion Parti)ulars 3perating profit Less : ?nterest on loans Pro it 1e ore ta2 +ess (a# P ",; , 2" la+hs # !" ; !, la+hs # !2."; ERs. in 2".,, &.0" !.2" 2,.,, !,.,,
Pro it a ter ta2 Num4er of e uity shares 5arnings per share Pri)e 5arnings Ratio
D E", la+hs % Rs.2,A D P$( % Num4er of shares D Bar+et pri)e % 5PS E",%'A
+,.,, 2",,,, Rs.'.,, !2.";
I3. SOL-TION EaA Current ratio E4A *or+ing, )apital
D Current assets % Current lia4ilities Current assets D 2 Current lia4ilities D 2 (imes Current assets - Current lia4ilities D2 Current lia4ilities - Current [email protected]
(herefore )urrent lia4ilities [email protected] Current assets D2>0", ,,,D!,",,,, E)A Gui)+ ratio D Gui)+ $ssets % Gui)+ lia4ilities D !." (imes Current $ssets 9 Sto)+ % Current Lia4ilities 9 31erdraft D !." (imes D!,",,,,,-Sto)+ % 0",,, 9 !,,,,D!." (herefore sto)+ !,",,,,, - E!." # 8",,,,A Sin)e there are no loans or fi)titious assets, Capital employed D Proprietary fund D Fi#ed $ssets L*or+ing Capital Proprietary FundD Fi#ed $ssets L0",,, Proprietary Fund D &%'th of Proprietary Funds L 0",,, !%'th Proprietary Fund D 0",,, (herefore Proprietary Fund D 0",,, > ' D &,,,,,,, Reser1es and Surplus D ",,,, (herefore Share Capital D &,,,,,,, 9 ",,,,, D 2,",,,,, Fi#ed $ssets D &,,,,,,, H M D 2,2",,,, Statement of Proprietary Fund Sour)es Share Capital Reser1res and Surplus $ppli)ation Fi#ed $ssets Current $ssets 2,",,,,, ",,,,, &,,,,,,, Sto)+ 2,2",,,, "2,",,
Less/ )urrent Lia4ilities 3thers S'%U$I'1 5 . (a Worki ! a0ital ) #urre t ratio
3thers 2an+ 31erdraft 8",,,,
-0,",, !,,,,, E0",,,A
!,",,,,, &,,,,,,,
" #urre t assets $ #urre t lia"ilitie! " #urre t assets % #urre t lia"ilitie! " urrent assets " 2.5 urrent lia"ilitie! " 2.5 urrent lia"ilitie! - urrent lia"ilitie! There+ore #urre t liabilities " [email protected] ' 1.@ #urre t assets " KJ6JJJ * 2.5 (h &ui'k ratio urrent assets $ Sto'k % urrent lia"ilitie! - %an& ) OD (here)ore Sto'k [email protected] - Sto'k % KJ6JJJ - 5J6JJJ 2,25,000 $(1.5 * +0,000) 1ro0rietary ratio Si 'e there are o loan! an) )i'titious assets, a0ital em,loye" 1ro0rietary )u -s 8 Fi/e) assets 1 Worki ! 0..5 (/i0e- assets 1 'urre t assets) #a,ital 0..5 *Fi/e) assets 1 225000) " /i0e- assets 1 Cor&in, 0..5 Fi/e) assets 1 1+2.50 a0ital " [email protected] - [email protected] 0.25 /i0e- assets There+ore )i0e- assets " 33,.50 * 0.25 There+ore total assets Fi/e) Assets 1 urrent assets [email protected] 1 [email protected] 1ro0rietary )u 0..5 * 56FJ6JJJ 1ro0rietary )u #a,ital 1 Reser4es a0ital 1 KJ6JJJ 26GJ6JJJ - KJ6JJJ (here)ore a0ital Ratio o) .:uity3 5re)ere 'e .:uity a0ital " 2 % 3 * 16HJ6JJJ 1re+erence a0ital " 1 % 3 * 16HJ6JJJ Statement o proprietar! "un#s
*R!.8 [email protected] 8 2.5 times 8 [email protected] 8 KJ6JJJ 2,25,000 1.@ times 1.5 [email protected]
8 33,.50 " [email protected] 3,+0,000 26GJ6JJJ 26GJ6JJJ 16HJ6JJJ 2:1 162J6JJJ FJ6JJJ
Sour'es
.:uity a0ital 5re)ere 'e a0ital Reser4es 6 Net Fi/e) Assets urrent Assets $ Sto'k - 7thers Less : urrent Lia"ilitie! - %an& over)ra+t Q - Other! [email protected] 80,000 5J6JJJ FJ6JJJ
162J6JJJ +0,000 KJ6JJJ [email protected] 2,25,000 *KJ6JJJ-
A00lication
26GJ.JJJ
26GJ6JJJ
S'%U$I'15 .I %ia0ilities Share a0ital $ Re!erve! *hLon, term )e"t urrent Lia"ilitie! $otal *i*"#mt" [email protected] [email protected] 7.JJ 6:":: #ssets Fi/e) A!!et! *+urrent A!!et! Stoc& *cDe"tor! *,%an& *1J.JJ - K.JJ- *"'+$otal #mt" 1J.JJ 7.JJ @.JJ 1.JJ
1J.JJ 6:"::
4or5ings a. Current ratio / Current $ssets % Current Lia4ilities (herefore Current $ssets D 2." Current Lia4ilities D 2." (imes 4. Net *or+ing )apital D )urrent $ssets 9 Current Lia4ilities D 2." (imes Current Lia4ilities 9 Current Lia4ilities urrent Lia"ilitie! 8 F.JJ ' 1.@ 8 7.JJ
c. ). e. +. ,. h. i.
There+ore urrent A!!et! 8 7.JJ M 2.@ 8 1J.JJ Quic& Ratio 8 urrent A!!et! - Stoc& ' urrent Lia"ilitie! 81J.JJ-*[email protected]+ore Stoc&8 7.JJ Stoc& turnover ratio 8 o!t o+ ,oo)! !ol) ' avera,e !toc& 8 @ Time! o!t o+ ,oo)! !ol) 8 7.JJ M @ 8 2J.JJ =ro!! 0ro+it 8 2JL o+ !ale! 8 o!t o+ ,oo)! !ol) 8 HJL o+ !ale! 8 2J.JJ There+ore Sale! 8 2J.JJ ' HJL 8 [email protected] o!t o+ ,oo)! !ol) ' net +i/e) a!!et! 8 2 Time! Net Fi/e) A!!et!8 2J.JJ ' 2 8 1J.JJ Avera,e ollection 1erio) 8 2.7 month! There+ore De"tor! 8 [email protected] M 2.7 '12 8 @.JJ Fi/e) A!!et! ' Net 9orth 8 J.HJ Time! There+ore Net 9orth 8 1J.JJ ' J.HJ 8 [email protected] Lon, term De"t ' ca0ital $ re!erve! 8 G ' 2@ There+ore Lon, term De"t 8 [email protected] M G ' 2@ 8 [email protected]
Solution 3II 7ise %imited Balance Sheet ;#mo!nts in &s" lakhs< Lia"ilitie! Share a0ital *,ivenRe!erve! *aLon, term loan! *current Lia"ilitie! *>Total Amt. 1J.JJ 1J.JJ 1.JJ 7.JJ [email protected] A!!et! Fi/e) A!!et! *1urrent A!!et! Stoc& *hDe"tor! *e%an& *1J.JJ - K.JJ- *"'+Total Ann. [email protected] 7.JJ @.JJ 1.JJ
1J.JJ [email protected]
*R!. in la&h!7orkings *a- Re!erve! ' a0ital a0ital 8 1J la&h! There+ore Re!erve! 8 *"- Net 9orth 8 a0ital # Re!erve! 8 1 Time 1J.JJ 8 2J.JJ
*c- Net 9orth ' Lon, term loan There+ore Lon, term Loan Sale! ' Net 9orth There+ore Sale! Sale! ' De"tor! There+ore De"tor! =ro!! 1ro+it Ratio o!t o+ ,oo)! Sol) Stoc& Eelocity There+ore Avera,e Stoc& Net 9or&in, ca0ital ' Net 9orth Net 9or&in, ca0ital Net 9or&in, ca0ital urrent Ratio Net 9or&in, ca0ital urrent Lia"ilitie! 4ence urrent A!!et! Aci) Te!t Ratio
8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8
2J Time! 2J.JJ'2J 8 1.JJ 1.@ time! 1.@ M 2J.JJ 8 5J.JJ 8 F time! 5J.JJ ' F 8 @.JJ 2JL o+ Sale! 8 2JL M 5J.JJ 8 F.JJ 5J.JJ N F.JJ *Sale! N =18 27.JJ o!t o+ =oo)! Sol) ' Avera,e Stoc& 8F Time! 27.JJ'F.JJ 8 7.JJ 8 J.5 Time! 2J.JJ M J.5 8 F.JJ urrent A!!et! N urrent Lia"ilitie! 8 F.JJ urrent A!!et! ' urrent Lia"ilitie! 8 2.@ time! urrent A!!et! 8 2.@ urrent Lia"ilitie! 2.@ urrent Lia"ilitie! - urrent Lia"ilitie! 8 F.JJ F.JJ ' 1.@ 7.JJ M 2.@ 8 1J.JJ urrent A!!et! N Stoc&! -------------------------------------------- 8 1.@ Time! urrent Lia"ilitie! N %an& Over)ra+t *1J.JJ N 7.JJ- ' *7.JJ N %an& Over)ra+t- 8 1.@ *1.@ M 7.JJ- N F.JJ 8 Nil 8 2 Time! 5J.JJ ' 2 8 [email protected]
There+ore %an& over)ra+t Sale! ' Net +i/e) a!!et! There+ore Net +i/e) a!!et! S'%U$I'1" .III
8 8
7iser %imited Balance Sheet Lia"ilitie! Net 9orth *a-
Amt [email protected]@2 Fi/e) A!!et!
