MODEL BALANCE SHEET

LIABILITIES ASSETS
Capital and Reserves Fixed Assets
Paid up Capital Land and Building
Reserves Plant and Machinery
Profit & Loss Account (Profit) Furniture and Fixtures

Long term Liabilities Current Assets

Debentures Cash in Hand
Bank Term Loan Cash at Bank
Raw Material
Current Liabilities Finished Goods
Sundry Creditors Sundry Debtors
Bills Payable Bills Receivable
Bank Over draft Term Deposits in a Bank
Outstanding Expenses Pre paid Expenses
Advances Received Advances Paid
Term Loan installments due
during the year
Non- Current Assets
Investment in sister
concerns
Deposits in Utility
Services
Overdue Sundry Debtors
& Bills Receivables

Intangible Assets
Good Will ,Patent,
License
Trade Mark , Copy
rights

Fictitious Assets
Discount on shares and
Debentures
Preliminary Expenses
Deferred Revenue
Expenditure
Profit & Loss Account
(Loss)
TOTAL TOTAL
 CASE STUDY ON RATIO ANALYSIS
M/S.X Y Z LIMITED – P&L ACCOUNT FOR THE PERIOD ENDED MARCH 31, 2012
(Amount in ,000 of Rupees)
Opening Stock 230 Sales 1720
Raw Material consumed 850 Closing Stock(Includes of Raw 400
Other Mfg. Expenses 150 material of Rs0.80 lakhs)
Salaries & Wages 480
Other Expenses 59
Depreciation 170
Gross Profit c/d 181
2120 2120

40 181
Int. on Working Capital 41
Int. on Term Loan 30 Gross Profit c/d
Tax 70
Net Profit
181 181
Additional Information:-
Dividend Paid: Rs 30,000 Retained Profit: Rs 40,000.
Cost of Goods: sold Rs 15.39lakhs; Cost of Sales Rs16.20lakhs
_________________________________________________________________________

BALANCE SHEET OF M/S.X Y Z AS AT 31st MARCH 2010

(Amount in ‘000 of Rupees)
LIABILITIES ASSETS
Share Capital Net Fixed Asset
(30 000 shares of Rs 10 each 300 ( After Depreciation of Rs 7.60lakhs ) 440
Provision for tax 30 Raw Material 200
Sundry Creditors 240 Work in progress 50
Debentures 400 Finished goods 150
Bank CC/OD 580 Preliminary Expenses 10
Bank Term Loan 230 Cash at Bank 80
Cash in hand 40
Reserves and Surplus 310 Good will 30
Outstanding expenses 40 Sundry Debtors 760
Bank Term Deposits for 7 years 340
Discount on shares 30
Total 2130 Total 2130
Note:-
 Installments of Bank term loan falling due in next 12 months is Rs. 50 000
 Raw material worth Rs 20 000 is obsolete
 Sundry debtors include overdue debts amounting to Rs 70 000
 Cash sales are of Rs 2 lakhs.
 The purchase of raw material is made on credit basis

Calculate:
a) Leverage Ratios
b) Liquidity Ratios
c) Profitability Ratios
d) Turnover Ratios
e) Earning Per Share
WORK SHEET FOR RATIO ANALYSIS
Current Ratio =
Liquidity

Current Assets / Current Liabilities

Ratios

Quick or Acid Test Ratio =

(Total CA–Stock- Prepaid Expenses) / Current
Liabilities
 Debt Equity Ratio =
Leverage Ratios Long Term Debt / Tangible Net worth
Total Debt to Equity Ratio =
Term Liabilities + Current Liabilities / Tangible Net
worth
Fixed Assets Coverage Ratio =
Net Fixed Assets + Non Current Assets / TNW +
TL
Gross Profit Margin Ratio =
Gross Profit * 100 / Net Sales
Net Profit Margin Ratio =
Net Profit * 100 / Net Sales
Cost of Sales to Sales Ratio =
Cost of Sales * 100 / Sales
Profitability Ratios

Return on Investment =
PBIT * 100 / Capital Employed

Return on Net Worth =

Net Profit * 100 / Equity Capital + Reserves &
Surplus
Earnings Per share = Net profit after payment of
dividend to the preference. Share holders / No of
Equity shares.
DSCR =
(PAT + Depreciation + Int. on TL) /
(Interest. + Installments falling due during the
year)

Total Assets Turnover Ratio =

Net Sales / (Net Fixed Assets + Current Assets)
Working Capital Turnover Ratio =
Net Sales / Current Assets
Turnover Ratios

Inventory Turnover Ratio =

Cost of Goods Sold / Average Inventory
Debtor’s Turnover = Credit Sales during the year/
(Sundry Debtors + Bills Receivable )
Average Collection Period ( In months)=
12 / Debtor’s Turnover
Creditor’s Turn Over= Credit Purchases during the
year/ (Sundry Creditors + Bills Payable)
Average Payment Period ( In months)=
12 / Creditors’ Turnover