1. Prepare the working capital and funds flow statement for ABC Ltd.
Balance Sheet of ABC Ltd as
Liabilities 2004 2005 Assets 2004 2005
Creditors 79000 82270 Cash 5000 5400
Bills payable 67560 23050 Debtors 170350 145250
Overdraft 119020 0 Sundry 4630 1470
Provision for 80000 100000 Stock 222080 194740
taxation
Reserves 79380 82440 Land & 297000 288500
Building
Profit & loss 100000 100000 Plant 225900 232400
&Machinery
Share capital 400000 520000 Goodwill 0 40000
924960 907760 924960 907760
Additional Information
1. During the year 31-3-2005 and interim dividend of Rs. 52,000 was paid
2. The assets of another company were purchased for Rs. 1,20,000 payable in fully paid
shares of the company. These assets consisted of stock Rs. 43,280. Machinery Rs. 36,720
and Good will Rs. 40,000.
3. In addition the plant was purchased for Rs. 11,300.
4. Income tax paid during the year Rs. 50,000.
5. The net profit for the year before tax was Rs. 1,23,000.
2. From the following information, Prepare comparative Balance sheet of X Ltd. Particulars 31st
Mar, 2004 31st Mar, 2005
3. From the following information, prepare a comparative income statement:
4. Prepare the common size statement analysis for the firm ABC Ltd.
5. From the following table, prepare the common size statement analysis.
6. Compute trend percentages for the following particulars of Boomi Ltd.
7. Two firms A and B have following information:
Particulars Firm A Firm B
Sales (Rs. Lakh) 1800 1500
Variable Costs 450 750
Fixed costs 900 372
You are required to calculate (a) profit to sales ratio, (b) break-even point and (c) the degree
of operating leverage for both firms.
Comment on the positions of the firms. If sales increase by 20% what shall be the impact on
profitability of the two firms?
8. Consider the following information for XYZ Enterprise:
Particulars (Rs. Lakh)
EBIT 1.120
PBT 320
Fixed Cost 700
Calculate percentage change in earnings per share if sales increased by 5%
9. ABC LTD. Needs Rs. 10 lakh (1 million) for expansion. The expansion is expected to yield an annual
EBIT of Rs. 160000. In choosing a financial plan. ABC Ltd. Has an objective of maximizing earnings
per share. It is considering the possibility os issuing equity shares and raising debt of Rs. 100000 or
Rs 400000 or Rs 600000. The current market price per share is Rs. 25 and is expected to drop to Rs.
20 if the borrowed in excess of Rs. 500000. Funds can be borrowed in excess of below:
(a) upto Rs. 100000 at 8%. (b) over Rs. 100000 upto Rs. 500000 at 12% (c) over Rs. 500000
at 18%
Assume tax rate of 50%. Determine the EPS for the three financing alternatives.
10. The following figures to the trading acitivities of Hind Traders Ltd. For the year ended
30thMay2021. You are required to prepare the profit and loss statement and calculate ratio
for the same.
Particulars Amount
Sales 1500000
Salaries 81000
Rent 8100
Opening Stock 228750
Purchases 966750
Closing Stock 295500
Selling and 45900
distribution Expenses
salaries
Advertising 14100
Travelling 6000
Stationery, postage, 7500
etc
Depreciation 27900
Other charges 49500
Provision for taxation 120000
Non-operating 12000
expenses loss on sale
of assets
Non-operating 2000
income divinded on
shared
Profit on sale of 9000
shares
Sales return 60000
11. The following is the details of the financial statements for XYZ. Co. for 2014.
Particulars Amount (Rs.)
Creditors 280000
Cash 70000
Bills payable 140000
Debtors 350000
Outstanding expenses 40000
Stock 490000
Provision for tax 100000
Fixed assets (net) 1050000
Long-term debt 840000
Goodwill 140000
Preference share capital 280000
Equity Share capital 140000
Reserves 280000
Sales in cash 280000
Sales in credit 1120000
Cost of goods Sold 840000
Selling, administrative and general expenses 140000
Depreciation 98000
Interest on long-term debt 42000
Taxes 140000
Preference dividend 17000
Reserve at 1 january 2013 305000
Dividend paid to euity shareholders 25000
(a) Prepare the profit and loss statement , Balance sheet , Calculate ratios for 2013 and evaluate
the company financial position.
(b) Using relevant ratio indicate what decision would be taken in the following situations: (i) XYZ
co. wants to buy material of Rs. 70000 on a three, month credit from A. (ii) XYZ co. offer to
sell 70000 additional shares for Rs. 112 per shares to financial institution. (iii) XYZ co. wants
to issue 16% debentures of Rs. 300000 with ten years maturity
12. A currency trader working at PQR capital management, expects higher volatility in the
foreign exchange market owing to uncertain geographical situation. He expects the rupeeto
either appreciate by 3% or depreciate by 3% in comparison to the USD in 30 days times. He
assumes equal probility for the two senarios. The currency quote system installed at PQR
capital management is flashing the following quotes:
Spot rate Rs. 61/USD
Future rate (for 1 month) Rs. 61.80/USD
Call option (strike price Rs. 61, 1 month) 0.90/USD
Put option (strike price Rs 61, 1 month) 0.30/USD
(a) What strategy should the currency trader adopt?
(b) If the end of the month the spot rate is RS. 62.40/USD, what is the return on investment?