A!!et! *"al.+i,-
Amt 56GJ6JHF
Term lia"ilitie! urrent lia"ilitie!
*)*"-
[email protected]@ 26K261G7
urrent A!!et! Stoc& De"tor! %an& Total
*+*,*h-
56@@6@@F [email protected] 261162J1 1261G65K1 *[email protected]@2 26K261G7 @6216G5K [email protected]@ 2.K time! H67G65J@ 8 8 8 56@@6@@F F7 )ay! [email protected]
$otal Cor&in,! 3
1261G65K 1
*a- Sale! ' Net 9orth 8 2.5 time! Sale! 8 1F6JJ6JJJ There+ore Net 9orth 1F6JJ6JJJ ' 2.5 *"- urrent Lia"ilitie! 8 72 L o+ Net 9orth 8 72L M [email protected]@2 *c- Total Lia"ilitie! 8 [email protected] o+ Net 9orth 8 [email protected] M [email protected]@2 *)- There+ore Term Lia"ilitie!-De"t 8 *c- - *"*e- urrent Ratio urrent A!!et! ' urrent Lia"ilitie! urrent A!!et! 2.K M 26K261G7 *+- Sale! ' Inventory 8 7.@ time! Sale! 8 1F6JJ6JJJ There+ore Inventory 1F6JJ6JJJ ' 7.@ *,- Avera,e ollection 0erio) There+ore De"tor! 8 1F6JJ6JJJ M F7 ' 5F@ *ha!h and Bank 8 C!rrent #ssets ( Stock ( De0tors 8 H67G65J@ - 56@@6@@F - [email protected]
8 261162J1
S'%U$I'1" I= Sivaprakasam and Co" Balance Sheet Amt. A!!et! @.JJ Fi/e) A!!et! [email protected] urrent A!!et! @J.JJ Stoc& @.JJ De"tor! Other! *[email protected] - 17.1G-
Lia"ilitie! Share a0ital Re!erve! $ Sur0lu! 12 L Term loan urrent Lia"ilitie! *I*m*i*"-
*+*c*,-
Amt. 71.FG 1J.JJ 7.1G J.H5
$otal 7orkings *a- urrent Ratio 4ence Net Cor&in, a0ital urrent Lia"ilitite! There+ore urrent A!!et! *"- urrent A!!et! ' Stoc& There+ore Stoc& *c- Aci) te!t Ratio
> "::
Other A!!et! $otal
*"al.+i,-
1H.55 > "::
8 urrent A!!et! ' urrent Lia"ilitie! 8 5 Time! 8 urrent Lia"ilitie!8 5 urrent Lia"ilitie! 8 urrent A!!et! N urrent Lia"ilitie! 8 1J.JJ 8 5 urrent Lia"ilitie! N urretn Lia"ilitite! 8 1J.JJ 81J.JJ ' 2 8 @.JJ 8@ M 5 8 [email protected] 8 5'2 8 [email protected] M 2'5 8 1J.JJ 8 8 urrent A!!et! N Stoc& ' urrent Lia"ilitie! 8 1 Time 8 8 8 8 8 8 Nil
There+ore %an& over)ra+t *)- Stoc& Turnover Ratio There+ore Sale! Fi/e) A!!et! Turnover Ratio There+ore Fi/e) A!!et! Avera,e ollection 1erio) There+ore De"tor!
urrent A!!et! N Stoc& ' urrent Lia"ilitie! 8 I Time @ M 1J.JJ 8 @J.JJ Turnover ' Fi/e) A!!et! 8 @J.JJ ' 1.2 8 8 1.2 time! 71.FG
5J )ay! Sale! M 5J ' 5FJ 8 @J.JJ M 5J ' 5FJ 8 7.1G Profit and %oss #cco!nt
Sales +ess =aria4le Costs J 8, Contri4ution +ess , Fi/e) o!t! .%IT *"al. +i,*h-
@J.JJ 5J.JJ 2J.JJ K.JJ 1 l .JJ
Less:
Intere!t .%T *1JL o+ !ate!Less : Ta/ .AT *h- Financial Levera,e .%IT Lon, term loan *r- Total Lia"ilitie! uTotal Lia"ilitie! ' Net 9orth There+ore Net 9orth *&- Num"er o+ .:uity Share! *I- Share a0ital *m- There+ore Retaine) earnin,! S'%U$I'1" =
1JL M @J.JJ
F.JJ @.JJ Nil @.JJ 2.2 11.JJ @J.JJ 8 @@.JJ 8 2.G@ time! 8 2J.JJ @JJJJ !hare! 8 @.JJ 8 [email protected]
.%IT ' .%T 2.2 / @.JJ Intere!t ' Intere!t Rate8 F.JJ ' 12L 8 Term lia"ilitie! # urrent Lia"ilitie! 8 @J.JJ # @.JJ 8 @@.JJ ' 2.G@ 8 Net 9orth ' %oo& value 0er !hare 8 @JJJJ !hare! / R!.lJ 8 2J.JJ - @.JJ
8 2J.JJ ' 7J
S!kan,a + Co" Profit and %oss #cco!nt 1articular! To O0enin, Stoc& *)To 1urcha!e! *"al.+i,To =ro!! 1ro+it *1J LTo ./0en!e! *%al. +i,.To Net 0ro+it Total *h#mt" [email protected] [email protected] G5.JJJ [email protected]@JJ 756JJJ 5J6JJJ G56JJJ 1articular! %y Sale! %y lo!in, Stoc& %y =ro!! 1ro+it "') Total Amt. G65J6JJJ [email protected]@JJ [email protected]@JQ G56JJJ >3?:::
*,iven*c-
Balance Sheet Lia"ilitie! Share a0ital *,ivenRe!erve! $ Sur0lu! *56JJ6JJJ N #mt [email protected] @J6JJJ A!!et! Fi/e) A!!et! *,Amt 16HJ6JJJ
*Total 1ro0rietary Fun)! 8 56JJ6JJJurrent lia"ilitie! %an& over)ra+t *,[email protected] Other! *HJ6JJJ - [email protected]@6JJJ Total 3?@:?:::
urrent A!!et! Stoc& *cDe"tor! *e%an& *26JJ6JJJ - [email protected]@JJTotal
[email protected]@JJ HJ6JJJ [email protected] 3?@:?:::
Cor&in,! 3 *a- Cor&in, a0ital *"- urrent Ratio There+ore 4ence urrent Lia"ilitie! urrent A!!et! *c- Quic& Ratio
There+ore lo!in, Stoc& *)- lo!in, Stoc& There+ore O0enin, !toc& *e- De"tor! Eelocity There+ore lo!in, De"tor! 8 G65J6JJJ M 7J ' 5FJ *1Fi/e) A!!et! ' 1ro0rietary Fun) There+ore 8 Cor&in, a0ital ' 1ro0rietary Fun) There+ore 1ro0rietary Fun) 8 Cor&in, a0ital ' J.7 8 162J6JJJ ' J.7 *,- Fi/e) A!!et! 8 1ro0rietary Fun) M J.F 8 56JJ6JJJ M J.F *h- Net 1ro+it SOL-TION 6I
urrent A!!et! - urrent Lia"ilitie! urrent A!!et! ' urrent Lia"ilitie! urrent A!!et! 8 2.@ urrent Lia"ilitie! 2.@ urrent Lia"ilitie! - urrent Lia"ilitie! 162J6JJJ ' 1.@ HJ6JJJ M 2.@ Quic& A!!et! ' Quic& Lia"ilitie! urrent A!!et! - lo!in, Stoc& urrent Lia"ilitie! - %an& over)ra+t 26JJ6JJJ - lo!in, Stoc& HJ6JJJ - [email protected] 26JJ6JJJ - *1.5 M [email protected], Stoc& # 1J L [email protected]@JJ' 11JL
8 8
*R!.162J6JJ J 2.@ time! 162J6JJ J HJ6JJJ 26JJ6JJ J 1.5 time! 1.5 [email protected]@J J [email protected]@J J [email protected] J 7J )ay! HJ6JJJ J.FJ J.7J 56JJ6JJ J 16HJ6JJ J 5J6JJJ
1JL o+ 1ro0rietary Fun)! 8 56JJ6JJJ M 1JL
S!nrise %imited Profit + %oss #ppropriation #cco!nt Le!! 3 Le!! 3 Le!!3 1%IT *1JL o+ K6JJ6JJJDe"enture Intere!t 1%T Ta/ 1rovi!ion P @JL 1AT 1re+erence $ .:uity Divi)en) Tran!+erre) to %alance Sheet *iKJ6JJJ 1562JJ GF6HJJ 5H67JJ 5H67JJ 576JJJ 767JJ
>-
