The document provides financial information for Aditya Mills Limited including the balance sheet and profit and loss statement. It then lists various ratios to calculate for Aditya Mills like current ratio, acid test ratio, stock turnover, debtors turnover, gross profit ratio, net profit ratio, operating ratio, earnings per share, and rate of return on equity capital. It also provides information on how certain transactions would impact the current ratio.
5. Sales40, 00, 000Less: Cost of Goods Sold30, 80, 000Gross Profit on Sales9, 20, 000Less: Operating Expenses6, 80, 000Net Profit2, 40, 000Less: Taxes (0.35)84, 000Net Profit after taxes1, 56, 000
6. Sundry Debtors and stock at the beginning of the year were Rs. 3, 00, 000 and Rs.4, 00, 000 respectively. Determine the following ratios of Aditya Mills Ltd.
7. Current RatioAcid Test RatioStock TurnoverDebtors TurnoverGross Profit RatioNet Profit RatioOperating RatioEarnings Per Share Rate of return on equity capitalMarket value of the share if price earnings ratio is 10 times
8. Indicate for each of the following transactions whether the transaction would improve, weaken or have no effect on the current ratio of the company.
9. Sell additional equity sharesSell 15% debenturesPay bills payableCollect 40% sundry debtorsPurchase additional plantIssue bills payable to creditorsCollect bills receivable from debtorsPurchase treasury billsWrite off bad debts
10. The following data are extracted from the published accounts of two companies, ABC Ltd and XYZ ltd in an industry.
12. Prepare a statement of comparative ratios showing liquidity, profitability, activity base of the two companies.
13. Presently the CA and CL of a company are Rs. 16 lakhs and Rs.8 lakhs respectively. Calculate the effect of each of the following transactions individually and totally on the current ratio of the company.
17. Receipt of a shipment of new materials at landed cost of Rs.5 lakhs, against which the bank finance obtained, is Rs 3 lakhs.
18. A partial list of trend and common-size percentages for ABC Ltd is given below.
19. March, Current YearMarch, Previous YearTrend percentages:Sales (net)120100Cost of goods sold?100Gross profit on sales?100Operating expenses and income taxes?100Net Income?100Common-size percentages:Sales (net)100100Cost of goods sold??Gross profit on sales40?Operating expenses and income taxes2025Net Income2010
22. The following is the summary of the financial ratios of a company relating to its liquidity position:
23. Year 1Year 2Year 3Current Ratio22.132.28Acid test Ratio1.21.100.90Debtors Turnover1087Stock turnover654
24. The current ratio is increasing, while the acid-test ratio is decreasing. Explain the contributing factors for this apparently divergent trend.
25. The information below is taken from the records of two companies in the same industry. The companies are X Ltd. and Y Ltd. and the data is as follows:
32. Which company is extended credit for a longer period by the creditors, assuming all purchases (equivalent to cost of goods sold) to be credit purchases.
33. How long does it take each company to convert an investment in stock to cash?
41. Rent is Rs.7, 500 per month. Administrative expenses for July are expected to be Rs.60, 000 and are expected to rise by 1% per month over the previous month’s expenses.
42. The company has Rs.3, 00, 000 of 8% loan, interest payable monthly.
48. Indicate its strength and weaknesses in terms of liquidity, solvency and profitability as revealed by your analysis.
49.
50. RatioABIndustryCurrent ratio221561241Acid test ratio121301131Debt to assets ratio36535Operating expenses ratio1817.520Number of times interest paid 6125Stock turnover8.56.57Debtors turnover111511.4Rate of return on total assets171013
51. Can we say on the basis of the above ratios and information, that B is a better company than A because its ratios are better in six out of eight areas? Company B is also better than the industry average in the same six categories.
52. Given below are the selected ratios of Worst Ltd. for the three years ending 31st March.
53. RatioYear 1Year 2Year 3Current ratio200500150Acid test ratio11032080Debt to equity ratio154055Operating expenses ratio242532Number of times interest earned66(1)Stock turnover (times)543Debtors turnover (times)12106Rate of return on total assets15105
54. Outline the possible explanations for the drastic changes in some of the ratios from year 1 to year 2 and year 2 to year 3.
55. Given below are summarized accounts of Alok Ltd. for the years 1 and 2