NMIMS 2nd sem assignment Financial Accounting & Analysis

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Financial Accounting & Analysis

Q1. From the following information of A star Ltd. prepare the Cash Flow statement for the year ended 2017 and 2018 as per AS – 3. (10 Marks)

Liabilities	31-3-2017	31-3-2018	Assets	31-3-2017	31-3-2018
Equity share capital	2,20,000	2,50,000	machinery	2,00,000	2,30,000
9% Preference Share Capital	1,00,000	1,10,000	Building	1,50,000	1,76,000
Securities Premium	20,000	26,000	Land	18,000	18,000
Profit & Loss A/c	1,04,000	1,34,000	Stock	84,000	98,000
5% Debentures	70,000	64,000	Debtors	38,000	38,000
Creditors	38,000	46,000	Bills Receivable	42,000	62,000
Bills Payable	5,000	4,000	Cash	42,000	32,000
Provision for Tax	10,000	12,000
Dividends payable	7,000	8,000
	5,74,000	6,54,000		5,74,000	6,54,000

Calculation of Cash Flow as per AS 3 can be done as follows:

Cash Flow Statement of A Star Ltd.

Q2. Balance Sheet for JK Ltd. for the year ended 31st March 2016 & 2017 (10 Marks)

Liabilities	2016	2017	Assets	2016	2017
Equity Share Capital	2,00,000	2,00,000	Land	50,000	50,000
9% Preference Share Capital	1,50,000	1,50,000	Building	1,50,000	1,35,000
Reserves	1,00,000	1,22,500	Plant & Machinery	1,50,000	1,35,000
17% Debentures	50,000	75,000	Furniture	50,000	70,000
Creditors	75,000	1,00,000	Stock	1,00,000	1,50,000
Bills Payable	25,000	37,500	Debtors	1,00,000	1,50,000
Tax payable	50,000	75,000	Cash	50,000	70,000
	650000	760000		650000	760000

Profit & Loss Account for JK Ltd. for the year ended 31st March 2016 and 2017

Particulars	2016	2017	Particulars	2016	2017
To Cost of goods sold	3,00,000	3,75,000	By Sales	4,00,000	5,00,000
To Operating Expenses
Administrative	6,500	7,250
Selling	10,000	10,000
To Interest on Debentures	8,500	12,750
To Net Profit	75,000	95,000
	4,00,000	5,00,000		4,00,000	5,00,000

Using the tool of common size financial statement analysis, comment about the improvement or decline of financial performance of the company.

In an uncertain business environment with fluctuations in trends, there may be variations in the earnings, profitability or solvency of the company. Every year the profits of

Q3. The following extracts are available from the financial statements of companies V ltd. and J Ltd. for the year ended 31st March 2017: (Rs. In Lakhs)

Particulars	V Ltd.	J Ltd.
Revenue from operations	1,500	6,000
Manufacturing cost	900	4,050
Interest paid	105	375
Depreciation	135	675
Selling expenses	135	225
Income Tax	90	225
Non-operating income	45	285
Dividend paid	120	600
Fixed Assets	1,500	7,350
Current Assets	525	2,250
Current Liabilities	375	2100
Debentures	600	3,300
Reserves	450	1,200
Share Capital	600	3,000

From the above information answer the following questions with the help of suitable ratios:

Q3a)

Which company has better solvency using current ratio and share value using earning per share?

Which company would you recommend for investment? Justify. (5 Marks)

Calculation of Current Assets:

Particulars

V Ltd.

J Ltd.

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.