Balance Sheet Lia"ilitie! Share a0ital .:uity a0ital 17L 1re+erence a0ital Re!erve! $ Sur0lu! 1 $ L appropriation account =eneral Re!erve Secure) loan! - 12L De"enture! urrent Lia"ilitie! re)itor! *hTa/ 0rovi!ion $otal Cor&in,! 3 *a- o!t o+ +i/e) a!!et! 8 Fi/e) A!!et! Turnover Sale! 8 Percentage #nal,sis of sales 1articular! (aterial! 1ercenta,e Amount in La&h! 7JL 5.F 8 O0enin, %alance # 1urcha!e! @6JJ6JJJ #16JJ6JJJ 8 F6JJ6JJJ 8 Sale! ' =ro!! Fi/e) A!!et! 8 1.@ M F6JJ6JJJ 8 La"our [email protected] 2.2@ (anu+acturin, Overhea)! 1JL J.KJ O++ice Overhea)! 1JL J.KJ Amt. 26JJ6JJJ 16JJ6JJJ 767JJ 7J6JJJ 161J6JJJ G26JJJ 5H67JJ ?6A?@:: A!!et! Fi/e) A!!et! - =ro!! F6JJ6JJJ Le!!3 De0reciation [email protected] urrent A!!et! Stoc& *+De"tor! *,a!h $ %an& *"al. +i,Amt. [email protected] [email protected] 16JJ6JJJ [email protected]
$otal
?6A?@::
1.@ Time! K6JJ6JJJ De0reciation @L J.7@ 1%IT 1JL J.KJ
*)- Net "loc& o+ Fi/e) A!!et! *eo!t o+ =oo)! Sol)
*+- Stoc& Turnover Avera,e Stoc&
=ro!! %loc& - De0reciation F6JJ6JJJ - *16FJ6JJJ # [email protected](aterial # La"our # (anu+acturin, Overhea)! 56FJ6JJJ # 262@6JJJ # KJ6JJJ o!t o+ ,oo)! !ol) Avera,e Stoc& [email protected]'17.7
8 8 8 8
[email protected] [email protected] 17.7 time! 7F6HG@
Avera,e Stoc& O0enin, Stoc& lo!in, Stoc& *,*h*i*>-
AO0enin, Stoc& # lo!in, Stoc&B ' 2 FJ6JJJ *2 M 7F6HG@ - - FJ6JJJ
8 8
7F6HG@ [email protected] 16JJ6JJJ G2.JJJ 15.2JJ 576JJJ
De"tor! 8 1'Kth o+ !ale! 8 1'K M K6JJ6JJJ re)itor! 8 1'@th o+ (aterial co!t 8 1'@ M 56FJ6JJJ 8 *12L M FJ6JJJ- # *12L M @J6JJJDe"enture Intere!t 8 8 Divi)en) 0ai) -1re+ $ .:uity 8 *17L M 16JJ6JJJ- # *1JL M 26JJ6JJJ-
2. Quic& Ratio or Aci) te!t ratio 5. A"!olute a!h Ratio 6
Quic& A!!et! Quic& Lia"ilitie!
urrent Lia"ilitie! urrent A!!et! Less : Inventorie! Less : %an& Over)ra+t Less : 1re0ai) ./0en!e! Less : a!h re)it a!h in 4an) # %alance at %an& *Dr.# (ar&eta"le Securitie! $ !hort term inve!tment!
A"ility to meet imme)iate lia"ilitie!. I)eal Ratio i! 1.5531
* a!"#(ar&eta"le Securitie!urrent Lia"ilitie!
Sun)ry re)itor! *+or ,oo)!- Availa"ility o+ ca!h to meet !hort# Out!tan)in, ./0en!e! *+or term commitment!. !ervice!# Short Term Loan! $A)vance! * r.# Bank Over)ra+t ' a!h re)it # 1rovi!ion +or ta/ation # 1ro0o!e) or Unclaime) Divi)en) Aaattal a!h./0en!e! 36 a!h ./0en!e! 8 Total ./0en!e! le!! De0reciation an) 9rite o++!. A"ility to meet reg!lar cash expenses"
7. Interval (ea!ure
Quic& A!!et! urrent A!!et! Cash Expenses 1er Day Le!! 3 Inventorie! Less : 1re0ai) ./0en!e!
N
P" C#PI$#% S$&UC$U&E &#$I'S ( In)icator o+ Financin, $echni)!es $ lon,-term !olvency 1. .:uity to Total Fun)! Ratio Sharehol)er;! Fun)! Total Fun)! .:uity Share a0ital #1re+erence Share a0ital # Re!erve! $ Sur0lu! Le!! 3 Accumulate) Lo!!e! Lon, Term %orro9e) Fun)!6 i.e. De"enture!6 Lon, Term Loan! +rom in!titution! Total Lon, Term +un)! em0loye) in "u!ine!! 8 De"t#.:uity. In)icate! Lon, Term Solvency< mo)e o+ +inancin,< e/tent o+ o9n +un)! u!e) in o0eration!. In)icate! the relation!hi0 "et9een )e"t $ e:uity< I)eal ratio i! 231.
2. De"t .:uity Ratio
De"t .:uity
.:uity Share a0ital #1re+erence Share a0ital # Re!erve! $ Sur0lu! Le!! 3 Accumulate) lo!!e!6i+ any
B" C#PI$#% S$&UC$U&E &#$I'S ( Indicator of *inancing $echni)!es + long(term solvenc, - Contd... 5. a0ital =earin, Ratio Fi/e) har,e %earin, a0ital .:uity Sharehol)er;! Fun)! 1re+erence Share a0ital # De"enture! # Lon, Term Loan! .:uity Share a0ital # Re!erve! $ Sur0lu! Le!!3 Accumulate) Lo!!e! Sho9! 0ro0ortion o+ +i/e) char,e *)ivi)en) or intere!t- "earin, ca0ital to e:uity +un)!< the e/tent o+ a)vanta,e or levera,e en>oye) "y e:uity !harehol)er!.
7. Fi/e) A!!et to Lon, Term Fun) Ratio
Fi/e) A!!et! Lon, Term Fun)!
Net Fi/e) A!!et! i.e. =ro!! %loc& Less: De0reciation
Lon, Term Fun)! 8 Sharehol)er;! +un)! *a! in %1- # De"t +un)! *a! in %2-
@. 1ro0rietary Ratio *See Note "elo9-
1ro0rietary Fun)! Total A!!et!
.:uity Share a0ital # 1re+erence Share a0ital #Re!erve! $Sur0lu! Le!!3 Accumulate) lo!!e!
Sho9! 0ro0ortion o+ +i/e) a!!et! *lon,-terma!!et!+inance)"ylon,term +un)!. In)icate! the +inancin, a00roach +ollo9e) "y the ? +irm i.e. con!ervative6 matchin, or a,,re!!ive< I)eal Ratio i! le!! than one. Sho9! e/tent o+ o9ner;! Net Fi/e) A!!et! +un)! # Total urrent A!!et! *Only tan,i"le a!!et! 9ill "e utili!e) in +inancin, a!!et!. inclu)e).-
Note 3 1ro0rietary Fun)! +or %-@ can "e com0ute) throu,h t9o 9ay! +rom the %alance Sheet3 • Lia"ility Route 3 A.:uity Share a0ital # 1re+erence Share a0ital # Re!erve! $ Sur0lu!B Le!!3 Accumulate) lo!!e! • A!!et! Route 3 ANet Fi/e) A!!et! # Net Cor&in, a0italB Le!!3 Lon, Term Lia"ilitie!.
B" C'.E&#/E &#$I'S ( #0ilit, to Serve *ixed %ia0ilities De"t Service Ratio .arnin,! +or De"t Service Net 1ro+it a+ter ta/ation Intere!t on De"t *Intere!t#In!talment- A))3 Ta/ation overa,e A))3In!talmento+De"t A)) 3 Intere!t on De"t *0rinci0al re0ai)Fun)! A)) 3 Non-ca!h o0eratin, e/0en!e!*e.,. )e0reciation an) amortiDation!A)) 3 Non-o0eratin, a)>u!tment! *e.,.lo!! on !ale o+ +i/e) a!!et!2. Intere!t overa,e .arnin,! "e+ore Intere!t $ .arnin,! "e+ore Intere!t Intere!t on De"t Fun) an) Ratio Ta/ Ta/e! 8Sale! Le!! Intere!t Earia"le an) Fi/e) o!t! *e/clu)in, intere!t- *or- .AT # Ta/ation # Intere!t 5. 1re+erence .arnin,! a+ter Ta/ Divi)en) on 1re+erence .arnin,! a+ter Ta/ 8 Divi)en) 1re+erence Divi)en) Share .AT overa,e a0ital Ratio D" $U&1'.E& / #C$I.I$2 / PE&*'&3#1CE &#$I'S
In)icate! e/tent o+ current earnin,! availa"le +or meetin, commitment! an) out+lo9 to9ar)! intere!t an) in!talment< I)eal ratio mu!t "e "et9een 2 to 5 time!.
