Name Of The Student – Aakash Gupta

Roll No. – 25-1019

Registration No. – 25-1019
Specialization – Marketing
Batch – 2020-22
Institute – Balaji Institute Of Managment And Human Resource Development
Semester – 1st
Subject Name – Managment Accounting
Assingment No. – IV
Submission Date – 28/11/2020
Total Number Of Pages Written – 17
Q1.
Balance Sheet as at March 31, 2017
Particulars Note No. Rs.

1. Equity and
Liabilities:
1. Shareholders’ funds
a) Share capital 10,00,000
b) Reserves and surplus 9,00,000
2. Non-current
Liabilities
a) Long-term 12,00,000
borrowings
3. Current Liabilities
a) Trade payables 5,00,000
Total 36,00,000
11. Assets
1. Non-current Assets
a) Fixed assets
Tangible assets 18,00,000
2. Current Assets
a) Inventories 4,00,000
b) Trade Receivables 9,00,000
c) Cash and cash 5,00,000
equivalents
Fötal 36,00,000
Additional Information: Revenue from Operations Rs. 18,00,000 Calculate:
i. Debt-Equity Ratio
ii. Working Capital Turnover Ratio
iii. Trade Receivables Turnover Ratio
A.
1. Debt equity ratio:
Long−term liabilities
Debt t o equity ratio=
Total shareholder equity
Long−term liabilities=12,00,000
Total shareholder equity=Share capital + Reserves∧Surplus=10,00,000+9,00,000=19,00,000
12,00,000
∴ Debt t o equity ratio= =0.63 : 1
19,00,000
2. Working capital turnover ratio:

Working capital turnover ratio=Revenue ¿ operations ¿

working capital
Revenue ¿ operations=18,00,000
WorkingCapital=Current assets – Current liabilities=18,00,000 – 5,00,000=13,00,000
18,00,000
∴ Working capital turnover ratio= =1.39׿
13,00,000
3. Trade receivables turnover ratio:
Net Credit Sales
Trade receivables turnover ratio=
Average Trade Receivable
Net Credit Sales=18,00,000[ Assuming revenue ¿operations¿ be credit sales]
Average Trade Receivable=9,00,000
18,00,000
∴ Trade receivables turnover ratio= =2׿
9,00,000
Q2A.
From the following information, calculate the following ratios:
i. Quick Ratio
ii. Inventory Turnover Ratio
iii. Return on Investment
Particulars Rs.

Inventory in the beginning 50,000

Inventory at the end 60,000
Revenue from operations 4,00,000
Gross Profit 1,94,000
Cash and Cash Equivalents 40,000
Trade Receivables 1,00,000
Trade Payables 1,90,000
Other Current Liabilities 70,000
Share Capital 2,00,000
Reserves and Surplus 1,40,000

A.
1. Quick ratio:
Quick assets
Quick ratio=
Current liabilities
Quick assets=Cash∧Cash Equivalent +Trade receivable=40,000+ 1,00,000=1,40,000
Current Liabilities=Trade Payables+Other Current Liabilities=1,90,000+70,000=2,60,000
1,40,000
∴ Quick ratio= =0.54 : 1
2,60,000
2. Inventory Turnover ratio:

Inventory Turnover ratio=Cost of Revenue ¿ Operations ¿

Average Inventory
Cost of Revenue ¿ Operations=Revenue ¿ Operations – Gross Profit=4,00,000 – 1,94,000=2,06,000.
Inventory∈the beginning+ Inventory at the end 50,000+ 60,000
Average Inventory= = =55,000
2 2
2,06,000
∴ Inventory Turnover ratio= =3.74׿
55,000
3. Return on Investment:
Profit before Interest∧Tax
Return on Investment= ∗100
Capital Employed
Profit before Interest∧Tax=1,40,000.
Capital Employed=ShareCapital+ Resrves∧surplus=2,00,000+1,40,000=3,40,000
Profit before Interest ∧Tax 1,40,000
∴ Return on Investment = ∗100= ∗100=41.17 %
Capital Employed 3,40,000
Q2B.
From lhe following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c)
Proprietary Ratio.
Particulars Rs
Equity Share Capital 75.000

