Assignment: Balance Sheet and Funds Flow Statement
Assignment - A
Question 1(a) What do you understand by the concept of conservatism ? Why is it also called the concept of prudence? Why is it not applied as strongly today as it used to be in the Past?
Question 1(b) What is a Balance Sheet? How does a Funds Flow Statement differ from a Balance Sheet? Enumerate the items which are usually shown in a Balance Sheet and a Funds Flow Statement.
Question 2(a) Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances responsible for its limitations. If any
Question 2(b) Why do you understand by the term 'pay-out ratio'? What factors are taken into consideration while determining pay-out ratio? Should a company follow a fixed pay-out ratio policy? Discuss fully.
Question 3. From the ratios and other data given below for Bharat Auto Accessories Ltd. indicate your interpretation of the company's financial position, operating efficiency and profitability.
Year I
Year II
Year III
Current Ratio
265%
278%
302%
Acid Test Ratio
115%
110%
99%
Working Capital Turnover (times)
2.75
3.00
3.25
Receivables Turnover
9.83
8.41
7.20
Average Collection Period (Days)
37
43
50
Inventory to Working Capital
95%
100%
110%
Inventory Turnover (times)
6.11
6.01
5.41
Income per Equity Share
5.10
4.05
2.50
Net Income to Net Worth
11.07%
8.5%
7.0%
Operating Expenses to Net Sales
22%
23%
25%
Sales increase during the year
10%
16%
23%
Cost of goods sold to Net Sales
70%
71%
73%
Dividend per share
Rs. 3
Rs.3
Rs.3
Fixed Assets to Net Worth
16.4%
18%
22.7%
Net Profit on Net Sales
7.03%
5.09%
2.0%
Question 4: Bose has supplied the following information about his business for the year ended 31 st March, 2004 is as follows: Assets and Liabilities
On 1st April 2003
On 31st March, 2004 Rs.
Rs.
Sundry debtors
1,81,000
1,93,000
Stock
1,50,000
1,40,000
Machinery
2,50,000
?
Furniture
40,000
?
Sundry creditors
1,10,000
1,25,000
Receipts
Rs.
Payments
Rs.
To Opening balance
5,000
By Payments to creditors
Question 1(a) What do you understand by the concept of conservatism ? Why is it also called the concept of prudence? Why is it not applied as strongly today as it used to be in the Past?
Question 1(b) What is a Balance Sheet? How does a Funds Flow Statement differ from a Balance Sheet? Enumerate the items which are usually shown in a Balance Sheet and a Funds Flow Statement.
Question 2(a) Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances responsible for its limitations. If any
Question 2(b) Why do you understand by the term 'pay-out ratio'? What factors are taken into consideration while determining pay-out ratio? Should a company follow a fixed pay-out ratio policy? Discuss fully.
Question 3. From the ratios and other data given below for Bharat Auto Accessories Ltd. indicate your interpretation of the company's financial position, operating efficiency and profitability.
Year I
Year II
Year III
Current Ratio
265%
278%
302%
Acid Test Ratio
115%
110%
99%
Working Capital Turnover (times)
2.75
3.00
3.25
Receivables Turnover
9.83
8.41
7.20
Average Collection Period (Days)
37
43
50
Inventory to Working Capital
95%
100%
110%
Inventory Turnover (times)
6.11
6.01
5.41
Income per Equity Share
5.10
4.05
2.50
Net Income to Net Worth
11.07%
8.5%
7.0%
Operating Expenses to Net Sales
22%
23%
25%
Sales increase during the year
10%
16%
23%
Cost of goods sold to Net Sales
70%
71%
73%
Dividend per share
Rs. 3
Rs.3
Rs.3
Fixed Assets to Net Worth
16.4%
18%
22.7%
Net Profit on Net Sales
7.03%
5.09%
2.0%
Question 4: Bose has supplied the following information about his business for the year ended 31 st March, 2004 is as follows: Assets and Liabilities
On 1st April 2003
On 31st March, 2004 Rs.
Rs.
Sundry debtors
1,81,000
1,93,000
Stock
1,50,000
1,40,000
Machinery
2,50,000
?
Furniture
40,000
?
Sundry creditors
1,10,000
1,25,000
Receipts
Rs.
Payments
Rs.
To Opening balance
5,000
By Payments to creditors