In)icate! a"ility to meet intere!t o"li,ation! o+ the current year. Shoul) ,enerally "e ,reater than I.
In)icate! a"ility to 0ay )ivi)en) on 0re+erence !hare ca0ital.
i. a0ital Turnover RatioD
Sale! a0ital .m0loye)
Sale! net o+ return!
See Note 1 below:
2. Fi/e) A!!et Turnover Ratio
Turnover Fi/e) A!!et!
Sale! net of return!
Net Fi/e) A!!et!
A"ility to ,enerate !ale! 0er ru0ee o+ lon,-term inve!tment. The hi,her the turnover ratio6 the "etter it i!. A"ility to ,enerate !ale! 0er ru0eey of Fi/e) A!!et
5. Cor&in, a0ital Turnover Turnover Ratio Net Cor&in, a0ital Q. Fini!he) =oo)! or Stoc& Turnover Ratio o!t o+ =oo)! Sol) Avera,e Stoc&
Sale! net o+ return! For (anu+acturer!3 O0enin, Stoc& # o!t o+ 1ro)uction Le!!3 lo!in, Stoc& For Tra)er!3 O0enin, Stoc& # 1urcha!e! Le!!3 lo!in, Stoc&
urrent A!!et! Le!! urrent A"ility to ,enerate !ale! 0er Lia"ilitie! ru0ee o+ Cor&in, a0ital. *O0enin, Stoc& # lo!in, In)icate! how +a!t inventory Stoc&i! 2 u!e) ' !ol). A hi,h turnover ratio or ,enerally (a/imum Stoc& # (inimum in)icate! +a!t movin, material 9hile Stoc& lo9 ratio may mean )ea) or 2 e/ce!!ive !toc&. O0enin, CI1 # lo!in, CI1 2 O0enin, Stoc& # lo!in, Stoc& 2 In)icate! the CI1 movement ' 0ro)uction cycle. In)icate! how +a!t ra9 material! are u!e) in 0ro)uction.
@. CI1 Turnover Ratio F. Ra9 (aterial Turnover Ratio
Factory o!t Avera,e Stoc& o+ CI1 o!t o+ (aterial on!ume) Avera,e Stoc&o+R(
(aterial! # Ca,e! # 1ro)uction Overhea)! O0enin, Stoc& o+ R( #1urcha!e! Le!!3 lo!in, Stoc&
re)it Sale! re)it Sale! net o+ return!Account! Receiva"le8 In)icate! !0ee) o+ collection Avera,e Account! De"tor! #%'R o+ Receiva"le Avera,e Account! Receiva"le cre)it !ale!. 8 O0enin, "al. # lo!in, "al. 2 H. re)ito6!Turnover re)it 1urcha!e! re)it 1urcha!e! net o+ Account!;1aya"le8 re)itor!# In)icate! velocity o+ )e"t Ratio Avera,e Account! return!6 i+ any %'1 0ayment. 1aya"le Avera,e Account! 1aya"le 8 O0enin, "al. # lo!in, "al. 2 1ote 4 5 Assets Route : Net Fi/e) A!!et! -t Net 9or&in, a0ital Liability Rowe : .:uity Share a0ital # 1re+erence Share a0ital # Re!erve! $ Sur0lu! # De"enture! an) Lon, Term Loan! Le!! Accumulate) Lo!!e! Le!! Non-Tra)e Inve!tment! 1ote 6 5 Turnover ratio! can al!o "e com0ute) in term! o+ )ay! a! 5F@ ' TO Ratio6 e.,. No. o+ )ay! avera,e !toc& i! hel) 8 5F@ ' Stoc& Turnover Ratio. E" P&'*I$#BI%I$2 &#$I'S B#SED '1 S#%ES I. =ro!! 1ro+it Ratio =ro!! 1ro+it a! 0er Sale! net o+ return! In)icator o+ %a!ic =ro!! 1ro+it Tra)in, 1ro+ita"ility. Sale! Account 2. O0eratin,;0ro+it ratio O0eratin, 1ro+it Sale! Sale! Le!! co!t o+ !ale! *orNet 1ro+it A))3 Non-o0eratin, e/0en!e! Le!! 3 Non-o0eratin, income! Net 1ro+it Sale! net o+ return! In)icator o+ O0eratin, 1er+ormance o+ "u!ine!!.
G. De"tor! Turnover Ratio
5. Net 1ro+it Ratio 7. ontri"ution Sale! Ratio
Net 1ro+it Sale! ontri"ution Sale!
Sale! net o+ return! Sale! net o+ return!
In)icator o+ overall 0ro+ita"ility. In)icator o+ 0ro+ita"ility in (ar,inal o!tin, *al!o calle) 1E Ratio-
Sale! Le!! Earia"le o!t!
*" P&'*I$#BI%I$2 &#$I'S ( '71E&8S .IE7 P'I1$ 1. Return on Total .arnin,! 1ro+it! a+ter ta/e! Inve!tment Total a0ital .m0loye) A))3 Ta/ation *ROI- or Return on A))3 Intere!t a0ital .m0loye) A)) 3 Non-tra)in, *RO .e/0en!e! Le!! 3 Non-o0eratin, income! li&e rent!6 intere!t an) )ivi)en)!
A!!et! Route3 Net Fi/e) A!!et! *inclu)in, intan,i"le a!!et! li&e 0atent!6 "ut not +ictitiou! a!!et! li&e mi!cellaneou! e/0en)iture not 9'o+#Net 9or&in, a0ital Lia"ility Route 3 .:uity Share a0ital # 1re+erence Share a0ital # Re!erve! R Sur0lu! #De"enture! an) Lon, Term Loan! Le!!3 Accumulate) Lo!!e! Le!!3 Non-Tra)e Inve!tment! Net Fi/e) A!!et! # Net Cor&in, a0ital Le!!3 ./ternal Lia"ilitie! *lon, term.:uity Share a0ital Face Ealue 0er !hare .:uity Share a0ital Face Ealue 0er !hare
Overall 0ro+ita"ility of the 0!siness +or the ca0ital emplo,ed9 in)icate! the return on the total ca0ital em0loye). om0ari!on o+ RO . 9ith rate o+ intere!t o+ )e"t lea)! to +inancial levera,e. I+ RO . I Intere!t Rate6 u!e o+ )e"t +un)! i! >u!ti+ie).
2. Return on .:uity RO.
.arnin,! a+ter Ta/e! Net Corth
1ro+it A+ter Ta/e!
1ro+ita"ility o+ .:uity Fun)! inve!te) in the "u!ine!!.
5. .arnin,! 1er Share .1S
1ro+it A+ter Ta/e! Le!t A1AT - 1re+erence 1re+erence Divi)en) Divi)en)B Num"er o+ .:uity Share!
Return or income 0er !hare6 9hether or not )i!tri"ute) a! )ivi)en)!. Amount o+ 1ro+it! )i!tri"ute) 0er !hare
7. Divi)en) 1er Share Divi)en)! 1ro+it! )i!tri"ute) to D1S Num"er o+ .:uity Share! .:uity Sharehol)er! @. Return on A!!et! *ROANet 1ro+it a+ter ta/e! Avera,e Total A!!et! Net 1ro+it a+ter ta/e!
