Question # 1

Following comparative data has been taken from the records of Naheed Super Store
Naheed Super Store
Comparative Income Statement
For the year ended December 31st 2009 & 2010
Particulars 2010 2009
Net Sales 12,000,000 8,500,000
Less: Cost of Goods Sold (6,900,000) (5,100,000)
Gross Profit 5,100,000 3,400,000
Less: Selling Expenses (1,200,000) (950,000)
Less: General & Admin Expenses (1,600,000) (1,300,000)
Income Before Interest & Taxes (IBIT) 2,300,000 1,150,000
Less: Financial Charges (320,000) (240,000)
Income before Income Tax 1,980,000 910,000
Less: Income Tax (297,000) (136,500)
Net Income 1,683,000 773,500
Naheed Super Store
Comparative Balance Sheets
As on December 31st 2009 & 2010
Assets 2010 2009
Cash & bank Balances 1,200,000 1,980,000
Marketable Securities 1,800,000 1,700,000
Accounts Receivables 1,900,000 1,100,000
Accrued Financial Income 700,000 600,000
Prepaid Expenses 900,000 300,000
Merchandise Inventory 700,000 700,000
Plants & equipment 3,820,000 1,700,000
Goodwill 1,500,000 1,200,000
Total Assets 12,520,000 9,280,000
Equities
Authorised Capital (10 par) 5,000,000 5,000,000
Ordinary Share Capital 4,500,000 4,100,000
Retained Earnings 3,680,000 2,000,000
Bonds Payables 1,350,000 1,250,000
Debenture Payables 200,000 ----
Accounts payables 2,000,000 1,230,000
Accrued Liabilities 750,000 700,000
Bills payables 40,000 ----
Total Equities 12,520,000 9,280,000
Required
Compute the following ratios
1. Working Capital for 2009 & 2010
2. Current ratio for 2009 & 2010
3. Quick ratio for 2009 & 2010
4. Equity Ratio for 2009 & 2010
5. Debt Ratio for 2009 & 2010
6. Earnings per share for 2009 & 2010
7. Book value per share for 2009 & 2010
8. Inventory Turnover for 2009 & 2010
9. Receivable Turnover for 2009 & 2010
10. Return on Assets for 2009 & 2010
11. Rate of return on shareholders’ equity in 2009 & 2010
12. Gross profit percentage on Sales in 2009 & 2010
13. Rate of Net Income on Sales for 2009 & 2010
14. Operating Cycle in days

Question # 2
Following comparative data has been taken from the records of Imran Textile
Imran Textile
Comparative Income Statement
For the year ended December 31st 2009 & 2010
Particulars 2010 2009
Net Sales 2,000,000 1,500,000
Less: Cost of Goods Sold (900,000) (800,000)
Gross Profit 1,100,000 700,000
Less: Operating Expenses (500,000) (450,000)
Net Income 610,000 250,000
Imran Textile
Comparative Balance Sheets
As on December 31st 2009 & 2010
Assets 2010 2009
Cash & bank Balances 300,000 180,000
Marketable Securities 100,000 70,000
Accounts Receivables 200,000 110,000
Prepaid Expenses 50,000 60,000
Merchandise Inventory 90,000 100,000
Plants & equipment 350,000 250,000
Total Assets 1,090,000 770,000
Equities
Accounts payables 104,000 55,000
Accrued Liabilities 36,000 20,000
Long Term Loans Payable 150,000 125,000
Capital 600,000 500,000
Retained Earnings 200,000 70,000
Total Equities 1,090,000 770,000
Required
Compute the following ratios
1. Working Capital for 2009 & 2010
2. Current ratio for 2009 & 2010
3. Quick ratio for 2009 & 2010
4. Equity Ratio for 2009 & 2010
5. Debt Ratio for 2009 & 2010
6. Earnings per share for 2009 & 2010
7. Book value per share for 2009 & 2010
8. Inventory Turnover for 2009 & 2010
9. Receivable Turnover for 2009 & 2010
10. Return on Assets for 2009 & 2010
11. Rate of return on shareholders’ equity in 2009 & 2010
12. Gross profit percentage on Sales in 2009 & 2010
13. Rate of Net Income on Sales for 2009 & 2010
14. Operating Cycle in days

