Formats

Format of the Journal

Journal of …………… year

Date Particulars L.F Debit (Rs) Credit (Rs)

Format of the Ledger

Name of the account

Date Particulars J.F Amount Date Particulars J.F Amount

(Rs) (Rs)

Format of Trial Balance

Date Particulars Debit (Rs) Credit (Rs)

Format of a Trading Account

Trading account of ---------------for the year ending ---------------

Dr Cr
Particulars Amount Particulars Amount (Rs)
(Rs)
To opening stock By sales
To purchases Less: sales
returns or Return
inwards
Less: Purchases returns By closing stock
or Return Outwards
To wages By gross loss
(transferred to
profit and loss
a/c -balancing
figure)
To wages and salaries
To direct expenses
To carriage or to
carriage inwards
To carriage on purchase
To gas, fuel and power
To freight or cartage
To manufacturing or
productive expenses
To factory expenses
such as: Factory
lighting, Factory rent
etc.
To dock charges and
clearing charges
To import duty or
custom duty
To Royalty
To gross profit
(transferred to profit
and loss a/c - balancing
figure)

Format of a Profit and Loss Account

Profit and Loss account of ---------------for the year ending -----------

Dr Cr
Particulars Amount Particulars Amount
(Rs) (Rs)
To Gross loss b/d By gross profit
(Transferred from trading (Transferred from trading
a/c) a/c)
Office Expenses: By rent from tenant
To salaries By discount received
To salaries and wages By commission received
To rent, rates and taxes By interest on
Investments
To printing and stationery By dividend on shares
To postage By bad debts recovered
To lighting By profit on sale of assets
To insurance premium By income from other
sources
To telephone charges By miscellaneous income
To legal charges By net loss ( Transferred
to capital account)
To audit fees
To travelling expenses
To establishment expenses
To trade expenses
To General expenses
Selling and Distribution
expenses:
To carriage outwards or
carriage on sales
To advertisement
To commission
To brokerage
To bad debts
To export duty
To packing charges
To delivery van expenses
To stable expenses
Miscellaneous expenses:
To discount allowed
To repairs
To depreciation
To interest
To bank charges
To entertainment expenses
To conveyance expenses
To donation and charity
To loss on sale of assets
To net profit – Transferred
to capital a/c

Format of a Balance sheet

Balance Sheet as at----------------------

Liabilities Amount Assets Amount

 (Rs) (Rs)
Current liabilities Current Assets:
Bank overdraft Cash in hand
Bills payable Cash at Bank
Sundry Creditors Bills Receivable
Outstanding expenses Shorty term Investments
Unearned Income Sundry Debtors/Book
debts
Non-current Liabilities: Closing Stock
Long term loans Prepaid Expenses
Reserves Accrued Income
Capital Non-current Assets:
Add: Net Profit Furniture
Less: Drawings Loose Tools
Less: Income tax Motor Vehicle
Less: Life Insurance Long term investments
Premium
Plant and Machinery
Land and Building
Patents and Trade marks
Good will

Ratio analysis

a) Liquidity Ratio

Ratio Type Ratio Name Formula Ideal Ratio

Numerator Denominator
Liquidity Ratio Current Ratio Current assets Current Liabilities 2:1
Quick (or) Acid test Quick Assets Current Liabilities 1:1
(or) Liquid Ratio
 Absolute liquid (or) Absolute Liquid assets Quick Liabilities 0.5 :1
Pure Liquid Ratio (or)
cash position ratio

*Quick Assets = Current Asset – (Stock + Prepaid expenses)

*Absolute Liquid assets = Cash in hand, Cash at bank and tradable market securities.
b) Profitability Ratio

Ratio Type Ratio Name Formula Calculation

Profitability Gross Profit Ratio (Gross Profit/ Net Gross Profit = Net sales – Cost of Goods Sold
Ratio sales) * 100 Cost of Goods sold = (Opening stock + Purchase +Direct
expenses ) – Closing stock
(or)
COGS= Sales – Gross Profit
Net sales = Total Sales - sales return
Net Profit Ratio (Net Profit/ Net sales) Net Profit = (Gross profit +Non-operating income) –
* 100 Operating and non-operating expenses.
Net sales = Total Sales - sales return
Operating Profit Ratio (Operating Profit/ Net Operating profit = (Net Profit +Non-Operating expenses )-
sales) * 100 Non operating incomes
 Operating Ratio (or) (Operating Cost / Net Operating cost = Cost of goods sold + Operating expenses
Operating expenses sales) * 100 Operating expenses = Office and administration expense,
ratio selling and distribution and any other expense related to
the operational aspect of a concern.
Expenses Ratio (Specific expenses / Expense include COGS, Operating expenses like wages,
Net sales) * 100 salary advertisement, general expenses
Return on capital (NPBIT/Capital Return on capital employed = Operating profit or earnings
employed employed) *100 before interest and taxes.
Capital employed = Owners fund + Long term borrowings –
(Good will and fictitious assets)

c) Turnover ratio

Ratio Type Ratio Name Formula Calculation Ideal Ratio

Turnover ratio Stock (or) Cost of goods sold / COGS= Sales – Gross Profit More the ratio more will
(or) Activity Inventory Turnover Average Stock Cost of Goods sold = (Opening be operational efficiency
ratio (or) ratio stock + Purchase +Direct
Efficiency ratio expenses ) – Closing stock
Average stock = (Opening
stock +Closing stock)/2
Debtors Turnover Net annual credit Net annual credit sales = Total More the ratio more will
ratio sales / Average sales – Cash sales (Total sales be operational efficiency
Trade debtors means sales – sales return)
Average trade debtors =
(Opening debtors and Bills
receivable + closing debtors
& Bills receivable )/ 2

