STATEMENT SHOWING TREND PERCENTA

Particulars 1987 1988 1989 1990 1987% 1988% 1989% 1990%

Sales 1000 950 1200 1300 100 95.00 120.00 130.00
cost of goods sold 600 589 696 728 100 98.17 116.00 121.33
Gross profit 400 361 504 572 100 90.25 126.00 143.00
Total selling expenses 100 97 110 120 100 97.00 110.00 120.00
Net operating profit 300 264 394 452 100 88.00 131.33 150.67
REND PERCENTAGE
 Percentage of sales
Particulars 2015-16 2016-17
2015-16
Revenue from Operations 600000 800000 100.00
Other income 10000 12000 1.67
TOTAL REVENUE 610000 812000 101.67
EXPENSES
a) Cost of revenue from operation 428000 728000 71.33
b) Other expenses 45500 21000 7.58
TOTAL EXPENSES 473500 749000 78.92
Profit before tax(TR-TE) 136500 63000 22.75
Less: Income tax 40950 18900 6.83
Profit after Tax 95550 44100 15.93
Percentage of sales
2016-17
100.00
1.50
101.50

91.00
2.63
93.63
7.88
2.36
5.51
 COMPARATIVE INCOME STATEMENT

Particulars 2017 (Rs) 2016 (Rs) Absolute change Percentage change

I. EQUITY & LIABILITIES
Equity share capital 400,000 300,000 100,000 33.33
reserves and surplus 150,000 100,000 50,000 50.00
Loan from IDBI 300,000 100,000 200,000 200.00
Short term borrowing 70,000 50,000 20,000 40.00
Trade payable 60,000 30,000 30,000 100.00
Short term provisions 10,000 20,000 -10,000 -50.00
Other current liabilities 110,000 100,000 10,000 10.00
TOTAL 1,100,000 700,000 400,000 57.14
II. ASSETS
Fixed assets 400,000 220,000 180,000 81.82
Non-current investments 225,000 100,000 125,000 125.00
Current investments 80,000 60,000 20,000 33.33
Stock 105,000 90,000 15,000 16.67
Trade receivables 90,000 60,000 30,000 50.00
Short terrm loans& advances 100,000 85,000 15,000 17.65
Cash & Cash equivalents 100,000 85,000 15,000 17.65
TOTAL 1,100,000 700,000 400,000 57.14
 Particulars 31.03.2017 31.03.2018 Absolute change C=B-A
revenue from operations 1000000 1250000 250000
other income 30000 30000
Total income(i) 1030000 1280000 250000
expenses
cost of materials consumed 500000 650000 150000
other expenses 50000 60000 10000
Total expenses(ii) 550000 710000 160000
Profit before tax (i-ii) 480000 570000 90000
Tax 240000 285000 45000
Profit after tax (PAT-tax) 240000 285000 45000
Percentage change AC/BY*100
25.00

24.27

30.00
20.00
29.09
18.75
18.75
18.75
 FLEXIBLE BUDGET
50% 75%
Particulars 1000 units 1500 units
Per Unit(Rs.) Total (Rs.) Per Unit(Rs.) Total (Rs.)
DIRECT EXPENSES
Materials 100 100000 100 150000
Labour cost 50 50000 50 75000
Variable expenses 10 10000 10 15000
PRIME COST 160 160000 160 240000
Administrative expenses
Variable (50%) 20 20000 20 30000
Fixed(50%) 20 20000 13.333333333 20000
COST OF PRODUCTION 200 200000 193.33333333 290000
Selling and distribution expenses
Variable (40%) 20 20000 20 30000
Fixed(60%) 30 30000 20 30000
TOTAL COST 250 250000 233.33333333 350000
 Working Notes
100%
2000 units Administrative expenses
Per Unit(Rs.) Total (Rs.) Variable (50%) 40000
Fixed (50%) 40000
100 200000
50 100000
10 20000 Selling and distribution expenses
160 320000 Fixed(60%) 50000
Variable (40%) 50000
20 40000
10 20000
190 380000