Avera,e Total A!!et! or Net Income 0er ru0ee o+ Tan,i"le avera,e A!!et! or Fi/e) A!!et!6 i.e. IA +i/e) a!!et!. o+ O0enin, an) lo!in, %alance
Il!stration 4 5 &atio Comp!tation from *inancial Statements
From the +ollo9in, annual !tatement! o+ Su)har!han Lt)6 calculate the +ollo9in, ratio! 3 *a- =1 Ratio 3 "- O0eratin, 1ro+it Ratio < *c- Net 1ro+it Ratio < *)- urrent Ratio < *e- Li:ui) Ratio *+- De"t .:uity Ratio < ,- Return on Inve!tment Ratio < *h- De"tor! Turnover Ratio < *iFi/e) A!!et! Turnover Ratio. $rading and Profit and %oss #cco!nt for the ,ear ended 34st 3arch #mt" Partic!lars #mt" Partic!lars [email protected] %y Sale! To (aterial! on!ume)3 O0enin, Stoc& - [email protected] %y 1ro+it on Sale o+ Inve!tment! FJJ 1urcha!e! - @[email protected]@ %y Intere!t on Inve!tment! 5JJ [email protected]@ lo!in, Stoc& - *[email protected]@ 1672@ To arria,e In9ar)! To O++ice ./0en!e! [email protected] To Sale! ./0en!e! 56JJJ To Financial ./0en!e! [email protected] To Lo!! on Sale o+ A!!et! 7JJ To Net 1ro+it [email protected] [email protected] Total [email protected] Total Balance Sheet as at 34st 3arch %ia0ilities Share a0ital3 2JJJ e:uity !hare! o+ R!.1J each +ully 0ai) u0 Re!erve! 1ro+it $ Lo!! Account Secure) Loan! %an& Over)ra+t Sun)ry re)itor!3 For ./0en!e! For Other! Total #mt" 2J6JJJ 56JJJ F6JJJ F6JJJ 56JJJ 26JJJ H6JJJ 7H6JJJ #ssets Fi/e) A!!et! 3 %uil)in,! 1lant urrent A!!et!3 Stoc& in Tra)e De"tor! %ill! Receiva"le %an& %alance! Total #mt" [email protected] H6JJJ 176JJJ G6JJJ 16JJJ 56JJJ 7H6JJJ
illustration 2 : Computing AC P alculate the Avera,e ollection 1erio) +rom the +ollo9in, )etail! "y a)o0tin, a 5FJ-)ay year. *a- Avera,e Inventory - R!.5FJJJJ *"- De"tor! - R!.27JJJJ *c- Inventory Turnover Ratio - F *)- =1 Ratio - 1JL *e- re)it Sale! to Total Sale! - 2JL Illustration 3 : PE Ratio Computation alculate 1'. Ratio +rom the +ollo9in, in+ormation 3 .:uity Share a0ital *o+ R!.2J each- [email protected] la&h! Fi/e) A!!et! - R!.5J la&h! Re!erve! an) Sur0lu! - R!.@ la&h! Inve!tment! - R!.@ la"! Secure) Loan! at [email protected] - R!.2@ la&h! O0eratin, 1ro+it *!u">ect to Ta/ o+ @JL- R!.2@ la&h! Un!ecure) Loan! at [email protected] - R!.1J la&h! (ar&et 1rice 0er !hare - [email protected]
Illustration 4 : Statement o Proprietar! "un#s From the following information relating to a Limited Company, prepare a Statement of Proprietors' Funds. *or+ing Capital - Rs.0",,,, Reser1es and Surplus Current Ratio - 2 Rs.",,,,, 2an+ 31erdraft - Rs.!,,,,, Li uid Ratio - !." Fi#ed $ssets % Proprietary Funds - &!' (here are no long-term loans or fi)titious assets. Illustration 5 : Statement of Proprietar! Funds *or+ing capital of a company is Rs. !,&",,,, and current ratio is 2.5. Li uid ratio is !." and the proprietary ratio 0.75. Bank Overdraft is Rs.30,000 there are no long term loans and fictitious assets. Reserves and surplus amount to Rs. -,,,,, and the gearing ratio !"uity Capital%Preferen)e Capital. is 2. From the a#ove, as)ertain /
1G. 1 H
OST A
OUNTIN= AND FINAN IAL (ANA=.(.NT
$i% &urrent assets $ii% &urrent lia4ilities $iii% 'et 4lo)+ $iv% Proprietary fund $lso draw the statement of property Fund Illustration $ : %alan&e S'eet Preparation
$v% (uick lia4ilities $vi% (uick assets $vii% )tock and $viii% *reference and e"uity
2ased on the following information, prepare the 2alan)e Sheet of Star 5nterprises as at &!st 6e)em4er Current Ratio - 2." Cost of 7oods Sold to Net Fi#ed $ssets - 2 Li uidity Ratio - !." $1erage 6e4t Colle)tion Period - 2.' months Net *or+ing Capital - Rs.8 la+hs Sto)+ (urno1er Ratio 9 " Fi#ed $ssets to Net *orth - ,.:, 7ross Profit to Sales - 2,; Long (erm 6e4t to Capital and Reser1es - 0%2" Illustration (: %alan&e S'eet Preparation From the following information relating to *ise Ltd., prepare its summari<ed 2alan)e Sheet. Current Ratio 9 2." $)id (est Ratio 9 !." 7ross Profile to Sales Ratio 9 ,.2 Net *or+ing )apital to Net *orth Ratio 9 ,.& Sales % Net Fi#ed $ssets Ratio 9 2., Sales % Net *orth Ratio 9 !." Sales % 6e4tors Ratio 9 8., Reser1es % Capital Ratio 9 !., Net *orth % Long (erm Loan Ratio 9 2,., Sto)+ =elo)ity 9 2 months Paid up share Capital 9 Rs. !, la+hs
Illustration ) : %alan&e S'eet Preparation From the following information of *iser Ltd, prepare its proforma 2alan)e Sheet if its sales are Rs.l8 la+hs. Sales to Net *orth - 2.& Current Ratio - 2.- times> fitness Current Lia4ilities to Net *orth - '2; Sales to Closing ?n1entory - '." times> (otal Lia4ilities to Net *orth - 0"; $1erage Colle)tion Period - 8' days @>- Ratio figures are re)ast in a more understanda4le wayA
Illustration *: %alan&e S'eet Preparation From the following information and ratios, prepare the profit and Loss $))ount and 2alan)e Sheet of B%s. Si1apra+asam C )o., an e#port Company @(a+e ! year D &8, days. Current $ssets to Sto)+ - &/2 Current Ratio - &.,, $)id (est Ratio D !.,, Finan)ial Le1erage - 2.2, 5arnings Per Share Eea)h of Rs.!,A - Rs.!,.,, 2oo+ =alue per share - Rs.',.,, $1erage Colle)tion Period - &, days Sto)+ (urno1er Ratio - ".,, Fi#ed $sset (urno1er Ratio - !.2, (otal Lia4ilities to Net *orth - 2.0" Net *or+ing Capital - Rs.!, la+hs Net Profit to Sales - !,; =aria4le Cost - 8,; Long (erm Loan ?nterest - !2; (a#ation 9 N?L
Illustration +, : "inan&ial Statements Preparation From the following information of Su+anya C Co. Ltd, prepare its finan)ial statements for the year Fust ended. Current Ratio - 2." *or+ing Capital - Rs.!,2,,,,, Gui)+ Ratio - !.& 2an+ 31erdraft - Rs.!",,,, Proprietary Ratio @Fi#ed $ssets%Proprietary Fund. - ,.8 Share Capital - Rs.2,",,,,, 7ross Profit - !,; of Sales Closing Sto)+ - !,; more than 3pening Sto)+ 6e4tors =elo)ity - ', days Net Profit - !,; of Proprietary Funds Sales - Rs.0,&,,,,, Illustration ++ : "inan&ial Statements Preparation 2elow is gi1en the 2alan)e Sheet of Sunrise Ltd., as on &!st Bar)h, 2,H!/ Lia4ilities Rs. $ssets Fi#ed $ssets Share Capital/ !'; Preferen)e Shares !,,,,,,, $t Cost 5 uity Shares 2,,,,,,, +ess , 6epre)iation !,8,,,,, 7eneral Reser1es ',,,,, Sto)+ in trade Rs.
&,',,,, 8,,,,,
!2; 6e4entures Current Lia4ilities (otal
8,,,,, !,,,,,,, ",,,,,,,
Sundry 6e4tors Cash (otal,
:,,,,, 2,,,,, ",,,,,, ,
(he following information is a1aila4le / !. Fi#ed assets )osting Rs.!,,,,,,, to 4e installed on !st $pril, 2,H! and would 4e)ome operati1e on that date, payment is re uired to 4e made on &!st Bar)h, 2,H2. 2. (he Fi#ed $ssets-(urno1er Ratio would 4e !." Eon the 4asis of )ost of Fi#ed $ssetsA. &. (he Sto)+-(urno1er Ratio would 4e !'.' Eon the 4asis of the a1erage of the opening and )losing sto)+A. '. (he 4rea+-up of )ost and profit would 4e as follows / Baterials - ',;I La4our - 2";I Banufa)turing 5#penses - !,;I 3ffi)e and Selling 5#penses - !,;/ 6epre)iation - ";I Profit - !,; and Sales - !,,; (he profit is su4Fe)t to interest and ta#ation J ",;. ". 6e4tors would 4e !%-th of sales. 8. Creditors would 4e !%"th of materials )ost. 0. $ di1idend J !,; would 4e paid on e uity shares in Bar)h 2,H2. :. Rs. ",,,,,, !2; de4entures ha1e 4een issued on $pril !, 2,H!. Prepare the fore)ast 2alan)e Sheet as on 51!t (arch 2JM2. Illustration +2 : -se o Ratios an# Ratios as In#i&ators. E$A ?ndi)ate the a))ounting ratios that will 4e used 4y ea)h of the following/ aA $ Long (erm Creditor interested in determining whether his )laim is ade uately se)ured. 4A $ 2an+ whi)h has 4een approa)hed 4y the Company for Short (erm Loan % 31erdraft )A $ Shareholder who is e#amining his portfolio and who is to de)ide whether he should hold or sell hi/ shares in a Company. E2A *hi)h a))ounting ratio will 4e useful in indi)ating the following sym ptoms K Bay !--& EFA EiA Low )apa)ity utilisation EiiA Falling demand for the produ)t in the mar+et EiiiA ?na4ility to pay interest Ei1A 2orrowing for short term and in1esting in long-term assets E1A Large in1entory a))umulation in anti)ipation of pri)e rise in future E1iA ?neffi)ient )olle)tion of de4tors E1iiA ?na4ility to pay dues to finan)ial institutions E1iiiA Return of shareholder's funds 4eing mu)h higher than the o1erall return of in1estment Ei#A Li uidity )risis E#A ?n)rease in a1erage )redit period to maintain sales in 1iew of falling demand
Illustration +3 : Compre'ensi/e ROI Anal!sis - 0upont C'art (he Finan)ial Statements of 5#)el $BP 7raphi)s Limited are as under / 2alan)e Sheet as at 6e)em4er &!, 2,,!