Preference Share Capital 25.000

General Reserve 45.000

Accumulated Profits 30.000

Debentures 75.000

Sundry Creditors 40.000

Outstanding Expenses 10.000

A
1. Debt Equity Ratio:
Debt
Debt Equity Ratio=
Shareholders ’ Fund
Debt= Debentures=75,000
Shareholders’ Fund=Equity ShareCapital + Preference Share Capital+General Resrves+ Accumulated Profits
Debt 75,000
∴ Debt Equity Ratio= = =0.43:1
Shareholders ’ Fund 1,75,000
 2. Total Assets to Debt Ratio:
Total Assets
Total Assets ¿ Debt Ratio=
Debt
Total Assets= Equity Share Capital+ Preference Share Capital+ General Resrves+ Accumulated Profits+ Deben
Debt= Debentures=75,000
Total Assets 3,00,000
∴ Total Assets ¿ Debt Ratio= = =4 :1
Debt 75,000
3. Proprietary Ratio

Shareholder s' Fund

Proprietary Ratio=
Net Assets
Shareholders’ Fund=Equity ShareCapital + Preference Share Capital+General Resrves+ Accumulated Profits
Total Assets= Equity Share Capital+ Preference Share Capital+ General Resrves+ Accumulated Profits+ Deben

Shareholder s ' Fund

∴ Proprietary Ratio=
Net Assets
Q3.
The following is the summarized transactions and Statement of Profit and Loss Account for
the year ending March 31, 2007 and the Balance Sheet as on the basis of following
information, calculate:
(i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio
(v) Fixed Assets Turnover Ratio
Particulars Rs.

Gross Profit 50,000

Revenue from Operations 1,00,000
Inventory 15,000
Trade Receivables 27,500
Cash and Cash Equivalents 17,500
Current Liabilities 40,000
Land & Building 50,000
Plant & Machinery 30,000
Furniture 20,000

A.
1. Gross Profit Ratio:
Gross Profit
Gross Profit Ratio= Operations ¿∗100
Revenue ¿
Gross Profit=50,000
Revenue ¿ Operations=1,00,000
Gross Profit 50,000
∴ Gross Profit Ratio= Operations ¿∗100= ∗100=50 %
Revenue ¿ 1,00,000
2. Current Ratio:
Current Assets
Current Ratio=
Current Liabilities
Current Assets=Trade Receivable+ Inventory +Cash∧Cash Equivalent =27,500+15,000+17,500=60,000
Current Liabilities=40,000
Current Assets 60,000
∴ Current Ratio= = =1.5:1
Current Liabilities 40,000
3. Acid Test Ratio:
Liquid Assets
Acid Test Ratio=
Current Liabilities
Liquid Assets=Current Assets−Inventory=60,000−15,000=45,000
Current Liabilities=40,000
Liquid Assets 45,000
∴ Acid Test Ratio= = =1.125 :1
Current Liabilities 40,000
4. Inventory Turnover ratio:

Inventory Turnover ratio=Cost of Revenue ¿ Operations ¿

Average Inventory
Cost of Revenue ¿ Operations=Revenue ¿ Operations – Gross Profit=1,00,000 – 50,000=50,000.
Average Inventory=1 5,000[∵Opening∧closing inventory is not given]
50,000
∴ Inventory Turnover ratio= =3.33׿
15,000
5. Fixed Assets Turnover Ratio:

¿ AssetsTurnover Ratio=Revenue ¿Operations ¿ Assets ¿

Net ¿
Revenue ¿ Operations=1,00,000
Net ¿ Assets=Land∧Building+ Plant∧Machinery + Furniture=50,000+30,000+20,000=1,00,000

∴ ¿ Assets Turnover Ratio=Revenue ¿ Operations ¿ Assets ¿= 1,00,000 =1 :1

Net ¿ 1,00,000
Q4.
The following figures are extracted from the balance sheets of a Company:
Assets 2002-03 Rs. 2003-04 Rs. 2004-05 Rs.
 Buildings 12,000 10,000 20,000
Plant and Equipment 10,000 15,000 10,000
Stock 50,000 50,000 70,000
Debtors 30,000 50,000 60,000
1,02,000 1,25,000 1,60,000
Liabilities
Paid up capital (rs. 10 shares - Rs.7-50 56,000 56,000 56,000
paid up)