20 40000
15 30000
225 450000
tes

20000
20000
13.33333
10

30000
20000
1)Initial deposit (P) 200000
Interest ® 10% 1) Raj makes an initial deposit of 2 la
Number of years 6

Amount of matrurity/Future value= P(1+R)^n

FV using financial 3) If you deposit an amount of $500.0
FV YEARS Amt(Rs.)
function the future value that it wi
Future value 6 354312.20 ₹ -354,312.20
Future value 7 389743.42 ₹ -389,743.42 Year
Future value 8 428717.76 ₹ -428,717.76 1
Future value 9 471589.54 ₹ -471,589.54 2
Future value 10 518748.49 ₹ -518,748.49 3
4
2) Principal (P) 25000 5
Rate of interest ® 10% 6
No. of years 5 7
calculate a) Annually b) Half-yearly 8
9
Amount of matrurity/Future value= P(1+R)^n 10

a) Annually
Future value 40262.75 ₹ -40,262.75

b) Half yearly FV= P(1+R)^nm

R= Rate of interest for 6 months 0.05
m= frequency of compunding =12/6 2
Future value 40722.3657 ₹ -40,722.37
 Time value of money
1) Raj makes an initial deposit of 2 lakhs in lakshmi ltd interest compounded at 10% per annum for 6 years
compute amt of maturity

If you deposit an amount of $500.00 for 5 years at the rate of interest prvided at 5%, then we will calculate
the future value that it will receive at the end of the 5th year in the following manner

Opening Balance Deposit Interest Interest Value Closing Balance

500 5% 25.00 525.00
525.00 500 5% 51.25 1076.25
1076.25 500 5% 78.81 1655.06
1655.06 500 5% 107.75 2262.82
2262.82 500 5% 138.14 2900.96
2900.96 500 5% 170.05 3571.00
3571.00 500 5% 203.55 4274.55
4274.55 500 5% 238.73 5013.28
5013.28 500 5% 275.66 5788.95
5788.95 500 5% 314.45 6603.39
4) The expected cash inflows are as follows

YEAR 1 2 3 4 5
CASH IN FLOW(Rs.) 3000 4500 6000 8000 10000
Discount rate is 16%. Find out the present value of cash inflows
PVF= 1/(1+R)^n
SOLUTION:
CASH IN FLOWPRESENT VALUE PRESENT PV= CIF*PVF
YEARS
(Rs.) FACTOR 16% VALUE (Rs.)
1 3000 ₹ 0.862 ₹ 2,586.21
2 4500 ₹ 0.743 ₹ 3,344.23
3 6000 ₹ 0.641 ₹ 3,843.95
4 8000 ₹ 0.552 ₹ 4,418.33
5 10000 ₹ 0.476 ₹ 4,761.13
TOTAL VALUE OF PRESNT VALUE OF CASH INFLOWS ₹ 18,953.84
 5) A machine is to be selected from two competing projects which require an equal investment of Rs.75,000 and are expect
Year Project I Project II
1 37500 15000
2 22500 18000
3 15000 27000
4 0 37500
5 18000 12000
6 9000 6000
10%
COST OF CAPITAL
which proposal should be chosen and why? Evaluate the project proposals under
a) Pay-Back period b) Net Present value DF= Discount Factor
PV= Present value
SOLUTION: CCI- Cumulative cash inflow
a) PAY BACK PERIOD METHOD:
PROJECT I PROJECT II
YEAR
CI (Rs.) CCI (Rs.) CI (Rs.) CCI (Rs.)
1 37500 37500 15000 15000
2 22500 60000 18000 33000
3 15000 75000 27000 60000
4 0 75000 37500 97500
5 18000 93000 12000 109500
6 9000 102000 6000 115500
TOTAL 102000 115500