1articular! Source! o+ Fun)! Sharehol)er! Fun)! .:uity a0ital Re!erve! an) Sur0lu! Loan Fun)! Secure) Loan! Finance Lea!e o"li,ation! Un!ecure) Loan! Total #pplication o+ *!nds 5 Fi/e) A!!et! =ro!! %loc& Less : De0reciation Net %loc& a0ital Cor& in 0ro,re!! Inve!tment! urrent A!!et!6 Loan! $ A)vance! Inventorie! Sun)ry De"tor! a!h an) %an& %alance! Loan! an) A)vance! Less : urrent Lia"ilitie! 1rovi!ion! Net urrent A!!et! Net De+erre) Ta/ Lia"ility
6::4 ;&s" in Crores< 16121 [email protected] G7 1G1
2JJJ *R!. in rore!K5I G6KKK [email protected] 11@
1J6JG 1
H6K5J
27@ 1J651F
5G7 K65J7
F6FFG 56 1 @ J [email protected] 2G 26GJK K67FH 562JF 26 J 7 5 1G6 72F 1J61JK @15 1J6F22 *52J-
[email protected] 2HH
@6G7G 26 @ F 561HF 2H [email protected] K672H FF2 16G12 176572 G6KJ2 @G2 H6 7 G 7 -
56217 222
F6HJ7 *52J-
@6HFH -
Total
1J651F
K65J7
Profit and %oss #cco!nt for the year en)e) Decem"er 516 2JJ1 Decem"er 516 2JJJ 1G6H7K Income 3 Sale! an) Service! 25675F 5JF Other Income 52J [email protected] Expenses 3 o!t o+ (aterial! [email protected] 1J6KKF 1er!onnel ./0en!e! [email protected] 262K5 Other ./0en!e! [email protected] 26H1@ 5H5 - *F- 85GG De0reciation Le!! 3 Th. +rom Revaln. Re!. 71K - *G- 712 8 1F7 216H77 HH Intere!t Profit Before $ax 16K12 1rovi!ion +or Ta/ 3 urrent Ta/ [email protected] 5G1 De+erre) Ta/ *F777 Profit #fter $ax 167FH
1H61@ @
[email protected] K [email protected] 5G1 1621@
i. Compute and analyse the Return on Capital 5mployed ER3C5A in a 6u-pont Control Chart Framewor+. ii. Compute and analyse the a1erage in1entory holding period and a1erage )olle)tion period. iii. Compute and analyse the Return on 5 uity ER35A 4y 4rining our)learly the impa)t of finan)ial le1erage
S'%U$I'15 I *a- =ro!! 1ro+it Ratio *"- O0eratin, 1ro+it Ratio 8 1G.JFL O Net 1ro+it Ratio *)- urrent Ratio urrent A!!et! urrent Lia"ilitie! *e- Li:ui) Ratio Quic& A!!et! Quic& Lia"ilitie! *t- De"t .:uity Ratio De"t .:uity *,- Return on Inve!tment Return S!dharshan %imited 8 =ro!! 1ro+it ' Sale! 8 7JL 8 O0eratin, 1ro+it ' Sale!8 [email protected]#7JJ N FJJ N 5JJB ' [email protected] 8 Net 1ro+it ' Sale! 8 [email protected] JJJ ' [email protected] [email protected] 8 urrent A!!et! ' urrent Lia"ilitie! 8 [email protected] ' 156JJJ 8 1.K2 8 Stoc& De"tor! %ill! receiva"le # %an& 8 176JJJ#G6JJJ#16JJJ#56JJJ [email protected] 8 Sun)ay re)itor! +or e/0en!e! $ Other! # %an& over)ra+t 8 26JJJ#H6JJJ#56JJJ 8156JJJ 8 Quic& A!!et! ' Quic& Lia"ilitie! 8 116JJJ' 1J6JJJ 8 1.1 time! 8 urrent a!!et! N Stoc&8 [email protected] N 176JJJ8 116JJJ 8 urrent Lia"ilitie! N %an& over)ra+t 8 156JJJ N 56JJJ8 1J6JJJ 8 F6JJJ ' 2K6JJJ8J.21 time! 8 Secure) loan! 8 F6JJJ 8 .:uity !hare ca0ital # Re!erve! # 1 $ L account 2J6JJJ # 56JJJ # F6JJJ8 2K6JJJ 8 Return ' a0ital .m0loye)8 [email protected] ' [email protected] 8 71.75L 8 Net 0ro+it # Lo!! on !ale o+ a!!et! ;&s"<
a0ital em0loye) *h- De"tor! Turnover *i- Fi/e) A!!et! Turnover 85.FK time!
1ro+it on !ale o+ inve!tment! - Intere!t on inve!tment! 8 [email protected] # 7JJ - FJJ - 5JJ8 [email protected] 8 De"t # .:uity 8 F6JJJ # 2K6JJJ [email protected] 8 Sale! ' Avera,e Receiva"le! 8 [email protected] ' AG6JJJ # 16JJJB 8 Turnover ' Fi/e) A!!et! 8 [email protected] ' [email protected] # H6JJJB
81J.F2@ time!
II" S'%U$I'1 5 *a- Inventory Turnover 8 o!t o+ ,oo)! !ol) ' Avera,e inventory8 F time! Avera,e inventory *,ivenThere+ore o!t o+ ,oo)! !ol) 8 56FJ6JJJ M F *"- =ro!! 0ro+it ratio There+ore co!t o+ ,oo)! !ol) 4ence !ale! 8 216FJ6JJJ ' KJL *c- re)it !ale! 8 2JL o+ 276JJ6JJJ *)- De"tor! Turnover 8 re)it !ale! ' Avera,e )e"tor! 8 Avera,e ollection 0erio) 8 5FJ ' De"tor! turnover
*R!.8 56FJ6JJJ 8 216FJ6JJJ 8 1JL 8 KJL 8 276JJ6JJJ 8 76HJ6JJJ 76HJ6JJJ ' 267J6JJJ
8 2 time! 8 1HJ )ay!
III" Sol!tion Parti)ulars 3perating profit Less : ?nterest on loans Pro it 1e ore ta2 +ess (a# P ",; , 2" la+hs # !" ; !, la+hs # !2."; ERs. in 2".,, &.0" !.2" 2,.,, !,.,,
Pro it a ter ta2 Num4er of e uity shares 5arnings per share Pri)e 5arnings Ratio
D E", la+hs % Rs.2,A D P$( % Num4er of shares D Bar+et pri)e % 5PS E",%'A
+,.,, 2",,,, Rs.'.,, !2.";
I3. SOL-TION EaA Current ratio E4A *or+ing, )apital
D Current assets % Current lia4ilities Current assets D 2 Current lia4ilities D 2 (imes Current assets - Current lia4ilities D2 Current lia4ilities - Current [email protected]
(herefore )urrent lia4ilities [email protected] Current assets D2>0", ,,,D!,",,,, E)A Gui)+ ratio D Gui)+ $ssets % Gui)+ lia4ilities D !." (imes Current $ssets 9 Sto)+ % Current Lia4ilities 9 31erdraft D !." (imes D!,",,,,,-Sto)+ % 0",,, 9 !,,,,D!." (herefore sto)+ !,",,,,, - E!." # 8",,,,A Sin)e there are no loans or fi)titious assets, Capital employed D Proprietary fund D Fi#ed $ssets L*or+ing Capital Proprietary FundD Fi#ed $ssets L0",,, Proprietary Fund D &%'th of Proprietary Funds L 0",,, !%'th Proprietary Fund D 0",,, (herefore Proprietary Fund D 0",,, > ' D &,,,,,,, Reser1es and Surplus D ",,,, (herefore Share Capital D &,,,,,,, 9 ",,,,, D 2,",,,,, Fi#ed $ssets D &,,,,,,, H M D 2,2",,,, Statement of Proprietary Fund Sour)es Share Capital Reser1res and Surplus $ppli)ation Fi#ed $ssets Current $ssets 2,",,,,, ",,,,, &,,,,,,, Sto)+ 2,2",,,, "2,",,
Less/ )urrent Lia4ilities 3thers S'%U$I'1 5 . (a Worki ! a0ital ) #urre t ratio
3thers 2an+ 31erdraft 8",,,,
-0,",, !,,,,, E0",,,A
!,",,,,, &,,,,,,,
" #urre t assets $ #urre t lia"ilitie! " #urre t assets % #urre t lia"ilitie! " urrent assets " 2.5 urrent lia"ilitie! " 2.5 urrent lia"ilitie! - urrent lia"ilitie! There+ore #urre t liabilities " [email protected] ' 1.@ #urre t assets " KJ6JJJ * 2.5 (h &ui'k ratio urrent assets $ Sto'k % urrent lia"ilitie! - %an& ) OD (here)ore Sto'k [email protected] - Sto'k % KJ6JJJ - 5J6JJJ 2,25,000 $(1.5 * +0,000) 1ro0rietary ratio Si 'e there are o loan! an) )i'titious assets, a0ital em,loye" 1ro0rietary )u -s 8 Fi/e) assets 1 Worki ! 0..5 (/i0e- assets 1 'urre t assets) #a,ital 0..5 *Fi/e) assets 1 225000) " /i0e- assets 1 Cor&in, 0..5 Fi/e) assets 1 1+2.50 a0ital " [email protected] - [email protected] 0.25 /i0e- assets There+ore )i0e- assets " 33,.50 * 0.25 There+ore total assets Fi/e) Assets 1 urrent assets [email protected] 1 [email protected] 1ro0rietary )u 0..5 * 56FJ6JJJ 1ro0rietary )u #a,ital 1 Reser4es a0ital 1 KJ6JJJ 26GJ6JJJ - KJ6JJJ (here)ore a0ital Ratio o) .:uity3 5re)ere 'e .:uity a0ital " 2 % 3 * 16HJ6JJJ 1re+erence a0ital " 1 % 3 * 16HJ6JJJ Statement o proprietar! "un#s
*R!.8 [email protected] 8 2.5 times 8 [email protected] 8 KJ6JJJ 2,25,000 1.@ times 1.5 [email protected]
8 33,.50 " [email protected] 3,+0,000 26GJ6JJJ 26GJ6JJJ 16HJ6JJJ 2:1 162J6JJJ FJ6JJJ
Sour'es
.:uity a0ital 5re)ere 'e a0ital Reser4es 6 Net Fi/e) Assets urrent Assets $ Sto'k - 7thers Less : urrent Lia"ilitie! - %an& over)ra+t Q - Other! [email protected] 80,000 5J6JJJ FJ6JJJ
162J6JJJ +0,000 KJ6JJJ [email protected] 2,25,000 *KJ6JJJ-
A00lication
26GJ.JJJ
26GJ6JJJ
S'%U$I'15 .I %ia0ilities Share a0ital $ Re!erve! *hLon, term )e"t urrent Lia"ilitie! $otal *i*"#mt" [email protected] [email protected] 7.JJ 6:":: #ssets Fi/e) A!!et! *+urrent A!!et! Stoc& *cDe"tor! *,%an& *1J.JJ - K.JJ- *"'+$otal #mt" 1J.JJ 7.JJ @.JJ 1.JJ
1J.JJ 6:"::
4or5ings a. Current ratio / Current $ssets % Current Lia4ilities (herefore Current $ssets D 2." Current Lia4ilities D 2." (imes 4. Net *or+ing )apital D )urrent $ssets 9 Current Lia4ilities D 2." (imes Current Lia4ilities 9 Current Lia4ilities urrent Lia"ilitie! 8 F.JJ ' 1.@ 8 7.JJ
c. ). e. +. ,. h. i.
