Business Valuation

VALENTINO DSILVA
CLASS - TYBFM
ROLL. NO - 09
 Income Statement of BLUE STAR

bluestar
SALES 4000000
Less: Cost of Sales 3200000
GROSS PROFIT 800000
Less: Operating exp.(administrative and selling exp.) 250000
OPERATING INCOME (A) 550000
Less: Other exp.:
Depreciation on plant and machinery 220000
Interest on debentures 75600
Preliminary Exp. Written off 4000
TOTAL OTHER EXP.(B) 299600
Net income before tax (A-B) 250400
Less: Provisoin for tax 36000
NET INCOME AFTER TAX 214400
 Balance Sheet of BLUESTAR

Liabilities bluestar Assets bluestar

Equity share capital of Rs. 10 each 1500000 Fixed Assets:
Reserves and surplus 800000 Land 500000
Secured loans: 9% Debentures 840000 Plant & Machinery 1916000
Unsecured loans 0 Investments 100000
Current Liabilities % provisions: Current Assets, loans & advances:
(a) Current Liabilities creditors 964000 (a) Current assets
(b) Provisions (income tax provisions) 36000 Stock 720000
Debentures 800000
Cash and Bank 80000
(b) Loans and advances 0
Miscelleanous Expenditure
Preliminary Expenditure 24000
Total 4140000 4140000
 Valuation of Shares

 Return on equity: net profit after tax / shareholder’s funds

 R.O.E. for BLUE STAR = 2,14,000 / 22,76,000 * 100 = 9.42%

 Shareholder’s funds = equity share capital + reserves & surplus – preliminary expenses
 BLUE STAR : 15,00,000 + 8,00,000 – 24,000 = 22,76,000

 Earning per share (E.P.S) : net profit after tax / no. of equity shares
 BLUE STAR : 2,14,000 / 1,50,000 = 1.43 per share
 Profitability Ratio

Gross profit ratio: Gross profit / Sales * 100

 BLUE STAR : 8,00,000 / 40,00,000 * 100 = 20%

Net profit ratio: Net profit / Sales * 100

 BLUE STAR : 2,14,000 / 40,00,000 * 100 = 5.36%
Thank You