Question # 3
The following terms are taken from financial statement of Amir Trading Company for the period ended
June 30th 2011
Sales (on account) …………………………………….. 2,450,000
Plant & Equipment ………………………………………3,500,000
Capital Equity ……………………..……………………. 5,000,000
Long term liabilities ……………………………………..1,450,000
Average Accounts Receivable ……………………….. 750,000
Average Merchandise Inventory …………………….. 850,000
Required
Compute the following
1. Accounts Receivable turnover
2. Merchandise Inventory turnover
3. Ratio of plant & equipment to long term liabilities
4. Rate of return on shareholders’ equity
5. Gross profit percentage

Question # 4
The following date has been obtained from the financial statements of Khurram Stores for the year ended
December 31st 2009 & 2010
Particulars ………………………………. 2010 …………. 2009
Cash ……………………………………………. 128,750 ……….. 120,000
Accounts Receivable …………………………. 139,000 ……….. 146,000
Merchandise Inventory ………………………. 123,000 ……….. 115,000
Prepaid Expenses ……………………………… 15,200 ………… 17,500
Accounts Payable …………………………….. 114,000 ……….. 116,000
Notes Payable …………………………………. 130,000 ……….. 135,000
Accrued Expenses …………………………….. 17,000 ………… 18,700
Net Sales ……………………………………… 1,205,000 ……… 1,240,000
Cost of Goods Sold ………………………….. 1,110,000 ……… 1,125,000
Required
Compute the following for 2009 & 2010
1. Amount of Working Capital
2. Current Ratio
3. Acid Test Ratio
4. Inventory Turn Over
5. Receivable Turn Over
6. Gross Profit Rate

Question # 5
The selected date given below are taken from the record of the Habib Oil Mills Limited at the end of the
year 2010
Cash………….………………….. PKR 300,000
Accounts Receivable (Beg.)…….. 40,150
Accounts Receivable (End)…….. 43,500
Prepaid Insurance…………….… 22,500
Inventory (Beginning)……… …. 18,150
Inventory (Ending)…………….... 32,500
Sales………………………….. 1,255,000
Operating Expenses…………… 252,300
Purchases………………….…. 620,000
Account Payable………………… 52,500
Share Capital (Par value 10/-) 500,000
Accrued Expenses………….…… 42,500
Retained Earnings ………………….… ?
Total Assets ………………….. 1,650,000
Fixed Assets …………………………. ?
Required
Determine following ratios on the basis of above information
1. Working Capital
2. Acid Test Ratio
3. Current Ratio
4. Operating Expense Ratio
5. Rates of Gross Profit on Sales
6. Equity Ratio
7. Debt Ratio
8. Book value per Share
9. Earnings Ratio per share
10. Account Receivable Turnover Rate
11. Inventory Turnover Rate

Question # 6
The data given below were taken from the financial statements of M/s. Amir Hamza Dry Fruit Company
Limited for years 2009 & 2010.
Particulars 2009 2010
Current Assets 1,220,000 1,640,000
Current Liabilities 965,000 1,140,000
Cash Sales 1,200,000 1,800,000
Sales on account 1,450,000 2,560,000
Cost of goods sold 1,495,000 2,950,000
Merchandise Inventory 950,000 750,000
Quick Assets 700,000 750,000
Accounts Receivables 600,000 660,000
Required
Compute the following for 2009 & 2010
1. Amount of Working Capital
2. Current Ratio
3. Days to Inventory Turnover
4. Quick Ratio
5. Days to Receivable Turnover
6. Rate of Gross Profit on Sales
7. Days to Operating Cycle