There+ore urrent A!!et! 8 7.JJ M 2.@ 8 1J.JJ Quic& Ratio 8 urrent A!!et! - Stoc& ' urrent Lia"ilitie! 81J.JJ-*[email protected]+ore Stoc&8 7.JJ Stoc& turnover ratio 8 o!t o+ ,oo)! !ol) ' avera,e !toc& 8 @ Time! o!t o+ ,oo)! !ol) 8 7.JJ M @ 8 2J.JJ =ro!! 0ro+it 8 2JL o+ !ale! 8 o!t o+ ,oo)! !ol) 8 HJL o+ !ale! 8 2J.JJ There+ore Sale! 8 2J.JJ ' HJL 8 [email protected] o!t o+ ,oo)! !ol) ' net +i/e) a!!et! 8 2 Time! Net Fi/e) A!!et!8 2J.JJ ' 2 8 1J.JJ Avera,e ollection 1erio) 8 2.7 month! There+ore De"tor! 8 [email protected] M 2.7 '12 8 @.JJ Fi/e) A!!et! ' Net 9orth 8 J.HJ Time! There+ore Net 9orth 8 1J.JJ ' J.HJ 8 [email protected] Lon, term De"t ' ca0ital $ re!erve! 8 G ' 2@ There+ore Lon, term De"t 8 [email protected] M G ' 2@ 8 [email protected]
Solution 3II 7ise %imited Balance Sheet ;#mo!nts in &s" lakhs< Lia"ilitie! Share a0ital *,ivenRe!erve! *aLon, term loan! *current Lia"ilitie! *>Total Amt. 1J.JJ 1J.JJ 1.JJ 7.JJ [email protected] A!!et! Fi/e) A!!et! *1urrent A!!et! Stoc& *hDe"tor! *e%an& *1J.JJ - K.JJ- *"'+Total Ann. [email protected] 7.JJ @.JJ 1.JJ
1J.JJ [email protected]
*R!. in la&h!7orkings *a- Re!erve! ' a0ital a0ital 8 1J la&h! There+ore Re!erve! 8 *"- Net 9orth 8 a0ital # Re!erve! 8 1 Time 1J.JJ 8 2J.JJ
*c- Net 9orth ' Lon, term loan There+ore Lon, term Loan Sale! ' Net 9orth There+ore Sale! Sale! ' De"tor! There+ore De"tor! =ro!! 1ro+it Ratio o!t o+ ,oo)! Sol) Stoc& Eelocity There+ore Avera,e Stoc& Net 9or&in, ca0ital ' Net 9orth Net 9or&in, ca0ital Net 9or&in, ca0ital urrent Ratio Net 9or&in, ca0ital urrent Lia"ilitie! 4ence urrent A!!et! Aci) Te!t Ratio
8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8
2J Time! 2J.JJ'2J 8 1.JJ 1.@ time! 1.@ M 2J.JJ 8 5J.JJ 8 F time! 5J.JJ ' F 8 @.JJ 2JL o+ Sale! 8 2JL M 5J.JJ 8 F.JJ 5J.JJ N F.JJ *Sale! N =18 27.JJ o!t o+ =oo)! Sol) ' Avera,e Stoc& 8F Time! 27.JJ'F.JJ 8 7.JJ 8 J.5 Time! 2J.JJ M J.5 8 F.JJ urrent A!!et! N urrent Lia"ilitie! 8 F.JJ urrent A!!et! ' urrent Lia"ilitie! 8 2.@ time! urrent A!!et! 8 2.@ urrent Lia"ilitie! 2.@ urrent Lia"ilitie! - urrent Lia"ilitie! 8 F.JJ F.JJ ' 1.@ 7.JJ M 2.@ 8 1J.JJ urrent A!!et! N Stoc&! -------------------------------------------- 8 1.@ Time! urrent Lia"ilitie! N %an& Over)ra+t *1J.JJ N 7.JJ- ' *7.JJ N %an& Over)ra+t- 8 1.@ *1.@ M 7.JJ- N F.JJ 8 Nil 8 2 Time! 5J.JJ ' 2 8 [email protected]
There+ore %an& over)ra+t Sale! ' Net +i/e) a!!et! There+ore Net +i/e) a!!et! S'%U$I'1" .III
8 8
7iser %imited Balance Sheet Lia"ilitie! Net 9orth *a-
Amt [email protected]@2 Fi/e) A!!et!
A!!et! *"al.+i,-
Amt 56GJ6JHF
Term lia"ilitie! urrent lia"ilitie!
*)*"-
[email protected]@ 26K261G7
urrent A!!et! Stoc& De"tor! %an& Total
*+*,*h-
56@@6@@F [email protected] 261162J1 1261G65K1 *[email protected]@2 26K261G7 @6216G5K [email protected]@ 2.K time! H67G65J@ 8 8 8 56@@6@@F F7 )ay! [email protected]
$otal Cor&in,! 3
1261G65K 1
*a- Sale! ' Net 9orth 8 2.5 time! Sale! 8 1F6JJ6JJJ There+ore Net 9orth 1F6JJ6JJJ ' 2.5 *"- urrent Lia"ilitie! 8 72 L o+ Net 9orth 8 72L M [email protected]@2 *c- Total Lia"ilitie! 8 [email protected] o+ Net 9orth 8 [email protected] M [email protected]@2 *)- There+ore Term Lia"ilitie!-De"t 8 *c- - *"*e- urrent Ratio urrent A!!et! ' urrent Lia"ilitie! urrent A!!et! 2.K M 26K261G7 *+- Sale! ' Inventory 8 7.@ time! Sale! 8 1F6JJ6JJJ There+ore Inventory 1F6JJ6JJJ ' 7.@ *,- Avera,e ollection 0erio) There+ore De"tor! 8 1F6JJ6JJJ M F7 ' 5F@ *ha!h and Bank 8 C!rrent #ssets ( Stock ( De0tors 8 H67G65J@ - 56@@6@@F - [email protected]
8 261162J1
S'%U$I'1" I= Sivaprakasam and Co" Balance Sheet Amt. A!!et! @.JJ Fi/e) A!!et! [email protected] urrent A!!et! @J.JJ Stoc& @.JJ De"tor! Other! *[email protected] - 17.1G-
Lia"ilitie! Share a0ital Re!erve! $ Sur0lu! 12 L Term loan urrent Lia"ilitie! *I*m*i*"-
*+*c*,-
Amt. 71.FG 1J.JJ 7.1G J.H5
$otal 7orkings *a- urrent Ratio 4ence Net Cor&in, a0ital urrent Lia"ilitite! There+ore urrent A!!et! *"- urrent A!!et! ' Stoc& There+ore Stoc& *c- Aci) te!t Ratio
> "::
Other A!!et! $otal
*"al.+i,-
1H.55 > "::
8 urrent A!!et! ' urrent Lia"ilitie! 8 5 Time! 8 urrent Lia"ilitie!8 5 urrent Lia"ilitie! 8 urrent A!!et! N urrent Lia"ilitie! 8 1J.JJ 8 5 urrent Lia"ilitie! N urretn Lia"ilitite! 8 1J.JJ 81J.JJ ' 2 8 @.JJ 8@ M 5 8 [email protected] 8 5'2 8 [email protected] M 2'5 8 1J.JJ 8 8 urrent A!!et! N Stoc& ' urrent Lia"ilitie! 8 1 Time 8 8 8 8 8 8 Nil
There+ore %an& over)ra+t *)- Stoc& Turnover Ratio There+ore Sale! Fi/e) A!!et! Turnover Ratio There+ore Fi/e) A!!et! Avera,e ollection 1erio) There+ore De"tor!
