Unit 1 – Financial Statement Analysis

1. The following are the balance sheet of Surendra Ltd. For the year ending 31st Dec. 2012 & 2013.
Particulars 2012 2013
I.Equity And Liabilities
Shareholders’ funds:
Share Capital
Equity Share Capital 2,00,000 3,30,000
Preference Share Capital 1,00,000 1,50,000
Reserves and Surplus:
Reserves 20,000 30,000
Profit & Loss A/c 15,000 20,000
Non-Current Liabilities - -
Current Liabilities
Bank Overdraft 50,000 50,000
Creditors 40,000 50,000
Provision for Taxation 20,000 25,000
Proposed Dividend 15,000 25,000
Total 4,60,000 4,60,000
II. Assets
Non-Current Assets:
Fixed Assets ( Less Depreciation) 2,40,000 3,50,000
Current Assets:
Stock 40,000 50,000
Debtors 1,00,000 1,25,000
Bills Receivables 20,000 60,000
Prepaid Expenses 10,000 12,000
Cash in Hand 40,000 53,000
Cash at Bank 10,000 30,000
Total 6,80,000 6,80,000
Prepare a Comparative Balance Sheet of the company and study its financial Position.

2.The Balance sheets of a company are given as under .Explain the significance of changes in
assets & liabilities of these comparative balance sheets:
31st March 2015 31st March 2016
Equity share capital 5,00,000 10,00,000
Preference share capital 1,00,000 2,00,000
General reserves 1,00,000 2,50,000
Accounts Payable 1,00,000 2,00,000
Outstanding expenses 50,000 50,000
P& L Account 2,00,000 3,00,000
10,50,000 20,00,000
Fixed assets 4,00,000 10,00,000
Investments 3,00,000 1,00,000
Receivables 2,00,000 4,00,000
Inventories 1,00,000 4,00,000
Cash 50,000 1,00,000
10,50,000 20,00,000
2. Following is the Income Statement of Swastik Ltd. Bombay, for the years 2010 and 2011. Prepare a
Comparative Income Statement and comment on the profitability of the company.
Particulars 2010 2011 Particulars 2010 2011
To Opening stock 85,000 2,00,000 By Sales 10,00,000 12,00,000
To Purchase 5,00,000 5,50,000 By Closing Stock 2,00,000 2,25,000
To Wages 60,000 80,000 By Interest from
To Salaries 42,000 64,000 Investment 12,000 15,000
To Rent, rates & taxes 35,000 40,000 By Dividend rec. 5,000 7,500
To depreciation 40,000 60,000
To Selling expenses 12,000 12,000
To Discount allowed 5,000 7,000
To Loss on sale of plant - 8,000
To Interest paid 12,000 14,000
To Net profit 4,26,000 4,12,500
12,17,000 14,47,500 12,17,000 14,47,500

3. Following income statement of a business are given for the years ending 31st Dec. 2010 and 2011.
Rearrange them in a comparative form and make comments.
Particulars 2010 2011 Particulars 2010 2011
To cost of goods sold 9,00,000 9,50,000 By Sales 15,25,000 17,00,000
To administrative exp. 93,250 95,980 By Interest 7,500 6,200
To Selling expenses 1,90,000 2,09,000 By Profit on sale of land 6,000 8,000
To Interest paid 8,000 7,000
To Loss on sale of machinery 2,500 800
To Income tax 85,000 1,68,000
To Net Profit 2,59,750 2,83,420
15,38,500 17,14,200 15,38,500 17,14,200

4. Convert the following Balance Sheet into common-size balance sheet and interpret the results.
Liabilities 2011 2012 Assets 2011 2012
Equity and Liabilities Fixed Assets:
Shareholder’s Fund: Building (-) Dep. 800 1,400
Equity share capital 1,000 1,200 Land 198 345
Reserves and surplus: Furniture & Fixture 77 105
Capital Reserve 90 185 Current Assets:
General Reserve 500 450 Debtors 450 390
Sinking Fund 90 100 Cash 200 15
Non-current Liabilities: Stock 320 250
10% Debentures 450 650 Investments 300 250
Current Liabilities:
Sundry creditors 200 150
Others 15 20
2,345 2,755 2,345 2,755
5. The following figures relate to the activities of S.K. Ltd., New Delhi for the year ending 31st
March 2011. You should study the Income Statement of the concern with the help of common
size statement.
Particulars Amount
 Sales 7,50,000
Purchases 3,75,000
Opening Stock 70,000
Closing stock 80,000
Administrative expenses:
Salaries 37,000
Rent 12,000
Postage and stationery 5,000
Provision for taxation 50,000
Selling & Distribution Expenses:
Salaries 18,000
Advertising 6,000
Commission on sales 7,500
Discount 2,000
Non-operating expenses:
Interest 5,000
Loss on sale of Assets 11,500
Non-Operating Income:
Profit on sale of investments 9,500

6.Calculate the trend percentages from the following figures of priya enterprises taking 1995 as
the base & interpret:
YEAR SALES STOCK PROFIT BEFORE
TAX
1995 1,881 709 321
1996 2,340 781 435
1997 2,655 816 458
1998 3,021 944 527
1999 3,768 1,154 672