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Economics & Finance
Articles by Mandalika
Page 32 of 41
Calculate Ratio analysis for following table
LiabilitiesRs.AssetsRs.Equity share capital15000Fixed assets (less depreciation Rs.12000)360007% preference share capital3500Reserves and surplus110006% mortgage debentures16500Current liabilitiesCurrent assetsCreditors1300Cash1790Bills payable2200Investments (12%)4055Outstanding expenses500Sundry debtors4740Stock6415Tax provision30005300053000Additional information − Net sales: Rs.55000, Cost of goods sold: Rs. 48600, Net income before Tax: Rs. 3500, Net income after Tax: Rs. 1400SOLUTIONThe solution is as follows −Short term solvency ratioscurrent ratio = current assets/current liability = 17000/7000 => 2.43:1liquid ratio = liquid ratio/ current liability = (1790+4055)/7000 => 5845/7000=> 0.84:1Long term solvency ratiosproprietary ratio = proprietors fund/total assets = (1500+3500+11000)/53000=> 16000/53000 => 0.32:1(Proprietors fund or shareholders fund = equity share capital + preference share + capital + Reserve ...
Read MorePrepare cash flow statement for the following Balance sheet as on 31st March
Liabilities20042005Assets20042005Share capital100000110000Land and building6000060000Profit and loss a/c Loans2000023000Plant and machinery3500045000Loans-1000stock2000025000Creditors1500018000Debtors1800028000Bills payable50004000Bills receivable20001000Cash500060001400001650005000165000SOLUTIONThe solution is as follows −InflowRs.OutflowRs.Balance b/d5000Purchase of plant10000Issued share capital10000Increase current AssetsLoan10000StockCash opening profit3000Decrease in bills payable5000Decrease in bills1000Balance c/d10000Receivable30001000Increase in creditors60003200032000
Read MoreAnalyse the below table and prepare a common size balance sheet (one of the techniques used in financial statement analysis)
Liabilities2003 (Rs)2004 (Rs.)Assets2003 (Rs.)2004 (Rs.)Capital54825482Cash and balance with RBI67058025543697Reserve and surplus69963008406754Balance with banks and money at call short notice37816115349090Deposits7354078879299033Investments4226011046435410Borrowings672177262960Advances5794769962502390other liabilities and provisions15147661632769Fixed assets369499401240Other assets408108640325228272951389606998115145807124264349solutionThe solution is as follows−PARTICULARS2003 (Rs.)Percentage2004 (Rs.)PercentageAssetsTotal current assetsCash and balance with RBI67058025.8255436974.46Balance with banks and money at call and short notice37816113.2853490904.30Total current assets104874139.10108927878.86Fixed assetsInvestments4226011036.704643541037.37Advances5794769950.336250239050.29Fixed Assets36949900.324012400.32Other Assets408108603.5540325223.25Total Fixed Assets10465839490.9011337156291.23Total Assets (TA)115145807100.00124264349100.0Current liabilitiesBorrowings6721770.812629600.29Other liabilities and provisions15147661.8316327691.82Total Current Liabilities21869432.6418957292.11Fixed liability capital54820.00754820.006Reserves surplus69963008.4684067549.38Deposits7354078888.897929903388.50Total Fixed Liabilities8054257097.368771126997.89Total liability82729513100.0089606998100.00
Read MorePrepare a schedule of changes in working capital and statements of funds of flownBalance sheet as on 31st March
Liabilities20042005Assets20042005Share capital150000180000Land and building8500085000Profit and loss a/c Loans3500042000Plant and machinery5400070000Loans200015000stock3050050000Creditors1700023000Debtors2550045000Bills payable30001000Bills receivable50002000Cash70009000207000261000207000261000SOLUTIONThe solution is as follows − Working capital= current assets – current liabilitiesChanges in working capitalParticulars2004 (Rs.)2005 (Rs.)Incharge (Rs.)Decharge (Rs.)Current AssetsStock305005000019500Debtors255004500019500Bills Receivable500010002000Cash700090002000Total (X)68000106000Current liabilitiesCreditors17000230006000Bills payable300010002000Total (Y)2000024000430008000X-Y480008200035000Increase in W.C.34000340004300043000FUNDS FLOW STATEMENTSourceRs.ApplicationRs.Issued share capital30000Purchase of plant and machinery16000Loan13000Increase in working capital34000Funds from operations70005000050000Funds from operations = 42000-35000 = 7000 (profit and loss a/c)Increase in working capital = 82000-48000 = 34000
Read MoreAnalyse the following table and prepare a trend analysis (one of the techniques used in financialnstatement analysis)
YearDepositsAdvancesProfit199929585549782917751301120003834587510115298594580200146005530128007097382252002536681881428825076951620035878649015799280933680200463372248170362901181468SOLUTIONThe solution is as follows −For DepositsMake Base year as 1990 => 29585549 (100%)YearDepositsCTrend percentage (C*100)199929585549(D1)(D1/D1) = 1100200038345875(D2)(D2/D1) = 1.296129.6200146005530(D3)(D3/D1) = 1.555155.5200253668188(D4)(D4/D1) = 1.814181.4200358786490(D5)(D5/D1) = 1.987198.7200463372248(D6)(D6/D1) = 2.142214.2For Advances − Make Base year as 1990 => 7829177 (100%)YearAdvancesCTrend percentage (C*100)19997829177 (A1)(A1/A1)=1100200010115298 (A2)(A2/A1)= 1.292129.2200112800709 (A3)(A3/A1)= 1.635163.5200214288250 (A4)(A4/A1)= 1.825182.5200315799280 (A5)(A5/A1)= 2.018201.8200417036290 (A6)(A6/A1)= 2.176217.6For profits − Make base year as 1990 => 513011 (100%)YearProfitsCTrend percentage (C*100)1999513011 (P1)(P1/P1)= 11002000594580 (P2)(P2/P1)= 1.159115.92001738225 (P3)(P3/P1)= 1.439143.92002769516 (P4)(P4/P1)= 1.500150.02003933680 (P5)(P5/P1)= 1.820182.020041181468 (P6)(P6/P1)= 2.303230.3
Read MoreHow to prepare comparative balance sheet?
