Q1 From the following particulars of XYZ Ltd. prepare the Cash Flow Statement.

Dr. Cr.

Liabilities March 31 March 31, Assets March 31, March 31

2016 2017 2016 2017
Rs. Rs. Rs. Rs.
Equity Share Capital 3,00,000 3,50,000
Fixed Assets (Net) 5,10,000 6,20,000
12% Pref. Share Capital 2,00,000 1,00,000
10% Investment 30,000 80,000
10% Debentures 1,00,000 2,00,000
Cash in Hand 20,000 35,000
Profit and Loss A/c 1,10,000 2,70,000
Cash at Bank 20,000 40,000
Creditors 70,000 1,45,000
Debtors (Good) 1,00,000 2,00,000
Provision for Doubtful Debts 10,000 15,000
Stock 1,00,000 90,000
Discount on Deb. 10,000 15,000
7,90,000 10,80,000 7,90,000 10,80,000

You are informed that during the year :

(i) A machine with a book value of Rs. 40,000 was sold for 25,000.
(ii) Depreciation charged during the year was Rs.70,000.
(iii) Preference shares were redeemed on 31st March, 2007 at a premium of 5%.
(iv) An Interim Dividend @ 15 per cent was paid on equity shares on 31st March, 2017.
Preference Dividend was also paid on 31st march, 2017.
(v) New shares and debentures were issued on 31st March, 2017.

Q2. With the help of the following information prepare a Trading Account, Profit and Loss Account and
Balance Sheet of ABC Ltd.:

(i) Gross Profit Ratio 25%

(ii) Net Profit Ratio 20%

(iii) Inventory Turnover Ratio 10 Times

(iv) Net Profit / Capital 1/5

(v) Capital / External Liabilities 1/2

(vi) Fixed assets to Capital 5/4

(vii) Fixed Assets / Total Current Assets 5/7

(viii) Fixed Assets Rs. 5,00,000

(ix) Closing Stock Rs. 50,000

What conclusion you can derive from the above analysis regarding the profitability and
effectiveness of fixed assets utilization w.r.t capital invested?

Also throw light on the short term solvency of the firm.