Question # 7
Comparative balance sheets at the end of 2009 & 2010 of M/s. Air Travellers Limited appears below
M/s. Air Travellers Limited
(Comparative Balance Sheets)
Assets 2010 2009
Cash & bank Balances 150,000 180,000
Marketable Securities 140,000 110,000
Accounts Receivables 320,000 270,000
Prepaid Expenses 250,000 210,000
Merchandise Inventory 690,000 410,000
Plants & equipment 1,350,000 1,250,000
Total Assets 2,900,000 2,430,000
 Equities
Accounts payables 404,000 355,000
Accrued Liabilities 26,000 20,000
Long Term Loans Payable 450,000 325,000
Mortgage Payable 600,000 500,000
Ordinary Share Capital 1,200,000 1,050,000
Retained Earnings 220,000 180,000
Total Equities 2,900,000 2,430,000
NOTE
Sales were Rs. 1,800,000 & Rs. 2,050,000 for the year 2009 & 2010 respectively & profit on cost of goods
sold is @ 25%.
Required
Compute the following ratios for the year 2009 & 2010
1. Current ratio
2. Quick ratio
3. Working capital
4. Stock turnover
5. Accounts receivable turnover
6. Return on capital employed
7. Comment on the company’s performance based on the accounting ratios for the year 2010

Question # 8
Pakistan Computer Supplies Company Limited comparative balance sheets & income statement for the
year 2009 & 2010 as follows
M/s. Pakistan Computer Supplies Company Limited
(Comparative Balance Sheets)
Assets 2010 2009
Cash & bank Balances 1,140,000 1,180,000
Accounts Receivables 440,000 310,000
Merchandise Inventory 520,000 470,000
Prepaid Expenses 220,000 210,000
Plants & equipment 2,680,000 2,410,000
Long Term Investment 1,000,000 1,250,000
Total Assets 6,000,000 5,830,000
Equities
Accounts payables 444,000 455,000
Accrued Liabilities 226,000 120,000
Taxes Payable 950,000 825,000
Mortgage Payable 1,500,000 2,000,000
Ordinary Share Capital 2,500,000 2,000,000
Retained Earnings 380,000 430,000
Total Equities 6,000,000 5,830,000
M/s. Pakistan Computer Supplies Company Limited
Comparative Income Statement
For the year ended December 31st 2010
Sales 2,300,000
Less: Cost of goods sold (1,200,000)
Gross Margin 1,100,000
Less: Operating Expenses (700,000)
Net Operating Income 400,000
Gain on sale of long-term investment 50,000
Income before Taxes 450,000
 Less: Income Taxes (140,000)
Net Income 310,000
Required
Compute the following ratios for the year 2009 & 2010
1. Current ratio
2. Acid test ratio
3. Inventory turnover
4. Return on total assets
5. Return on shareholder’s equity
6. Debt to equity ratio
7. Accounts receivable turnover
8. Comments on the results of your computation

Question # 9
The following is the Profit/Loss Account of a firm for the year ended 31 st December 2010
Profit & Loss Account of Lilly & Company
For the year ended 31st December 2010
Opening Stock 35,000 Sales 400,000
Purchases 225,000 Closing Stock 50,000
Wages Expenses 10,000 Profit on investment 2,000
Administration Expenses 10,000
Interest Expenses 5,000
Loss on sale of Machinery 2,000
Selling Expenses 10,000
Required
Calculate the following ratios
1. Gross Profit Ratio
2. Net Profit Ratio
3. Operating Profit Ratio
4. Operating Ratio

Question # 10
From the given data, calculate Gross Profit Ratio; Net Profit Ratio & Current Ratio
Sales 300,000
Cost of goods sold 200,000
Net Profit 30,000
Current Assets 60,000
Current liabilities 30,000

Question # 11
From the following details calculate; Gross Profit Ratio; Net Profit Ratio; Inventory Turnover & Receivables
Turnover
Sales 150,000
Cost of Goods Sold 120,000
Opening Stock 29,000
Closing Stock 31,000
Debtors 15,000
Administration Expenses 15,000

Question # 12
From the Balance Sheet given below, calculate Current Ratio, Working Capital, debt ratio, equity ratio;
Proprietary Ratio
 Rahim & Company Limited
Balance Sheet
As on 31st December 2010
Share Capital 60,000 Fixed Assets 165,000
Reserves 45,000 Long-term Investments 35,000
Bank Overdraft 70,000 Preliminary Expenses 10,000
Current Liabilities 120,000 Goodwill 10,000
Current Assets 75,000

