ASSIGNMENT

Analysis of Financial Statements

Illustration 1
Convert the following statements of profit and loss into the comparative statement
of profit and loss of BCR Co. Ltd.:
Particulars Note 2015-16 Rs. 2016-17
No. Rs.
I. Revenue from operations 60,00,000
II. Other incomes 1,50,000
III. Expenses 44,00,000
IV. Income tax 35%

Illustration 2
From the following statement of profit & loss of Madhu Co. Ltd., prepare
comparative statement of profit & loss for te year ended March 31,2016 & 2017:
Particulars Note 2015-16 2016-17
No.
Rs. Rs.

Revenue from operations 16,00,000 20,00,000

Employee benefit expenses 8,00,000 10,00,000
Other expenses 2,00,000 1,00,000
Tax rate 40%
Illustration 3
The following are the Balance sheets of J. Ltd., as at March 31,2016 & 2017.
Prepare a comparative balance sheet.
Particulars Note March 31 March 31
No. ,2017 ,2016
(Rs.) (Rs.)

I. Equity & Liabilities

1) Shareholders’ Funds
(a) Share capital 20,00,000 15,00,000
(b) Reserve & surplus 3,00,000 4,00,000
2) Non-current Liabilities
Long-term borrowings 9,00,000 6,00,000
3) Current Liabilities
Trade payables 3,00,000 2,00,000
Total 35,00,000 27,00,000
II. Assets
1) Non-current assets
a) Fixed Assets
- Tangible assets 20,00,000 15,00,000
- Intangible assets 9,00,000 6,00,000
2) Current assets
- Investors 3,00,000 4,00,000
- Cash & cash equivalents 3,00,000 2,00,000
Total 35,00,000 27,00,000
Illustration 4
From the following Balance Sheets of Amrit Limited as at March 31, 2016 and
2017, prepare a comparative balance sheet:
Particulars Note March 31, March 31,
No. 2017 (Rs.) 2016 (Rs.)
I. Equity and Liabilities
1. Shareholders’ Fund
a) Share capital 20,00,000 15,00,000

b) Reserves and surplus 13,00,000 14,00,000

2) Non-current Liabilities
Long-term borrowings
19,00,000 16,00,000
3) Current Liabilities
Trade payables
3,00,000 2,00,000
Total 55,00,000 47,00,000
II. Assets
1) Non-current assets
a) Fixed Assets
- Tangible assets
20,00,000 15,00,000
- Intangible assets
19,00,000 16,00,000
2) Current assets
- Investors
13,00,000 14,00,000
- Cash & cash equivalents
3,00,000 2,00,000
Total 55,00,000 47,00,000
Illustration 5
From the following information, prepare a Common size Income Statement for the
year ended March 31, 2016 and March 31, 2017:
Particulars 2015-16 2016-17
Rs. Rs.

Net sales 18,00,000 25,00,000

Cost of good sold 10,00,000 12,00,000
Operating expenses 80,000 1,20,000
Non-operating expenses 12,000 15,000
Depreciation 20,000 40,000
Wages 10,000 20,000

Illustration 6
From the following information, prepare Common size statement of profit and loss
for the year ended March 31, 2016 and March 31, 2017:
Particulars 2015-16 Rs. 2016-17
Rs.

Revenue from operations 25,00,000 20,00,000

Other income 3,25,000 2,50,000
Employee benefit expenses 8,25,000 4,50,000
Other expenses 2,00,000 1,00,000
Income tax (% of the profit before tax) 30% 20%
Illustration 7
Prepare common size Balance Sheet of XRI Ltd. from the following information:
Particulars Note March March
No. 31,2016 31,2017
I. Equity and Liabilities
1. Shareholders’ Fund
a) Share capital 15,00,000 12,00,000
b) Reserves and surplus 5,00,000 5,00,000
2) Non-current Liabilities
Long-term borrowings 6,00,000 5,00,000
3) Current Liabilities
Trade payables 15,50,000 10,50,000
Total 32,50,000
II. Assets 41,50,000
1) Non-current assets
a) Fixed Assets
- Tangible assets
Plant & Machinery 8,00,000
- Intangible assets 14,00,000
Goodwill 12,00,000
b) Non-Current investment 16,00,000 10,00,000
2) Current Assets 10,00,000
Inventories 2,50,000
Total 32,50,000
1,50,000
41,50,000
ASSIGNMENT
Analysis of Financial Statements
OBJECTIVE TYPE QUESTIONS
Choose the right answer :
1. The financial statements of a business enterprise include:
(a) Balance sheet
(b) Statement of Profit and loss account
(c) Cash flow statement
(d) All the above
2. The most commonly used tools for financial analysis are:
(a) Horizontal analysis
(b) Vertical analysis
(c) Ratio analysis
(d) All the above
3. An Annual Report is issued by a company to its:
(a) Directors
(b) Auditors
(c) Shareholders
(d) Management
4. Balance Sheet provides information about financial position of the enterprise:
(a) At a point in time
b) Over a period of time
(c) For a period of time
(d) None of the above
5. Comparative statements are also known as:
(a) Dynamic analysis
(b) Horizontal analysis
(c) Vertical analysis
(d) External analysis
State whether each of the following is True or False :
(a) The financial statements of a business enterprise include cash flow statement.
(b) Comparative statements are the form of horizontal analysis.
(c) Common size statements and financial ratios are the two tools employed in
vertical analysis.
(d) Ratio analysis establishes relationship between two financial statements.
(e) Ratio analysis is a tool for analyzing the financial statements of any enterprise.
(f) Financial analysis is used only by the creditors.
(g) Statement of profit and loss account shows the operating performance of an
enterprise for a period of time.
(h) Financial analysis helps an analyst to arrive at a decision.
(i) Cash Flow Statement is a tool of financial statement analysis.
(j) In a Common size statement each item is expressed as a percentage of some
common base

Fill in the blanks with appropriate word(s):

1. Analysis simply means—————data.
2. Interpretation means —————data.
3. Comparative analysis is also known as ———————— analysis.
4. Common size analysis is also known as ———————— analysis.
5. The analysis of actual movement of money inflow and outflow in an
organization is called——————— analysis.