Liabilities2003 (Rs.)2004 (Rs.)Assets2003 (Rs.)2004 (Rs.)Capital54825482Cash and balance with RBI67058025543697Reserve and surplus69963008406754Balance with banks and money at call short notice37816115349090Deposits7354078879299033Investments4226011046435410Borrowings672177262960Advances5794769962502390Other liabilities and provisions15147661632769Fixed assets369499401240Other assets408108640325228272951389606998115145807124264349SOLUTIONThe solution is as follows −ParticularsYear ending 31st marchIncreased/ DecreasedIncreased/ Decreased (%)2003 (Rs.)2004 (Rs.)Amount (Rs)Amount (Rs)AssetsTotal current assetsABA-B=C(C/A)*100Cash and balance with RBI670580255436971162410517.33Balance with banks and money at call and short notice37816115349090-1567479-41.45Total current assets10487413 (X)10892787 (Y)405374 (Y-X=Z)3.86 (Z/X*100)Fixed assetsAB(A-B=C)(A-B=C)Investments4226011046435410-4175300-9.88Advances5794769957947699-4554691-7.86Fixed Assets369499401240-31741-8.59Other Assets408108640325224856411.90Total Fixed Assets104658394 (X’)113371562 (Y’)8713168 (Y’-X’=Z’)8.33 (Z’/X’*100)Total Assets115145807 (x+x’)124264349 (y+y’)91185427.92Current liabilitiesABA-B=C(C/A)*100Borrowings67217726296040921760.88Other liabilities and provisions15147661632769-1180037.79Total Current Liabilities2186943 (X)1895729(Y)29121413.32ABB-A=C(C/A)*100Fixed liability capital54825482--------------------------------------------Reserves surplus69963008406754141045420.16Deposits735407887929903357582457.83Total Fixed Liabilities80542570 (X’)87711269 (Y’)71686998.90X+X’Y+Y’(Y+Y’)-(X+X’)=C’(C’/(X+X’))*100Total liability827295138960699868774858.31
Read MoreExplain various techniques used in financial statement analysis.
Financial statement analysis is interpreted mainly to determine the financial operational performances of the business concern. Following are the common techniques that are widely used −Comparative statement analysis − These statements help to understand the comparative position of financial and operational period at different period of time. It is again classified into 2 types −Comparative balance sheet analysis − As the name suggests, it only concentrates on balance sheet at different period of time. This type of analysis helps to understand the real financial position over the years and how well the organisation utilises its assets, liabilities and capitals during ...
Read MoreDefine financial statement analysis in financial management.
Financial statements provide summary of the accounting of an organisation. The balance sheet reflects the assets and liabilities and capital as on certain data and the income statements tells about the results of operation in a certain period.Financial statements consist of the following −Income statements or Profit and loss accountIt provides entire operational of the concern like total revenue generated and expenses incurred for earning that revenue. Income statement helps to understand the gross profit and net profit of the concern.Balance sheet or the position statementIt helps to ascertain and understand the total assets, liabilities and capital of the firm. ...
Read MoreWhat are key decisions of financial management?
Decision making helps to utilise the available resources for achieving the objectives of the organisation, unless minimum financial performance levels are achieved. Financial management provides both conceptual and analytical framework for financial decision making. The key aspects of financial decision making relate to financing, investment, dividends and working capital management.The top three financial decisions along with the factors affecting the respective decisions are mentioned below −Investment decisionsInvestment decisions tells about total amount of assets to be held in the firm. Since, funds involve cost are available in limited quantity proper utilisation is required for achieving the goal of wealth maximisation.Investment ...
Read MoreWhat is nature and scope of financial management?
Let us first understand the nature of financial management and then study about its scope.Nature of financial managementThe nature of financial management includes the following −Estimates capital requirementsFinancial management helps in anticipation of funds by estimating working capital and fixed capital requirements for carrying business activities.Decides capital structureProper balance between debt and equity should be attained, which minimizes the cost of capital.Financial management decides proper portion of different securities (common equity, preferred equity and debt).Select source of funSource of fund is one crucial decision in every organisation. Every organisation should properly analyse various source of funds (shares, bonds, debentures etc.) ...
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