Question # 13
From the following Profit/Loss Account of a company, ascertain the following ratios.
Gross Profit Ratio; Net Profit Ratio; Inventory Turnover Ratio
Asim Sale Company
Profit & Loss Account
For the year ending 31st December 2010
Beginning Stock 10,000 Sales 56,000
Purchases 44,000 Ending Stock 18,100
Administration Expenses 2,000 Dividend on Investments 1,000
Selling Expenses 8,900 Profit on sale of investment 800
Interest Expenses 3,000
Net Income 8,000

Question # 14
The following comparative data are prepared for the Light Company Limited
Particulars 2009 2010
Gross Sales 242,000 304,000
Less: Sales Return & Allowances (2,000) (4,000)
Net Sales 240,000 300,000
Less: Cost of Goods Sold (150,000) (180,000)
Gross profit 90,000 120,000
Less: Operating Expenses (46,000) (64,000)
Net Operating Profit 44,000 56,000
Required
Compute the following
1. % increase in the Net Sales
2. % increase in Gross Profit
3. % of Gross profit to Cost of Goods Sold for both years
4. % of Net Income to Net Sales for both years
5. Amount increase in Net Income
6. % of Operating Expenses on Net Sales for both years

Question # 15
The Following is the balance sheet of M/s. Nawaal Limited as of December 31 st 2010.
Share Capital 225,000 Building 2,838,935
Retained Earnings 9,798,289 Plants & Equipment 2,679,789
Allowance for Depreciation 458,189 Land 740,357
Accrued liabilities 75,532 Prepaid Expenses 79,378
Accounts Payable 321,689 Merchandise Inventories 1,633,526
Accounts Receivable 628,197
Short Term Investments 5,271
Marketable Securities 35,000
Cash 2,238,246
Required
Compute the following ratios for the year 2010
1. Current ratio
2. Acid test ratio
3. Debt Ratio
4. Equity ratio

Question # 16
The financial statements of M/s. Allies Limited for the current year are given below
M/s. Allies Limited
Balance Sheet
As on December 31st _______
CURRENT ASSETS CURRENT LIABILITIES
Cash 225,000 Accounts Payable 495,000
Marketable Securities 100,000 Income Tax Payable 135,000
Accounts Receivables (Net) 330,000 Total Current Liabilities 630,000
Merchandise Inventory 720,000 LONG TERM LIABILITIES
Prepaid Expenses 25,000 Mortgage Payable (due 2016) 500,000
Total Current Assets 1,400,000 15% Debenture Payable (due 2019) 500,000
LONG TERM INVESTMENTS 250,000 Total Long Term Liabilities 1,000,000
PLANT ASSETS Total Liabilities 1,630,000
Equipment 650,000 SHAREHOLDERS’ EQUITY
Building 1,200,000 Ordinary Share Capital (10 par) 1,500,000
Land 200,000 Retained Earnings 570,000
Total Plant Assets 2,050,000 Total Shareholders’ Equity 2,070,000
TOTAL ASSETS 3,700,000 TOTAL EQUITIES 3,700,000
M/s. Allies Limited
Statement of Retained Earnings
As on December 31st _______
Retained Earnings Balance (January 01st) 500,000
Add: Net Income for the year 160,000
Unadjusted Retained Earnings Balance 660,000
Less: Dividends (90,000)
st
Retained Earnings Balance (December 31 ) 570,000
M/s. Allies Limited
Income Statement
As on December 31st _______
Sales 3,490,000
Less: Sales returns & allowances (90,000)
Net Sales 3,400,000
Less: Cost of Goods Sold
Merchandise Inventory (January 01st) 460,000
Add: Net Purchases 2,670,000
Cost of goods Available for Sale 3,130,000
Less: Merchandise Inventory (December 31st) (720,000)
Cost of Goods Sold 2,410,000
Gross Profit 990,000
Less: Operating Expenses (660,000)
Net Operating Profit 330,000
Add: Other Income 15,000
Earnings Before Interest & Tax (EBIT) 345,000
Less: Interest Expenses (50,000)
 Net Profit before Income Tax 295,000
Less: Income Tax (135,000)
Net Profit after Income Tax 160,000
Additional Data
Additional data taken from the balance sheet of M/s. Allies Limited at December 31 st last year are as
follows
Accounts Receivables (net) Rs. 220,000/-
Long Term Investments Rs. 225,000/-
Total Assets Rs. 2,900,000/-
Total Shareholders’ equity (Ordinary Shares outstanding same in current year) Rs. 2,000,000/-
Market Price per share Rs. 48/-
Required
Determine the current year ratios, turnovers & other measures listed below, presenting the figures used in
your computations
1. Working Capital
2. Current Ratio
3. Acid Test Ratio (Quick Assets Ratio)
4. Accounts Receivable Turnover (Times & Days)
5. Merchandise Inventory Turnover (Times & Days)
6. Ratio of Shareholders Equity to Total Liabilities
7. Ratio of Plant Assets to Long Term Liabilities
8. Ratio of Plant Assets to Total Assets
9. Ratio of Plant Assets to Shareholders Equity
10. Rate of Net income on Total Assets
11. Rate of Net Income on Total Shareholders’ Equity
12. Debt Ratio
13. Equity Ratio
14. Earnings Per Share
15. Price Earnings Ratio
16. Ratio of Net Sales on Total Assets