Inference:
Project 1 3 FORMULA
Project 2 3.4 3+1st year CI/4th year CI

Project 1 should be selected because it has shorter Pay back period

PRESNT VALUE PROBLEM

6) What is the present value of $1,000 received in two years if the interest rate is?
a) 12% per year discounted annually
b) 12% per year discounted semi-annually
c) 12% per year discounted daily

PV 1000
n (years) 2

SOLUTION:
 a) FV = PV/(1+R)^n
PV 797.194
PV using Financial -797.193877551
function
b) SEMI-ANNUALLY
PV 792.09
PV using Financial -792.09
function
c) DISCOUNTED DAILY
12%/365 0.0003288
2*365 730

PV 786.658888964
PV using Financial -786.658888964
function
nvestment of Rs.75,000 and are expected to generate net cash flow as under:

b) NET PRESENT VALUE :

PROJECT I PROJECT II
YEAR
CI (Rs.) DF @ 10% PV (Rs.) CI (Rs.) DF @ 10% PV (Rs.)
1 37500 0.909 34090.91 15000 0.909 13636.36
2 22500 0.826 18595.04 18000 0.826 14876.03
3 15000 0.751 11269.72 27000 0.751 20285.50
4 0 0.683 0.00 37500 0.683 25613.00
5 18000 0.621 11176.58 12000 0.621 7451.06
6 9000 0.564 5080.27 6000 0.564 3386.84
Total PV of Future CI 80212.52 85248.80
Initial Investment NPV 75000 75000
NPV 5212.52 10248.80

Using Financial function:

YEAR PROJECT I PROJECT II
Total PV of
future Cash
inflows 80212.52161 85248.80035
Initial
investment 75000 75000
NPV 5212.52 10248.80035

INFERENCE:

Both project need the same investment of Rs.75000. However in case of project I, there is a
surplus of Rs.5212. While in case of project II there is a surplus of Rs. 10,249. Hence Project II
is preferred
 FORMULAS
DF= 1/(1+R)^n
PV=CI*DF
 1) A firm usually forecasts cashflows in nominal terms and discounts @ 10.25% nominal rate. The firm is considering a proje
Rs.20000 and forecasted cash flows in real terms that is in terms of current purchasing powe
Year Cash flows
1 10000
2 16000
3 12000
The firm expects inflation to be at the rate of 5% per annum

DISCOUNTED PAY BACK PERIOD

1) Project N has an initial investment of Rs. 3,00,000 Its cashflow for 5years are :
YEAR CASH FLOW
1 90000
2 108000
3 90000
4 79200
5 72000
Determine the discounted pay back period, assuming a discount rate of 10% per annum

ACCOUNT /AVERAGE RATE OF RETURN

1) Project A requires an investment of 20,00,000 and yields profit after tax and deprecation as follows:
YEAR PROFIT AFTER TAX &
DEPRECIATION
1 100000
2 150000
3 250000
4 260000
5 160000

At the end of 5th year, the plant can be sold for Rs.1,60,000. You are required to calculate ARR.
firm is considering a project at present involving a immediate cash flow of
current purchasing power of Rs. as follows
 INTERNAL RATE OF RETURN- NET INITIAL INVES
1) Present value of cash inflows is more than investment of Rs.8,00,000. A much higher rate should be app
YEAR CI PV Factor @
40%
1 3,60,000
2 3,60,000
3 3,20,000
4 3,20,000
5 2,40,000

2) The cash flow of two mutually exclusive projects as follows:

YEAR PROJECT P PROJECT J
1 13000 7000
2 8000 13000
3 14000 12000
4 12000 0
5 11000 0
6 15000 0
Initial
investment 40000 20000
Estimate the IRR for project PV FACTOR PV FACTOR
P and J 15% 14%
SOLUTION:

