NATIONAL INSTITIUTE FOR CONSTRUCTION MANAGEMENT AND RESEARCH NICMAR –PUNE

Subject – Finance Management Date- 31/12/2019

Faculty- Mr.Samanta Patra
Program- Project Mgtm.2019 –
Submitted By- Syed Kaifi Aftab
Purpose – Assignments

Problem 1: A comparative Balance sheet of a Yamuna Company is given for the year ending of 31-3- 2015 and
31--03-2016.You are required to find out Ratio which are as follow.

Calculate following ratios and give your opinion about company position in 2014‐'15 in
comparison with 2015-16. Whether it is positive or negative?
(1) Current ratio
(2) Quick ratio
(3) Debt Turnover Ration
(4) Creditor Turnover Ratio
(5) Stock Turnover ratio
(6) Working Capital turnover Ratio
(7)Avg Payment period
(8) Avg Collection Period
Two years' Balance sheets of Yamuna Company Ltd Hyderabad India. Are as follows:

Liabilities 31‐3‐2015 31‐3‐2016 Assets 31‐3‐2015 31‐3‐2016

Equity share capital 1,00,000 1,50,000 Land and 1,00,000 90,000
Buildings
10% prefence Share 50,000 50,000 Machinery 90,000 90,000
capitals
General Reserved Profit 30,000 30,000 Debtors 53,000 30,000
Loss A/c 12% 20,000 ‐‐‐‐‐ Bills Receivable 20,000 12,000
Debentures Creditor 1,00,000 50,000 Stock 75,000 90,000
Bills payable 30,000 35,000 Bank Balance 15,000 35,000
Bank Overdraft 10,000 25,000 Cash Balance 2,000 13,000
Out Standing Expenses 10,000 20,000 Profit and Loss ‐‐‐‐ 10,000
Tax Liabilities 5,000 10,000      
  3,55,000 3,70,000   3,55,000 3,70,000
Note: Consider 365 days as a working days
Additional Information:

2014-2015 2015-2016

Rs. Rs.

(1) Sales 3,65,000 2,19,000

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 (2) Cost of Goods sold 2,19,000 1,46,000

(3) Net profit (Before Pref. Dividend) 35,000 47,500

(4) Stock on 1‐4‐'14 71,000 ‐‐‐

(5) Purchase
150000 1,70,000

Solution: 1. Current Ratio = Current Assets

Current Liabilities.
Current Assets for year 2015 - Stock+ Bank Balance +Cash Balance +Bills Receivable +Debtor
75000+15000+2000+20000+53000= 165,000.

Current Liabilities for year 2015 - Bills Payable +Bank Overdraft+ Outstanding Expenses
30000+10000+10000+5000 = 55,000

Current Ratio 2015= 165000 =3

55,000
Current Ratio for 2015= 3:1

Current Assets for year 2016 - Debtor+ Stock+ Bank Balance +Cash Balance +Bills Receivable +
30,000+90,000+35000+13,000+12,000= 1,80,000.

Current Liabilities for year 2016 - Bills Payable +Bank Overdraft+ Outstanding Expenses
35,000+25,000+20,000+10,000 = 90,000.

Current Ratio 2015= 180,000 = 2.

90,000
Current Ratio for 2016= 2:1

2. Quick Ratio: Quick Assets

Quick Liabilities.

Quick Assets for 2015= Debtor + Bills Receiable+Bank Balance+Cash balance.

53000+ 20,000+15000+2000= 90,000.
Quick Liabilities for year 2015 - Bills Payable + Outstanding Expenses
30000+10000+5000 = 45,000
Quick Ratio for 2015= 90000 = 2:1.
45000
Quick Assets for 201 6 = Debtor + Bills Receiable+Bank Balance+Cash balance.
30000+ 12,000+35000+13000 = 90,000.

Quick Liabilities for year 2016 - Bills Payable + Outstanding Expenses

35000+20000+10000+ = 65,000

Quick Ratio for 2016= 90000 = 1.38: 1

65000

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3. Stock Turnover Ratio= Cost of Sold
Avg Stock.

Stock Turnover Ratio for 2015= 2, 19,000

75000+71000
2.

Stock Turnover Ratio for 2015= 3:1

Stock Turnover Ratio for 2016= 1,4,6000

95000+90000
2.
Stock Turnover Ratio for 2016= 1.76:1

4. Debtor Turnover Ratio = Annual Creditor Sale

Avg Debtor

Debtor Turnover Ratio for 2015 = 3,65,000

53000+20000
2
Debtor Turnover Ratio for 2015= 5.79

Debtor Turnover Ratio for 2016 = 2,19,000

53000+20000+ 30000+12000
2 2
Debtor Turnover Ratio for 2016= 3.8

5. Creditor Turnover Ratio = Annual Creditor Purchase

Avg Creditor.

Creditor Turnover Ratio for 2015 = 1,50,000

100000+30000
2
Creditor Turnover Ratio for 2015= 2.30

Creditor Turnover Ratio for 2016 = 1,70,000

100000+30000 + 50000+35000
2 2
Creditor Turnover Ratio for 2016= 1.58

6 .Avg Collection Period = No of Working days

Debt Turnover Ratio

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Avg Collection Period for 2015 = 365 days = 63.03 days
5.79

Avg Collection Period for 2016 = 365 days = 96 days

3.8.

7.Avg Payment Period = No of Working days

Creditor Turnover Ratio

Avg Payment Period for 2015 = 365 days = 158.69 days

2.30

Avg Payment Period for 2016 = 365 days = 96 days

1.56

8. Working Capital Turnover Ratio = Cost of Sale

Avg. of Working Capital

Working Capital Turnover Ratio for year 2015 = Cost of Sale

CA-CL.

Working Capital Turnover Ratio for year 2015 = 365000 = 3.31

165000-55000

Working Capital Turnover Ratio for year 2016 = Cost of Sale 2016
Avg. CA-CL.

Working Capital Turnover Ratio for year 2016 = 219000 = 2.201

165000+180000 +-55000+90000
2 2.

Ratio Interpretations Table

SL.N
O RATIO Year 2015 Year 2016 Interpretations
1 Current Ration 3 2 Liabilities was Less in 2015
2 Quick Ratio 2 1.38 Liabilities was Less in 2015
3 Inventory/Stock Turn Over Ration 3 1.76 stock was less in 2015
4 Debtor Turn Over Ration 5.79 3.8 Sell was more in Year 2015
In year 2016 credit less than
5 Creditor Turn Over Ration 2.30 1.58 2015
2016 was good due credits
6 Avg Collection Period in Days 63.03 96 days more

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 2015 was good money is
7 Avg Payments Period in Days 158.96 233 coming in 63days
working turn over 2015 is
8 Working Capital Turnover ratio 3.318 2.201 good
             
             

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