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INSTITUTE OF INNOVATION IN TECHNOLOGY & MANAGEMENT

MANAGEMENT ACCOUNTING

BBA-III SEMESTER

ASSIGNMENT-3

RATIO ANALYSIS

1.

2.

Explain the methodology for construction of Du Pont Chart. Do you think that it is one of the best tools of financial analysis of firms? Give reasons for your answer.

The following information is available for KCP Ltd for the year March 31, 2000:-

Total debt to equity ratio 2.5 Current ratio 2.4 Acid-test ratio 1.6 Cost of goods
Total debt to equity
ratio
2.5
Current ratio
2.4
Acid-test ratio
1.6
Cost of goods sold to
inventory ratio
8
Gross profit margin
20%
Average collection period
45
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)

Using the following data, complete the balance sheet of X ltd. As on 31.3.2009

Gross profit is 25% of sales Gross profit =1,20,00,000 Shareholder’s equity=Rs. 20,00,000 Credit sales to total sales=80% Total turnover to total assets id 4 times Cost of sales to inventory is 10 times. Average collection period is 30 days. Long term data=? Current ratio is 1.5

Current assets minus Current Liabilities Rs. 56 lakhs. The capital structure of the company consists of equity share capital, reserves and surplus and current liabilities. The assets of the company consist of fixed assets, inventories, debtors and cash. The reserves and surplus amount to two-third of equity share capital and fixed assets amount to 44% of the net worth. All the sales of the company are on credit basis. Assume 1 year=360days. Prepare the balance sheet of the company as on March 31, 2000.

3.

the balance sheet of the company as on March 31, 2000. 3. (viii) (ix) (x) Sundry

(viii)

(ix)

(x) Sundry creditors are Rs. 60,00,000

 

Balance Sheet of X Ltd.

 

Liabilities

Rs.

Assets

Rs.

Sundry creditors

-

Cash

-

Long term debt

-

Sundry debtors

-

Share capital

-

Inventory

-

1

Fixed assets

-

2008(Rs)

2009(Rs)

20, 00,000

25, 00,000

60,000

35,000

5.

Following are the income statements of W Ltd. For 2008 and 2009.

Profit and Loss account Income Sales Dividend Income Total income

20, 60,000 25, 35,000 Expenditure Purchases Manufacturing expense Office expense Selling expenses Depreciation
20, 60,000
25, 35,000
Expenditure
Purchases
Manufacturing expense
Office expense
Selling expenses
Depreciation
Interest paid
6,00,000
7,00,000
3,00,000
4,00,000
2,50,000
2,10,000
2,00,000
3,50,000
50,000
60,000
25,000
30,000
PBT
Provision for Tax
PAT
Proposed Dividend
Reserves and surplus
6,35,000
7,85,000
1,20,000
1,50,000
5,15,000
6,35,000
50,000
60,000
4,65,000
5,75,000
Additional information:
Share capital
25,00,000
35,00,000
Secured loans
8,00,000
10,00,000
Creditors
2,50,000`
2,40,000

Inventory

10,00,000

12,00,000

11,00,000

14,00,000

2,40,000 Inventory 10,00,000 12,00,000 11,00,000 14,00,000 Debtors Comment upon: i) Profitability ii) Return

Debtors

Comment upon:

i) Profitability

ii) Return generation

iii) Liquidity

6. Calculate currents assets of a company for the following information:-

(a) Stock Turnover Ratio : 4 Times

2

(b)

Stock of the end of year is Rs.20,000 more than stock in the beginning.

(c)

Sales Rs. 3,00,000.

(d)

Gross Profit Ratio 25%.

(e)

Current Liabilities Rs.40,000.

(f) Quick Ratio 0.75.

7. The balance sheet of XYZ Ltd is given as under for the year 31
7. The balance sheet of XYZ Ltd is given as under for the year 31 st March 2013:
Liabilities
Amount
Assets
Amount
Equity share capital
300000
Goodwill
200000
Reserve fund
150000
Land and building
300000
8% debentures
200000
Plant and machinery
250000
Mortgage load
400000
Patents
50000
Sundry creditors
50000
Stock
150000
Bills payable
25000
Sundry debtors
100000
Bank overdraft
40000
Bills receivable
80000
Outstanding expenses
10000
Marketable securities
18000
Tax liabilities
15000
Cash balance
40000
Prepaid expenses
2000
1190000
1190000
Purchases are Rs. 300000 and sales are Rs. 500000.
From the following, calculate:
(i)
Current ratio
(ii)
Acid-test ratio
(iii)
Inventory turnover ratio
(iv)
Average collection period
(v)
Debtor’s turnover ratio
(vi)
Creditor’s turnover ratio
(vii)Average
payment period
(viii)
On the basis of the above analysis, also comment on the cash
management of the firm.
8.
Following are the ratios of the trading activities of National Traders Ltd.
Debtor’s velocity = 3 months
Stock velocity = 8 months
Creditor’s velocity = 2months

Gross profit ratio = 25%

Gross profit for the year ended 31 st Dec.2008 amounts to Rs. 4,00,000.

Closing stock of the year is Rs. 10000 above the opening stock.

Bills receivables amount to Rs. 25,000 and bills payable Rs. 10000.

Find out: (a) Sales (b) Sundry debtors (c) Closing stock (d) Sundry creditors

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