YEAR CF PROJECT P CF PROJECT J PVF 15% PRESENT VALUE PRESENT VALUE

PR0JECT P (Rs.) PROJECT J (Rs.)
1 13000 7000 0.870 11304 6087
2 8000 13000 0.756 6049 9830
3 14000 12000 0.658 9205 7890
4 12000 0 0.572 6861 0
5 11000 0 0.497 5469 0
6 15000 0 0.432 6485 0
PV OF CFAT 45374 23807
Less: PV of cashoutflow 40000 20000
NPV 5374 3807

YEAR CF PROJECT P CF PROJECT J PVF 14% PRESENT VALUE PRESENT VALUE

PR0JECT P (Rs.) PROJECT J (Rs.)
1 13000 7000 0.877 11404 6140
2 8000 13000 0.769 6156 10003
3 14000 12000 0.675 9450 8100
4 12000 0 0.592 7105 0 IRR
5 11000 0 0.519 5713 0
6 15000 0 0.456 6834 0
 PV OF CFAT 46661 24243
Less: PV of cashoutflow 40000 20000
NPV 6661 4243
URN- NET INITIAL INVESTMENT/NET ANNUAL CASH FLOW
higher rate should be applied. Let us apply 40% rate:

PVF=1/(1+R)^n
IRR= Lower rate + positive NPV/Difference in calculated
present value*Difference in rate

14% 15%
1287 436
19.2% 23.7%
Anil enterprises present you the following income statement and request you to calculate
1) Operating ratio
2) Expense ratio
3) Operating profit ratio
4) Gross profit ratio
5) Net profit ratio

Particuars AMOUNT AMOUNT

Sales 860000
Less:Sales return 60000
Net sales
Less:Cost of goods sold 350000
Gross profit
Non Operating Incomes
Add: Profit on sale of investment 30000
Add:Income from Investment 20000

Less: Operating Expenses

Administartive expenses 40000
Selling expenses 16000
Distribution Expenses 20000
Non operating expenses
Finance Expenses 30000
Loss on sale of plant 20000
Provision for income tax 30000
Net Profit

The following figure relate to the trading activity of a company for the year ended 31-12-1987

PARTICULARS AMOUNT(Rs.)
Sales 100000
Purchase 70000
Closing stock 14000
Sales returns 4000
Dividend received 1200
Profit on sale of fixed assets 600
Loss on sale of shares 300
Opening Stock 11000
Salary of salesmen 1800
Advertising 700
Travelling expenses 500
Salaries (office) 3000
Rent 6000
STATIONERY 200
Depreciation 1000
Other expenses 2000
Provision for tax 7000
You are required to calculate
1) Gross profit ratio
2) Operating profit ratio
3) Operating ratio
4) Net profit ratio
 CIPLA
BALANCE SHEET OF (in Rs. Cr.) 23-Mar 22-Mar 21-Mar

12 mths 12 mths 12 mths

EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 161.43 161.36 161.29
TOTAL SHARE CAPITAL 161.43 161.36 161.29
Reserves and Surplus 23,184.53 20,636.35 18,123.15
TOTAL RESERVES AND SURPLUS 23,184.53 20,636.35 18,123.15
TOTAL SHAREHOLDERS FUNDS 23,407.78 20,841.69 18,326.53

Minority Interest 305.76 275.69 259.06

NON-CURRENT LIABILITIES
Long Term Borrowings 0 416.24 1,202.75
Deferred Tax Liabilities [Net] 163.28 243.96 296.61
Other Long Term Liabilities 374.63 310.11 359.22
Long Term Provisions 102.16 100.22 116.17
TOTAL NON-CURRENT 640.07 1,070.53 1,974.75
LIABILITIES
CURRENT LIABILITIES
Short Term Borrowings 520.36 407.9 334.73
Trade Payables 2,457.05 2,508.10 2,066.82
Other Current Liabilities 845.59 776.21 1,111.68
Short Term Provisions 1,286.67 1,221.00 1,078.32
TOTAL CURRENT LIABILITIES 5,109.67 4,913.21 4,591.55

