HOTS

Analysis of financial statements and

Tools of Financial Analysis
1. State the condition of shares being shown as Subscribed and Fully
Paid up.
2. Under which head is loss on Issue of Debentures shown in the
Balance Sheet? Give reason.
3. What is Horizontal Analysis of Financial Statements?
4. What is meant by vertical analysis of Financial Statements?
5. How is the Financial Statement Analysis useful to Financial Manager?
6. Give two examples of Employees Benefit Expenses.
7. What is meant by intra firm comparison?
8. While preparing Common Size statement of Profit and Loss, which
item is taken as 100?
9. Are loose tools and stores & spares included in current assets while
computing Current Ratio? Why?
10.
Give two examples of Finance Cost?
11.
Discuss three objectives of financial analysis.
12.
Under what heads and sub heads the following items will
appear in the Balance Sheet of a company as per schedule VI, part I
of the Companies Act, 1956?
(i)
Tax Reserve
(iv) Interest on Calls in
Advance.
(ii)
Stores and spares.
(v)subsidy reserve
(iii) Provision for doubtful debts
(vi) Mining Rights
13.
Calculate Revenue from operations, other Income and Total
revenue of non-financial company from the following information:
Sales Rs. 9,50,000; Sales return Rs. 5,000; Sale of Scrap Rs. 500;
Interest on Fixed Deposits Rs. 5,000; Loss on sale of Fixed asset.
14.

Calculate cost of material consumed from the following:

Opening inventory of: Materials Rs. 1,50,000; Finished Goods Rs.

1,00,000.
Closing inventory of: Materials Rs. 3,25,000; Finished Goods Rs.
75,000;
Raw Material purchased during the year Rs. 16,00,000.
15.
From the following information, prepare Note to accounts on
Employees Benefit Expenses:
Salaries Rs. 6,30,000; Bonus Rs. 52,500; Leave travel allowance Rs.
52,500; Staff welfare expenses Rs. 40,000; and Business Promotion
expenses Rs. 50,000.

16.
From the following information, prepare Note to Accounts on
Finance Costs: Interest on Term Loan Rs. 7,29,500; Interest on cash
Credit Limit Rs. 1,45,300; Interest on Debentures Rs. 2,58,000; Bank
Charges Rs. 12,750; Discount on Issue of Debentures written Off Rs.
15,000.
17.
Prepare Comparative statement of Profit and Loss from the
following:
31st Mar

Particulars
2013
31st Mar 2012
Revenue from operations
20,00,000

30,00,000

Other Income (% of revenue from operations)

20%

15%

Expenses (% of Operating revenue)

50%

60%

18.
Given below is the information extracted from the books of
Premium Tissues Ltd.:
31st Mar 2014

Particulars
31 Mar 2013
st

Revenue from operations

18,00,000

25,00,000

Employees Benefit Expenses

10,00,000

12,00,000

Other Expenses

3,00,000

2,00,000
Prepare common size of profit and loss.
19.
From the following Balance Sheet, prepare a common size
Balance Sheet.
Particulars
I.

Note
No.

Equity and Liabilities

1. Shareholders funds
(a)Share Capital
(b) Reserves and surplus
2. Non-current Liabilities
Long term Borrowings
3. Current Liabilities
Short Term Borrowings

Total
II Assets

31.03.201
5 (Rs.)

31.03.201
4 (Rs.)

10,00,000
2,00,000

6,00,000
3,00,000

8,00,000

4,00,000

4,00,000

3,00,000

24,00,000

16,00,000

1. Non Current Assets

(a) Fixed Assets
Tangible Assets
2. Current assets
(a) Inventories
(b)Cash and Cash Equivalents
Total

15,00,000

10,00,000

4,00,000
5,00,000

3,00,000
3,00,000

24,00,000

16,00,000

20.
From the following Balance Sheet, prepare a Comparative
Balance Sheet.
Particulars
I.

Note
No.

Equity and Liabilities

1. Shareholders funds
(a)Share Capital
(b) Reserves and surplus
2. Non-current Liabilities
Long term Borrowings
3. Current Liabilities
(a) Trade Payables
(b) Other current Liabilities
Total

II.

Assets
Non Current Assets
(a) Fixed Assets
Tangible Assets
Current assets
(a) Inventories
(b)Trade Receivables
(c) Cash and Cash Equivalents
Total

31.03.201
5 (Rs.)

31.03.201
4 (Rs.)

12,00,000
3,50,000

8,00,000
4,00,000

4,40,000

3,50,000

50,000
10,000
20,50,000

45,000
5,000
16,00,000

12,00,000

9,00,000

2,00,000
3,10,000
3,40,000
20,50,000

1,00,000
2,30,000
3,70,000
16,00,000

Answer Key
13. Total Revenue- Rs. 9,50,000.
14. Cost of Material Consumed- Rs. 14,25,000.
15. Employees Benefit Expenses- Rs. 7,75,000.
16. Finance Costs Rs. 11,48,000.
17. Percentage change: Revenue from operations=50%; Other Income=12.50%;
expenses=80%; net profit before tax=17.85%
18. 2014: Employee Benefit Expenses = 55.56%; other expenses=11.11% ; Total
expenses=66.67%; Profit before tax=33.33%
2015: Employee Benefit Expenses = 48%; other expenses=12% ; Total
expenses=60%; Profit before tax=40%
19. 2014: Share Capital = 37.50%; Reserve and surplus =18.75%; Non-Current
Liabilities=25%; short Term Borrowings =18.75%; Tangible assets= 62.5%;
Inventories=18.75%; Cash and Cash equivalents=18.75%
2015: Share Capital = 41.67%; Reserve and surplus =8.33%; Non-Current
Liabilities=33.33%; short Term Borrowings =16.67%; Tangible assets= 62.5%;
Inventories=16.67%; Cash and Cash equivalents=20.83%
20 . Percentage change Share Capital=50%; Reserve and surplus (12.5%); Non
current Liabilities= 25.71%; Trade Payables= 11.11%; Other Current
Liabilities=100%; Fixed Assets=33.3%; Inventories=100%; Trade receivables=
34.78% Cash and cash Equivalents=(8.108%)