 SOLUTIONS 

12th | Ts grewal 2021-2022 Question 25 And 26 | ch:3 Tools

of Financial statement analysis- Comparative statement and
Common-Size statement

Page No 3.38:

Question 25:

Prepare Common-size Balance Sheet and comment on the financial

position of Sun Ltd. and Star Ltd. The Balance Sheet of Sun Ltd. and
Star Ltd. as at 31st March, 2019 are:
Particulars Sun Ltd. Star Ltd.
( `) ( `)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 9,00,000 12,00,000
(b) Reserves and Surplus 4,00,000 3,50,000
2. Current Liabilities
Trade Payables (Creditors) 2,00,000 2,50,000
Total 15,00,000 18,00,000
II. ASSETS
1. Non-Current Assets
Fixed Assets (Tangible) 10,00,000 16,00,000
2. Current Assets
Trade Receivables (Debtors) 5,00,000 2,00,000
Total 15,00,000 18,00,000

Answer:

Common Size Balance Sheet

as at March 31, 2019
Particulars Absolute Amount Percentage of Balance
(`) Sheet Total
(%)
Sun Ltd. Star Ltd. Sun Ltd. Star Ltd.
I. Equity and Liabilities
1. Shareholders’
Funds
a. Share Capital 9,00,000 12,00,000 60.00 66.67
b. Reserve and 4,00,000 3,50,000 26.67 19.44
Surplus
2. Current Liabilities
a. Trade Payables 2,00,000 2,50,000 13.33 13.89
Total 15,00,000 18,00,000 100.00 100.00
II. Assets
1. Non-Current Assets
a. Fixed Assets 10,00,000 16,00,000 66.67 88.89
2. Current Assets
a. Trade Receivables 5,00,000 2,00,000 33.33 11.11
Total 15,00,000 18,00,000 100.00 100.00

Comments:

1. Star Ltd. has a greater share of Capital in the total sources of funds i.e.
66.67% in comparison to 60% of Sun Ltd.

2. Sun Ltd. retains 26.67% of their earnings as a part of Reserves and

Surplus. Whereas, Star Ltd. retains only 19.44% of their earnings.

3. Star Ltd. has invested major portion of its funds on acquiring the Fixed
Assets as these are 88.89% of the total application of funds in comparison
to 66.67% of Sun Ltd. On the other hand, Sun Ltd. emphasizes more on
Current Assets as these are 33.33% of the total applications of funds in
comparison to 11.11% of Star Ltd.

Page No 3.38:
Question 26:
From the following information, prepare a Common-size Balance Sheet:
BALANCE SHEET as at 31st March, 2021
Particulars Note No. March, 31st 31st March,
2021 (`) 2020 (`)
I. EQUITY AND LIABILITIES
1. Shareholders' Funds
(a) Share Capital 32,00,000 18,00,000
(b) Reserves and Surplus 8,00,000 6,00,000
2. Non-Current Liabilities
Long-term Borrowings 16,00,000 12,00,000
3. Current Liabilities
Short-term Borrowings 8,00,000 12,00,000
Total 64,00,000 48,00,000
Il. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment (Fixed Assets):
Tangible Assets 18,00,000 16,00,000
(b) Non-current Investments 8,00,000 6,00,000
2. Current Assets
(a) Inventories 10,00,000 8,00,000
(b) Trade Receivables 16,00,000 12,00,000
(c) Cash and Cash Equivalents 12,00,000 6,00,000
Total 64,00,000 48,00,000

Answer:
Common-Size Statement of Balance Sheet as at 31st March, 2021
Particulars Note Absolute Amounts Percentage of Revenue from
No. Operation (Net Sales)
31st March, 31st March, % 31st March, % 31st March,
2020 (`) 2021 (`) 2020 (`) 2021 (`)
I. EQUITY AND
LIABILITIES
1. Shareholders' Funds
(a) Share Capital 18,00,000 32,00,000 37.5 50
(b) Reserves and Surplus 6,00,000 8,00,000 12.5 12.5
2. Non-Current Liabilities
Long-term Borrowings 12,00,000 16,00,000 25 25
3. Current Liabilities
Short-term Borrowings 12,00,000 8,00,000 25 12.5
Total 48,00,000 64,00,000 100 100
Il. ASSETS
1. Non-Current Assets
(a) Property, Plant and
Equipment (Fixed Assets):
Tangible Assets 16,00,000 18,00,000 33.33 28.13
(b) Non-current Investments 6,00,000 8,00,000 12.5 12.5
2. Current Assets
(a) Inventories 8,00,000 10,00,000 16.67 15.62
(b) Trade Receivables 12,00,000 16,00,000 25 25
(c) Cash and Cash 6,00,000 12,00,000 12.5 18.75
Equivalents
Total 48,00,000 64,00,000 100 100

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