TOTAL CAPITAL AND LIABILITIES 29,463.28 27,101.12 25,151.89

ASSETS
NON-CURRENT ASSETS

Tangible Assets 5,050.61 5,225.82 5,078.02

Intangible Assets 1,126.01 1,319.58 1,430.21
Capital Work-In-Progress 689.17 382.9 570.84
FIXED ASSETS 7,269.92 7,311.58 7,477.12
Non-Current Investments 572.52 355.63 423.68
Deferred Tax Assets [Net] 456.54 448.83 314.69
Long Term Loans And Advances 0 0.04 52.99
Other Non-Current Assets 905.49 1,119.57 666.61
TOTAL NON-CURRENT ASSETS 12,188.33 12,373.58 11,942.38
CURRENT ASSETS
Current Investments 3,089.86 2,194.97 2,286.37
Inventories 5,156.43 5,350.24 4,669.18
Trade Receivables 4,057.00 3,424.44 3,445.68
Cash And Cash Equivalents 1,564.62 1,928.48 1,401.23
Short Term Loans And Advances 7.59 3.57 2.58
OtherCurrentAssets 3,399.45 1,825.84 1,404.47
TOTAL CURRENT ASSETS 17,274.95 14,727.54 13,209.51
TOTAL ASSETS 29,463.28 27,101.12 25,151.89
OTHER ADDITIONAL
INFORMATION

CONTINGENT LIABILITIES,
COMMITMENTS

Contingent Liabilities 1,095.87 1,291.24 1,178.42

BONUS DETAILS

Bonus Equity Share Capital 151.66 151.66 151.66

NON-CURRENT INVESTMENTS
Non-Current Investments Quoted Market 0 0 0
Value
Non-Current Investments Unquoted Book 481.62 309.82 195.3
Value
CURRENT INVESTMENTS
Current Investments Quoted Market Value 0 0 0

Current Investments Unquoted Book Value 3,089.86 2,194.97 2,286.37

 20-Mar 19-Mar
SOLUTION:
12 mths 12 mths 23-Mar 22-Mar 21-Mar
Ratios 12 mths 12 mths 12 mths
LIQUIDITY RATIO- SHORT TERM SOLVENCY RATIO
161.25 161.14 1) Current Ratio= CA/CL 3.38 3.00 2.88
161.25 161.14 liquid asset 12118.52 9377.30 8540.33
15,548.70 14,794.10 2) Quick ratio = LA/CL 2.37 1.91 1.86
15,548.70 14,794.10 3)
15,763.00 15,012.28 Cash position ratio= cash&
bank balance +marketable
securities/CL 0.31 0.39 0.31
294.28 331.97 DEBT RATIO- LONG TERMSOLVENCY RATIO
1) Fixed asset ratio= Fixed
2,369.28 3,830.07 asset/Long term fund 0.311399488 0.34465906 0.38369411
365.21 425.32 Long term fund 23,345.96 21,213.95 19,487.19
344.38 470.76
133.27 121.41
3,212.14 4,847.56

447.15 486.16
2,281.81 1,947.99
715.99 600.6
948.19 736.76
4,393.14 3,771.51

23,662.56 23,963.32

5,252.35 5,176.20
1,496.54 1,563.02
421 331.05
7,573.42 7,415.40
454.5 428.35
239.77 201.41
52.39 49.42
702.3 572.97
11,956.38 11,536.69
 1,016.52 2,125.79
4,377.60 3,964.83
3,891.31 4,150.72
1,003.91 618.81
5.6 6.28
1,411.24 1,560.20
11,706.18 12,426.63
23,662.56 23,963.32

1,382.19 1,137.34

151.66 151.66

0 0

219.53 193.86

0 0

1,016.52 2,125.79
 20-Mar 19-Mar
12 mths 12 mths
LVENCY RATIO
2.66 3.29
7328.58 8461.80 Liquid asset=current assest except stock and prepaid assets
1.67 2.24 long term fund= share capital+ reserves and supluses+long term loans - ficitious assets