Profit & loss a/c 10,000 13,000 15,000

Trade creditors 11,000 26,000 39,000
Bank 25,000 30,000 50,000
1,02,000 1,25,000 1,60,000
Sales 1,00,000 1,50,000 1,50,000
Gross profit 25,000 30,000 25,000
Net profit 5,000 7,000 5,000
Dividend paid 4,000 4,000 3,000
The opening stock at the beginning of the year 2002-03 was rs.4,000. As a financial analyst
comment on the comparative short-term, activity, solvency, profitability and financial
position of the company during the three-year period.
A.
For Short-term Solvency:
1. Current Ratio:
For, 2002-03.
Current Assets
Current Ratio=
Current Liabilities
Current Assets=Debtors+ Stock=30,000+50,000=80,000
Current Liabilities=Trade Creditors+ Bank=11,000+ 25,000=36,000
Current Assets 80,000
∴ Current Ratio= = =2.22:1
Current Liabilities 36,000
For, 2003-04.
Current Assets
Current Ratio=
Current Liabilities
Current Assets=Debtors+ Stock=50,000+50,000=1,00,000
Current Liabilities=Trade Creditors+ Bank=26,000+30,000=56,000
Current Assets 1,00,000
∴ Current Ratio= = =1.80 :1
Current Liabilities 56,000
For, 2004-05.
Current Assets
Current Ratio=
Current Liabilities
Current Assets=Debtors+ Stock=60,000+70,000=1,30,000
Current Liabilities=Trade Creditors+ Bank=39,000+50,000=89,000
Current Assets 1,30,000
∴ Current Ratio= = =1.46 :1
Current Liabilities 89,000
2. Quick Ratio:
For, 2002-03
Quick assets
Quick ratio=
Quick liabilities
Quick assets=Debtors=30,000
Quick Liabilities=Trade Creditors=11,000
30,000
∴ Quick ratio= =2.7 : 1
11,000
For, 2003-04
Quick assets
Quick ratio=
Current liabilities
Quick assets=Debtors=50,000
Quick Liabilities=Trade Creditors=26,000
50,000
∴ Quick ratio= =1.9 : 1
26,000
For, 2004-05
Quick assets
Quick ratio=
Quick liabilities
Quick assets=Debtors=60,000
Quick Liabilities=Trade Creditors=39,000
60,000
∴ Quick ratio= =2.7 :1
39,000
Comment: As the standard for current ratio is 2:1 the working capital position of the
company has weakened in the 2nd year and 3rd year. However, the quick ratio for all the
three years is well above the standard of 1:1. Thus it can be said that the short-term solvency
position of the company shows a mixed trend.
For, Activity Ratios:
1. Debtors Turnover Ratio:
For, 2002-03
Sales
Debtor Turnover Ratio=
Average Debtors
Sales=1,00,000
Average Debtors=30,000[∵ Opening Debtors is not given]
Sales 1,00,000
Debtor Turnover Ratio= = =3.333׿
Average Debtors 30,000
For, 2003-04
Sales
Debtor Turnover Ratio=
Average Debtors
Sales=1,50,000
Opening Debtors+Closing Debtors 30,000+50,000
Average Debtors= = =40,000
2 2
Sales 1,50,000
Debtor Turnover Ratio= = =3.75׿
Average Debtors 40,000
For, 2002-03
Sales
Debtor Turnover Ratio=
Average Debtors
Sales=1,50,000
Opening Debtors+Closing Debtors 50,000+60,000
Average Debtors= = =55,000
2 2
Sales 1,50,000
Debtor Turnover Ratio= = =2.73׿
Average Debtors 55,000
Comment: The sales as a number of times of debtors has improved in the year 2003- 04 but
has deteriorated in the year 2004-05.