Average Collection 360/ Debtors

period Turnover ratio
Creditors Turnover Net annual credit Net annual credit purchases= More the ratio more will
 Ratio purchases / Average Total purchases – Cash be operational efficiency
Trade creditors purchases (Total sales means
purchases – purchase return)
Average trade debtors =
(Opening Creditors and Bills
Payable + closing Creditors &
Bills Payable)/ 2
Debts payment 360/Creditors
period turnover ratio
Working capital Net sales/ Working Net sales = Total sales – Sales More the ratio more will
turnover ratio (or) capital return be operational efficiency
turnover to Working capital = Current
Working capital assets – Current liabilities
ratio
Fixed assets FATR = Net Fixed assets = Gross Fixed 5 times i.e., the value of
turnover ratio sales/Fixed Assets assets minus depreciation turnover or sales should
Net sales = Total sales – Sales be at least 5 times of the
return value of fixed assets.
Current assets Net sales / current Net sales = Total sales – Sales More the ratio more will
turnover ratio Assets return be operational efficiency
Current assets = Debtors
+Bills receivable+ Cash in
hand+ Cash at bank + Short
term investments.
d) Solvency Ratio

Ratio Type Ratio Name Formula Calculation Ideal

Ratio
Solvency ratio (or) Debt equity Debt/Equity Total long term debt = 2:1
Leverage ratio ratio = Total long term Debentures + long term loan
(or) Capital debt / Shareholder’s Shareholder’s fund = Share
structure ratio fund capital +Preference capital
+Reserves and surplus
Net worth Net worth / Total Net worth = Equity capital + All 5:1
ratio assets reserves created out of profits.
Total asserts means all assets
except Goodwill
Fixed assets Net fixed assets / Net Net fixed assets = Gross fixed 2/3rd or 67%
to net worth worth assets – Depreciation
ratio Net worth = Equity and equity
related items
Current asset Current assets / Net Current assets = Debtors +Bills More the ratio more will
to net worth worth receivable+ Cash in hand+ Cash be solvency
at bank + Short term
investments.
Capital Fixed interest (or) Fixed interest (or) Dividend More than one, The
Gearing Ratio Dividend bearing bearing securities = Debentures company s highly geared,
securities / Equity + Long term loans +Public which poses threat for
fund deposits +Preference share further fund raising,.
capital
Equity fund = Equity capital +
Reserves

Solvency Total assets / Total More the solvency ratio,

Ratio Liabilities more is the financial
soundness.
Proprietary Net worth (or)
Ratio Shareholders fund /
Total assets

e) Market test ratio

Ratio Type Ratio Name Formula
Market test Dividend yield ratio Dividend per share / Market price per share
ratio
Dividend coverage ratio for preference Profit after tax / Dividend payable to preference
shareholders shareholders
Dividend coverage ratio for equity PAT – Preference dividend/ Dividend payable for equity
shareholders shareholders

Earnings per share Equity earnings/Number of shares

Price earnings ratio Market price per share / Earning per share

Format of comparative balance sheet

Comparative balance sheet of ------- as on 31st December 2004 and 2005

Particulars 2004 (Example year) 2005 (Example year) Increase Decrease

Assets
Current Assets
Stock
Debtors
Cash
Total current assets (A)
Fixed Assets
Land and Buildings
Plant and Machinery
Furniture
Total fixed assets (B)
Total assets (A+B)
Liabilities and capital
 Current Liabilities
Sundry creditors
Bills payable
Total current liabilities ( A)
Long term liabilities
12% debentures
Total long term liabilities (B)
Total Liabilities (A+B)
Capital and Reserves
Equity share capital
Retained earnings
Shareholders fund (C)
Total Liabilities (A+B+C)

Format of comparative income statement

Comparative income statement of ------for the year ended 31st December 2004 and 2005

Particulars 2004 (Example year) 2005 (Example year) Increase Decrease

Net sales
Less: cost of sales
Gross profit (a)
Operating expenses:
Administration
Selling
 Total operating expenses (b)
Operating profit (a-b)
Non-operating expenses
Interest
Income tax
Total non-operating expenses (c)
Net profit (b-c)

Format of common size balance sheet

Common size balance sheet of ------- as on 31st December 2004 and 2005

Particulars 2004 (Example year) % 2005 (Example year) %

Assets
Current Assets
Stock
Debtors
Cash
Total current assets (A)
Fixed Assets
Land and Buildings
Plant and Machinery
Furniture
Total fixed assets (B)
Total assets (A+B)
Liabilities and capital
Current Liabilities
Sundry creditors
Bills payable
Total current liabilities ( A)
 Long term liabilities
12% debentures
Total long term liabilities (B)
Total Liabilities (A+B)
Capital and Reserves
Equity share capital
Retained earnings
Shareholders fund (C)
Total Liabilities (A+B+C)

Format of common size income statement

Common size income statement of ------for the year ended 31st December 2004 and 2005

Particulars 2004 (Example year) % 2005 (Example year) %

Net sales
Less: cost of sales
Gross profit (a)
Operating expenses:
Administration
Selling
Total operating expenses (b)
Operating profit (a-b)
Non-operating expenses
Interest
Income tax
Total non-operating expenses (c)
Net profit (b-c)
 Format for computing Trend Analysis

Particulars 2004 (Example 2005 (Example 2006 (Example 2007 (Example

year) year) year) year)
Net sales
Less: cost of sales
Gross profit (a)
Operating expenses:
Administration
Selling
Total operating expenses (b)
Operating profit (a-b)
Non-operating expenses
Interest
Income tax
Total non-operating
expenses (c)
Net profit (b-c)