urrent A!!et! N Stoc& ' urrent Lia"ilitie! 8 I Time @ M 1J.JJ 8 @J.JJ Turnover ' Fi/e) A!!et! 8 @J.JJ ' 1.2 8 8 1.2 time! 71.FG
5J )ay! Sale! M 5J ' 5FJ 8 @J.JJ M 5J ' 5FJ 8 7.1G Profit and %oss #cco!nt
Sales +ess =aria4le Costs J 8, Contri4ution +ess , Fi/e) o!t! .%IT *"al. +i,*h-
@J.JJ 5J.JJ 2J.JJ K.JJ 1 l .JJ
Less:
Intere!t .%T *1JL o+ !ate!Less : Ta/ .AT *h- Financial Levera,e .%IT Lon, term loan *r- Total Lia"ilitie! uTotal Lia"ilitie! ' Net 9orth There+ore Net 9orth *&- Num"er o+ .:uity Share! *I- Share a0ital *m- There+ore Retaine) earnin,! S'%U$I'1" =
1JL M @J.JJ
F.JJ @.JJ Nil @.JJ 2.2 11.JJ @J.JJ 8 @@.JJ 8 2.G@ time! 8 2J.JJ @JJJJ !hare! 8 @.JJ 8 [email protected]
.%IT ' .%T 2.2 / @.JJ Intere!t ' Intere!t Rate8 F.JJ ' 12L 8 Term lia"ilitie! # urrent Lia"ilitie! 8 @J.JJ # @.JJ 8 @@.JJ ' 2.G@ 8 Net 9orth ' %oo& value 0er !hare 8 @JJJJ !hare! / R!.lJ 8 2J.JJ - @.JJ
8 2J.JJ ' 7J
S!kan,a + Co" Profit and %oss #cco!nt 1articular! To O0enin, Stoc& *)To 1urcha!e! *"al.+i,To =ro!! 1ro+it *1J LTo ./0en!e! *%al. +i,.To Net 0ro+it Total *h#mt" [email protected] [email protected] G5.JJJ [email protected]@JJ 756JJJ 5J6JJJ G56JJJ 1articular! %y Sale! %y lo!in, Stoc& %y =ro!! 1ro+it "') Total Amt. G65J6JJJ [email protected]@JJ [email protected]@JQ G56JJJ >3?:::
*,iven*c-
Balance Sheet Lia"ilitie! Share a0ital *,ivenRe!erve! $ Sur0lu! *56JJ6JJJ N #mt [email protected] @J6JJJ A!!et! Fi/e) A!!et! *,Amt 16HJ6JJJ
*Total 1ro0rietary Fun)! 8 56JJ6JJJurrent lia"ilitie! %an& over)ra+t *,[email protected] Other! *HJ6JJJ - [email protected]@6JJJ Total 3?@:?:::
urrent A!!et! Stoc& *cDe"tor! *e%an& *26JJ6JJJ - [email protected]@JJTotal
[email protected]@JJ HJ6JJJ [email protected] 3?@:?:::
Cor&in,! 3 *a- Cor&in, a0ital *"- urrent Ratio There+ore 4ence urrent Lia"ilitie! urrent A!!et! *c- Quic& Ratio
There+ore lo!in, Stoc& *)- lo!in, Stoc& There+ore O0enin, !toc& *e- De"tor! Eelocity There+ore lo!in, De"tor! 8 G65J6JJJ M 7J ' 5FJ *1Fi/e) A!!et! ' 1ro0rietary Fun) There+ore 8 Cor&in, a0ital ' 1ro0rietary Fun) There+ore 1ro0rietary Fun) 8 Cor&in, a0ital ' J.7 8 162J6JJJ ' J.7 *,- Fi/e) A!!et! 8 1ro0rietary Fun) M J.F 8 56JJ6JJJ M J.F *h- Net 1ro+it SOL-TION 6I
urrent A!!et! - urrent Lia"ilitie! urrent A!!et! ' urrent Lia"ilitie! urrent A!!et! 8 2.@ urrent Lia"ilitie! 2.@ urrent Lia"ilitie! - urrent Lia"ilitie! 162J6JJJ ' 1.@ HJ6JJJ M 2.@ Quic& A!!et! ' Quic& Lia"ilitie! urrent A!!et! - lo!in, Stoc& urrent Lia"ilitie! - %an& over)ra+t 26JJ6JJJ - lo!in, Stoc& HJ6JJJ - [email protected] 26JJ6JJJ - *1.5 M [email protected], Stoc& # 1J L [email protected]@JJ' 11JL
8 8
*R!.162J6JJ J 2.@ time! 162J6JJ J HJ6JJJ 26JJ6JJ J 1.5 time! 1.5 [email protected]@J J [email protected]@J J [email protected] J 7J )ay! HJ6JJJ J.FJ J.7J 56JJ6JJ J 16HJ6JJ J 5J6JJJ
1JL o+ 1ro0rietary Fun)! 8 56JJ6JJJ M 1JL
S!nrise %imited Profit + %oss #ppropriation #cco!nt Le!! 3 Le!! 3 Le!!3 1%IT *1JL o+ K6JJ6JJJDe"enture Intere!t 1%T Ta/ 1rovi!ion P @JL 1AT 1re+erence $ .:uity Divi)en) Tran!+erre) to %alance Sheet *iKJ6JJJ 1562JJ GF6HJJ 5H67JJ 5H67JJ 576JJJ 767JJ
>-
Balance Sheet Lia"ilitie! Share a0ital .:uity a0ital 17L 1re+erence a0ital Re!erve! $ Sur0lu! 1 $ L appropriation account =eneral Re!erve Secure) loan! - 12L De"enture! urrent Lia"ilitie! re)itor! *hTa/ 0rovi!ion $otal Cor&in,! 3 *a- o!t o+ +i/e) a!!et! 8 Fi/e) A!!et! Turnover Sale! 8 Percentage #nal,sis of sales 1articular! (aterial! 1ercenta,e Amount in La&h! 7JL 5.F 8 O0enin, %alance # 1urcha!e! @6JJ6JJJ #16JJ6JJJ 8 F6JJ6JJJ 8 Sale! ' =ro!! Fi/e) A!!et! 8 1.@ M F6JJ6JJJ 8 La"our [email protected] 2.2@ (anu+acturin, Overhea)! 1JL J.KJ O++ice Overhea)! 1JL J.KJ Amt. 26JJ6JJJ 16JJ6JJJ 767JJ 7J6JJJ 161J6JJJ G26JJJ 5H67JJ ?6A?@:: A!!et! Fi/e) A!!et! - =ro!! F6JJ6JJJ Le!!3 De0reciation [email protected] urrent A!!et! Stoc& *+De"tor! *,a!h $ %an& *"al. +i,Amt. [email protected] [email protected] 16JJ6JJJ [email protected]
$otal
?6A?@::
1.@ Time! K6JJ6JJJ De0reciation @L J.7@ 1%IT 1JL J.KJ
*)- Net "loc& o+ Fi/e) A!!et! *eo!t o+ =oo)! Sol)
*+- Stoc& Turnover Avera,e Stoc&
=ro!! %loc& - De0reciation F6JJ6JJJ - *16FJ6JJJ # [email protected](aterial # La"our # (anu+acturin, Overhea)! 56FJ6JJJ # 262@6JJJ # KJ6JJJ o!t o+ ,oo)! !ol) Avera,e Stoc& [email protected]'17.7
8 8 8 8
[email protected] [email protected] 17.7 time! 7F6HG@
Avera,e Stoc& O0enin, Stoc& lo!in, Stoc& *,*h*i*>-
AO0enin, Stoc& # lo!in, Stoc&B ' 2 FJ6JJJ *2 M 7F6HG@ - - FJ6JJJ
8 8
7F6HG@ [email protected] 16JJ6JJJ G2.JJJ 15.2JJ 576JJJ
De"tor! 8 1'Kth o+ !ale! 8 1'K M K6JJ6JJJ re)itor! 8 1'@th o+ (aterial co!t 8 1'@ M 56FJ6JJJ 8 *12L M FJ6JJJ- # *12L M @J6JJJDe"enture Intere!t 8 8 Divi)en) 0ai) -1re+ $ .:uity 8 *17L M 16JJ6JJJ- # *1JL M 26JJ6JJJ-