2. Inventory Turnover Ratio:

For, 2002-03
Cost of Goods Sold
Inventory Turnover Ratio=
Average Inventory
Cost of Goods Sold =Sales−Gross Profit=1,00,000−25,000=75,000
Opening Stock +Stock 4,000+50,000
Average Inventory= = =27,000
2 2
Cost of Goods Sold 75,000
∴ Inventory Turnover Ratio= = =2.78׿
Average Inventory 27,000
For, 2003-04
Cost of Goods Sold
Inventory Turnover Ratio=
Average Inventory
Cost of Goods Sold =Sales−Gross Profit=1,50,000−30,000=1,20,000
Opening Stock +Stock 50,000+ 50,000
Average Inventory= = =50,000
2 2
Cost of Goods Sold 1,20,000
∴ Inventory Turnover Ratio= = =2.4׿
Average Inventory 50,000
For, 2004-05
Cost of Goods Sold
Inventory Turnover Ratio=
Average Inventory
Cost of Goods Sold =Sales−Gross Profit=1,50,000−25,000=1,25,000
Opening Stock +Stock 50,000+ 70,000
Average Inventory= = =60,000
2 2
Cost of Goods Sold 1,25,000
∴ Inventory Turnover Ratio= = =2.08׿
Average Inventory 60,000
Comment: Though there is no standard for inventory turnover ratio, higher the ratio, better
is the activity level of the concern. From this angle the ratio has come down gradually during
the three-year period indicating slow moving of stock.
For, Profitability Ratios:
1. Gross Profit Ratio:
For, 2002-03
GrossProfit
Gross Profit Ratio= ∗100
Sales
Gross Profit=25,000
Sales=1,00,000
GrossProfit 25,000
∴ Gross Profit Ratio= ∗100= ∗100=25 %
Sales 1,00,000
For, 2003-04
 GrossProfit
Gross Profit Ratio= ∗100
Sales
Gross Profit=30,000
Sales=1,50,000
GrossProfit 30,000
∴ Gross Profit Ratio= ∗100= ∗100=20 %
Sales 1,50,000
For, 2004-05
GrossProfit
Gross Profit Ratio= ∗100
Sales
Gross Profit=25,000
Sales=1,50,000
GrossProfit 25,000
∴ Gross Profit Ratio= ∗100= ∗100=16.67 %
Sales 1,50,000
2. Net Profit Ratio:
For, 2002-03
Net Profit
Net Profit Ratio= ∗100
Sales
Net Profit=5,000
Sales=1,00,000
Net Profit 5,000
∴ Net Profit Ratio= ∗100= ∗100=5 %
Sales 1,00,000
For, 2003-04
Net Profit
Net Profit Ratio= ∗100
Sales
Net Profit=7,000
Sales=1,50,000
Net Profit 7,000
∴ Net Profit Ratio= ∗100= ∗100=4.67 %
Sales 1,50,000
For, 2004-05
Net Profit
Net Profit Ratio= ∗100
Sales
Net Profit=5,000
Sales=1,50,000
 Net Profit 5,000
∴ Net Profit Ratio= ∗100= ∗100=3.33 %
Sales 1,50,000
Comment: The profitability ratios show that there is steady decline in the profitability of the
concern during the period. One reason for this declining profitability among others, is the
low and decreasing inventory turnover ratio.
For, Financial position
1. Debt Equity Ratio:
For, 2002-03
Debt
Debt Equity Ratio=
Shareholders ’ Fund
Debt=Trade Creditors+ Bank=11,000+25,000=36,000
Shareholders’ Fund=Paid Up Capital+ Profit∧Loss Acc=56,000+10,000=66,000
Debt 36,000
∴ Debt Equity Ratio= = =0.545:1
Shareholders ’ Fund 66,000
For, 2003-04
Debt
Debt Equity Ratio=
Shareholders ’ Fund
Debt=Trade Creditors+ Bank=26,000+30,000=56,000
Shareholders’ Fund=Paid Up Capital+ Profit∧Loss Acc=56,000+13,000=69,000
Debt 56,000
∴ Debt Equity Ratio= = =0.812:1
Shareholders ’ Fund 69,000
For, 2004-05
Debt
Debt Equity Ratio=
Shareholders ’ Fund
Debt=Trade Creditors+ Bank=39,000+ 50,000=89,000
Shareholders’ Fund=Paid Up Capital+ Profit∧Loss Acc=56,000+15,000=71,000
Debt 89,000
∴ Debt Equity Ratio= = =1.253:1
Shareholders ’ Fund 71,000
2. Debt Asset Ratio:
For, 2002-03
Debt
Debt Asset Ratio=
Total Asset
Debt=Trade Creditors+ Bank=11,000+25,000=36,000
Total Asset=1,02,000
 Debt 36,000
∴ Debt Equity Ratio= = =0.353:1
Total Asset 1,02,000
For, 2003-04
Debt
Debt AssetRatio=
Total Asset
Debt=Trade Creditors+ Bank=26,000+30,000=56,000
Total Asset=1,25,000
Debt 56,000
∴ Debt AssetRatio= = =0.448 :1
Total Asset 1,25,000
For, 2004-05
Debt
Debt AssetRatio=
Total Asset
Debt=Trade Creditors+ Bank=39,000+ 50,000=89,000
Total Asset=1,60,000
Debt 89,000
∴ Debt AssetRatio= = =0.556 :1
Total Asset 1,60,000
Comment: Debt equity ratio expresses the existence of debt for every re.1 of equity. From
this standpoint the share of debt in comparison to equity is increasing year after year and in
the last year the debt is even more than equity. Debt asset ratio gives how much of assets
have been acquired using debt funds. The calculation of this ratio reveals that in the 1st year
35% of assets were purchased using debt funds which has increased to 44.8% in the 2nd year
and 55.6% in the 3rd year. Thus, both the ratios reveal that the debt component in the capital
structure is increasing which has far reaching consequences.
Q5A.
Following is the balance sheet of X Ltd. as on 31st March 2019 and 2018.

