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Question 1:
X Co. has made plans for the next year. It is estimated that the company will employ
total assets of Rs. 8,00,000. 50 per cent of the assets being financed by borrowed capital
at an interest cost of 8 per cent per year. The direct costs for the year are estimated at
Rs. 4,80,000 and all other operating expenses are estimated at Rs. 80,000. The goods will
be sold to customers at 150 per cent of the direct costs. Tax rate is assumed to be 50 per
cent.
Calculate:
a. Net Profit Margin/NP Ratio
b. ROA
c. Assets turnover ratio
d. Return on owner’s equity [Hint – Return on shareholder’s funds]
Question 2:
The total sales (all credit) of a firm are Rs. 6,40,000. It has a gross profit margin of 15 per
cent and a current ratio of 2.5. The firm’s current liabilities are Rs. 96,000, Inventories as Rs.
48,000 and cash as Rs. 16,000.
[In both the above cases, assume a year to have 360 days]
PGP/SS/07-09 Saurabh Jain
Question 3:
The following figures relate to the trading activities of Hind traders limited for the year
ended June 30th 06.
Sales 1,500,000
Purchases 966,750
Opening Stock 228,750
Closing Stock 295,500
Sales Returns 60,000
Non-operating expenses:-
Loss on sale of assets 12,000
Administrative expenses:-
Salaries 81,000
Rent 8,100
Stationary 7,500
Depreciation 27,900
Other Charges 49,500
Provision for taxation 120,000
Non-Operating Income:-
Dividend on shares 27,000
Profit on sale of shares 9,000
a. Rearrange the above figures in a form suitable for analysis. [i.e. an Income Statement]
Question 4:
Ratios given:
Complete the following balance sheet based on the information given above:
Amount
Sources/Liabilities Amount (Rs.) Applications/Assets
(Rs.)
Current Debt Cash
Long-term Debt Inventory
Total Debt Total Current Assets
Owner's Equity Fixed Assets
TOTAL LIABILITIES TOTAL ASSETS
SOLUTIONS:
To Question 1:
a. 8.9%
b. 10%
c. 0.9 times
d. 16%
To Question 2:
a. Rs. 1,08,800
b. 72 days
To Question 3:
a.
EBIT/PBT 324,000
(-) Provision for taxation (-) 120,000
b.
(1) 37.5 %
(2) 22.5 %
(3) 3.43 times
To Question 4:
Therefore,
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