Interpretation on Comparative Balance Sheet

1. Working capital is the life blood of the company. Working capital is current assets minus
current liabilities and it goes on diminishing as in previous year it is minus 298.34 and in
C/Y it is minus 664.19 which alarms the financial position of the company.
2. The overall liquidity position of the company will improve as the liquid assets will increase
from 1191.57 to 1219.54 in comparison to P/Y.
3. The cash and cash equivalent goes on decreasing to great extent i.e from 32.84 to 8.51
which is not a good sign for the company.
4. The inventory increase can be on account of accumulated stock for want of customer,
decrease in demand or inadequate sales. An increase in inventory increases the working
capital of the business.
5. The increase in fixed assets is more than the long term borrowings, it means fixed assets
financed from working capital which is not a wise policy.
6. The increase in reserve and surplus shows that neither company distributed dividend nor
any issue bonus shares.