Question # 17
The current ratio is 2:1. State giving reasons which of the following transactions would improve, reduce &
not change the current ratio
a) Repayment of current liability;
b) Purchased goods on credit;
c) Sale of an office typewriter (Book value – Rs. 4,000) for Rs. 3,000 only;
d) Sale of merchandise (goods) costing Rs. 10,000 for Rs. 11,000;
e) Payment of dividend.

Question # 18
The Xerox Company Limited completed the following transaction during the year
1. Sold on account inventory costing Rs. 122,000 for Rs. 195,000
2. Issued additional shares of capital for Rs. 500,000 cash
3. Sold short term investment costing Rs. 110,000 for Rs. 140,000
4. Purchased short term investments for Rs. 250,000 on cash
5. Wrote off uncollectible accounts Rs. 11,000
6. Declared a cash dividend Rs. 250,000
7. Declared a 15% stock dividend
8. Sold on account inventory costing Rs. 175,000 for Rs. 290,000
9. Paid accounts payable Rs. 115,000
10. Borrowed cash from a bank by issuing a long-term note Rs. 300,000
Required
Indicate the effect (increase, decrease & no effect) of each independent transaction listed above on the
current ratio, quick ratio, working capital & net cash flow from operating activities. Use the following four-
column format
Effect Upon
Transaction # Current ratio Quick Ratio Working Capital Cash flow from Operating Activities

Question # 19
HO HO Corporation
Balance Sheet (000)
As on December 31st 1992
Current Assets Liabilities
Cash ? Current Liabilities ?
Accounts Receivable ? 8% Long Term Debentures ?
Inventory ? Total Liabilities ?
Total Current Assets ? Shareholders’ Equity
Plant Assets Capital Stock (10/- par) 1,000
Machine & Equipments 1,800 Retained Earnings 200
Less: Acc Depreciation (300) Total Shareholders Equity 1,200
1,500
Total Assets ? Total Equities ?

HO HO Corporation
Income Statement (000)
For the period ended December 31st 1992
Net Sales ?
Cost of Goods Sold (?)
Gross Profit (25% of Net Sales) ?
Operating Expenses (?)
Operating Income (10% of Net Sales) ?
Interest Expenses ( 84)
Income before Income Tax ?
Income Tax – 40% of Income before Income Tax (?)
Net Income ?

Additional Information:
1. The Equity Ratio 40% and Debt Ratio 60%
2. The only interest expense was on the long term debentures.
3. The beginning inventory was Rs. 500,000 the inventory turnover was 4.8 times
4. The current ratio was 2:1; the quick ratio was 1.07:1
5. The beginning balance in account receivables was Rs. 280,000; the account receivable turn over for the
year was 12.8 times
6. All sales were made on account

Required:
a) Compute the financial statement by use of available information
b) Give all computations of amount appearing in the financial statement