Particulars Note No. 31.03.2019 31.03.2018

Rs. Rs.
I EQUITY AND LIABILITIES:
Shareholder's Funds:
(a) Share Capital 10,00,000 5,00,000
(b) Reserves and Surplus 2,00,000 3,00,000
Non-Current Liabilities
Long Term Borrowings 8,00,000 2,00,000
Current Liabilities
Trade Payables 4,00,000 2,00,000
TOTAL 24,00,000 15,00,000
II.ASSETS:
Non-Current Assets
Fixed Assets:
1.Tangible Assets 14,00,000 8,00,000
2. Intangible Assets 3,00,000 2,00,000
Current Assets
A. Inventories 5,00,000 4,00,000
B. Cash and Cash Equivalents 2,00,000 1,00,000
TOTAL 24,00,000 15,00,000

A.

Particulars March Change

2018 2019 Absolute Percentage
I EQUITY AND
LIABILITIES:
Shareholder's Funds:
(a) Share Capital 5,00,000 10,00,000 5,00,000 100%
(b) Reserves and Surplus 3,00,000 2,00,000 -1,00,000 -33.3333%
Non-Current Liabilities
Long Term Borrowings 2,00,000 8,00,000 6,00,000 300%
Current Liabilities
Trade Payables 2,00,000 4,00,000 2,00,000 100%
TOTAL 15,00,000 24,00,000 9,00,000 60%
II.ASSETS:
Non-Current Assets
Fixed Assets:
1.Tangible Assets 8,00,000 14,00,000 6,00,000 75%
2. Intangible Assets 2,00,000 3,00,000 1,00,000 50%
Current Assets
A. Inventories 4,00,000 5,00,000 1,00,000 25%
B. Cash and Cash Equivalents 1,00,000 2,00,000 1,00,000 100%
TOTAL 15,00,000 24,00,000 9,00,000 60%

Q5B.
Following is the Statement of Profit and Loss of Crown Ltd. for the year ended 31.3.2018:

Particulars Amount (Rs.)

Income:
Revenue from operations 2,00,000
Other Incomes 15,000
Total Revenue 2,15,000
Expenses:
Cost of Materials Consumed 1,10,000
Other Expenses 5,000
Total Expenses 1,15,000
Tax 40,000
You are required to prepare a common size statement of P & L of Crown Ltd. for the year
ended 31.03.2018.
A.

Particular Absolute Amount % of Revenue from Operations

Income:
Revenue from Operations 2,00,000 100%
Other incomes 15,000 7.5%
Total Revenue (I) 2,15,000 107.5%
Expenses:
Cost of Material Consumed 1,10,000 55%
Other Expenses 5,000 2.5%
Total Expenses (II) 1,15,000 57.5%
Profit Before Tax (I – II) 1,00,000 50%
Less: Tax 40,000 20%
Profit After Tax 60,0000 30%