Ee PRACTICAL PAPER Time Allowed : 1 Hour] (Maximum Marks :12 1, Following table gives the actual and standard ratio of Crown India Ltd. for the year 2014-15: SNe Partials Aewat | Sandard 1 | Curent Assets/Current bites : a 2. | Cost of Revenue from Opertionsinventory : A 3. | Net credit Revenue from Operations/Trade Recehables « 3B 4, | net Prot before interest and tax/Captal Employed 40 Critically examine the above mentioned ratios. 3 2. From the following particulars regarding credit sales in 2013-2014 and 2014-2015, Is it correct to say that cash inflow from collection from debtors has improved in the year 2014-2015? a wia2018 | 20182015 z z ‘Opening balance of trade recsvables sooo] Closing balance of trade receivables 24000] 60,000, Credit Revenue from operations 240,000 480,000, Discount allowed 000] 6,000 Bad debts 2000} 4,000 Returns Inward 500] 3,000 What is the amount of change in cash flows? 3 3. The following comparative percentages are computed from the financial statements of two companies, XYZ Ltd and POR Utd, XYZ Ltd. PR Ltd, (0) Net income to Revenue from Operations 2% 9% Revenue from operations 80,000 95,000 Net Income to capital Employed 15% 12% Opening Receivables 10,000 8,000 Closing Receivables 12,000 8,000 Which company appears to be more successful? Give reasons, 3 4 If Credit purchases are 36,00,000 and cash purchases are 25% of total purchases. Find out the cash flow from operating activities when rent paid is € 1,50,000 and commission received & 2,50,000. 3 SOLUTIONS (i) The current ratio (Le., Current Assets/Current Liabilities) of the company is much higher than the standard, Company is comfortable in making timely payment to Its creditors. However, it seems that itis not using its funds effectively. It must invest the surplus fund in investments so that it may earn interest/dividend on idle fund. (i) The inventory turnover ratio (Cost of revenue from operations) is also higher than the standard. It indicates that company is rapidly turning over its inventory. 2 Accountane 1)