The XYZ Company's Statement of Profit and Loss account and Statement of Financial Position for two years have been given below: Statement of Profit…
BBA Financial Accounting · 2024 · Solved Question with Answer
The XYZ Company's Statement of Profit and Loss account and Statement of Financial Position for two years have been given below:
| Statement of Profit and Loss for the year 2080 | |
| Particulars | Amount (Rs.) |
| Revenue from operation | 6,00,000 |
| Cost of sales | (400,000) |
| Gross profit | 200,000 |
| Other income | 20,000 |
| Total | 220,000 |
| Distribution expenses | (60,000) |
| Administrative expenses | (115,000) |
| Operating profit | 45,000 |
| Financial cost | (7,500) |
| Net Profit | 37,500 |
| Statement of the financial position of a company for 2079 and 2080 | ||
| Assets | 2079 | 2080 |
| Non-current assets: | ||
| Property, plant, and equipment | 200,000 | 250,000 |
| Intangible assets | 10,000 | 7,500 |
| Investment (long-term) | 45,000 | 55,000 |
| Total Non-current Assets: | 255,000 | 312,500 |
| Current Assets: | ||
| Inventories / Stock | 20,000 | 30,000 |
| Cash and cash equivalents | 25,000 | 30,000 |
| Account receivable | 20,000 | 15,000 |
| Trade and Other receivable | 15,000 | 20,000 |
| Total current assets | 80,000 | 95,000 |
| Fictitious assets | - | - |
| Total assets | 335,000 | 407,500 |
| Equity: | ||
| Share capital @Rs.100 each | 200,000 | 225,000 |
| Reserve/Retained earnings | 45,000 | 82,500 |
| Non-controlling interest | - | - |
| Total Equity | 245,000 | 307,500 |
| Liabilities: | ||
| Non-current liabilities: | ||
| 10% Loan and Borrowing | 60,000 | 75,000 |
| Total non-current liabilities | 60,000 | 75,000 |
| Current liabilities: | ||
| Trade and Other payable | 15,000 | 25,000 |
| Income tax payable | - | - |
| Provision | 15,000 | - |
| Total current liabilities | 30,000 | 25,000 |
| Total liabilities | 90,000 | 100,000 |
| Total Equity and Liabilities | 335,000 | 407,500 |
Required: Financial analysis for 2080:
a) Current ratio (2:1)
b) Acid test ratio (1:1)
c) Debt to total capital ratio (less than 40%)
d) Stock turnover ratio (at least 8 times)
e) Total assets turnover ratio (more than 1 time)
f) Net profit margin (at least 12%)
g) Return on assets (at least 5%)
h) Return on equity (at least 7%)
i) Average sales period (45 days or less than 45 days)
j) Account receivable turnover ratio (at least 8 times)
k) Comment on the above result.