0.23 0.16
ENCY RATIO

0.41890169 0.394744617
18,079.23 18,785.31
+long term loans - ficitious assets
 Balanced sheet a
Given below is the summarised balance sheet and profit & loss of
Rajalakshmi sugar mills ltd as on 31st December 2023. You are required Liabilities
to calculate: Issued capital 40000 shares@100 each
a) Current Ratio h) Returns on Capital Employed Reserves
b) Quick Ratio i) Debtors Turnover Ratio Creditors
c) Fixed asset Ratio j) Creditors Turnover Ratio Profit and Loss Account
d) Debt Equity Ratio k) Net Profit Ratio 6% Debentures
e) Proprietary Ratio l) Operating Ratio TOTAL
f) Stock Turnover Ratio
g) Fixed Asset Turnover ratio

a) Current Ratio = Current asset/Current liabilities

Current assets Sto+deb+cash 5000000
Currrent liabilities Creditors 2600000
CURRENT RATIO 1.92
b) Quick Ratio = Liquid asset/CL
Liquid asset CA- stock 2040000
QUICK RATIO 0.78
c) Fixed Asset Ratio = Fixed asset/Long term fund
Land and Building 3000000
Plant and Machinery 1600000
Fixed asset 4600000
Issued capital 40000 shares@1 4000000
Reserves 1800000
Profit and Loss Account 600000
6% Debentures 600000
Long term fund 7000000
FIXED ASSET RATIO 0.66
d) Debt Equity Ratio = Long term Debt/ shareholder's fund
Long term Debt 600000
Issued capital 40000 shares@1 4000000
Reserves 1800000
Profit and Loss Account 600000
Shareholder's Fund 6400000
DEBT EQUITY RATIO 0.094
e) Proprietary ratio = Shareholder's fund/ Total tangible assets
Land and Building 3000000
Plant and Machinery 1600000
Stocks 2960000
Debtors 1420000
Cash at Bank 620000
Total tangible assets 9600000
Shareholder's Fund 6400000
PROPRIETARY RATIO 0.67
f) Stock Turnover Ratio = Cost of sales/Average stock
Cost of sales = Sales - gross profit
Cost of sales 10200000
Average stock = Opening stock + Closing stock / 2
Average stock 2485000
STOCK TURNOVER RATIO 4.10 times
g) Fixed Asset Turnover Ratio = Cost of sales / Fixed Assets
Cost of sales = Sales - gross profit
Cost of sales 10200000
Land and Building 3000000
Plant and Machinery 1600000
Fixed asset 4600000
FIXED TURNOVER RATIO 2.22 times
h) Return on Capital Employed = PBIT/ Capital Employed * 100
PBIT= Net profit + Non operating expenses + Interest - Non operating Income
PBIT 3200000
Capital Employed = Share capital + Profits + Reserves + Long term borrowings
Issued capital 40000 shares@1 4000000
Reserves 1800000
Profit and Loss Account 600000
6% Debentures 600000
Capital employed/Long term 7000000
fund
RETURN ON CAPITAL EMPLOYED 45.71 %
 Balanced sheet as on 2023 Profit and loss account s
Liabilities Amount Assets Amount Particulars
pital 40000 shares@100 each 4000000 Land and Building 3000000 To Opening stock
1800000 Plant and Machinery 1600000 To Purchases
2600000 Stocks 2960000 To Direct expenses
Loss Account 600000 Debtors 1420000 To Gross profit
tures 600000 Cash at Bank 620000
9600000 TOTAL 9600000 To Administrative Expenses
To Selling & Distribution Exp
To Financial Exp
To other Non-Operating Exp
To Net profit
Profit and loss account statement
Amount Particulars Amount
1990000 By Sales 17000000
10905000 By Closing Stock 2980000
285000
6800000
19980000 19980000
3000000 By Gross Pofit b/d 6800000
600000 By Non operating Income 180000
300000
80000
3000000
6980000 6980000