Why is the government interested in analysing financial statements ? 

1

(a)

On the basis of analysis of financial statements, government can judge which industry is progressing on the desired lines and which industry needs help.

State the significante of analysis of financial statements to the 'creditors'.

 

1

(a)

Creditors are intersted to know the liquidlity of the business whether the business is able to pay their debts on maturity.

Name two parties interested in Financial Statement Analysis.

1

(a)

(i) Invertors and (ii) Management

State the interest of tax authorities in the analysis of financial statements.

1

(a)

Tax authorities are intrested in the financial analysis for determining tax liabilities of the business entity.

State the interest of investors in the analysis of financial statements.

1

(a)

Inverters are intrested in the safty of their capital as well as apprteciation of their capital through financial analysis.

What is meant by analysis of financial statements ?

1

(a)

Analysis of financial statements refers to critical examination of financial information contained  financial statements in order to understand and make decisions regarding the operations of the firm.

State how qualitative aspects are ignored in financial statement analysis

1

(a)

Quantitive aspects like reputation of business, quality of product, efficiency of management etc.are ignored because these can not be measured in monetary terms.

State how financial statement analysis is considered historical in nature.

1

(a)

Financial statements analysis is considered as historical in nature because the analysis is made on data which is of past and not of furture.

State how financial statement analysis is not free from basis.

3

(a)

With the help of the given information obtained from the books Raghu Ltd.,prepare a Comparative Statement of Profit and Loss for the year ended 31.03.2013:

Particulars	Note  No.	2012-13	2011-12
Revenue from Operations		Rs.20,00,000	Rs.17,00,000
Cost of Revenue from Operations		70% of Revenue from operations	60% of Revenue from Operations
Other Expenses		Rs.42,000	Rs.68,000
Other Incomes		Rs.20,000	Rs.14,000
Income Tax		50%	50%

3

(a)

Common size statement is also known as 100% statement.Do you agree?

3

(a)

Which item is assumed to be 100 in case of common size income statement?

3

(a)

IUf selling and distribution expenses have increased from Rs 1,00,000 to Rs 2,00,000, then by how much will it increase or decrease in percentage form? 

3

(a)

Identify the values involved in comparative analysis and common size statement. 

3

(a)

Rearrange the following in the form of a comparative income statement or statement of profit and loss.

Particulars	31st March, 2014 Amt(Rs)	31st March,2015 Amt(Rs)
Revenue from Operations (Net Sales)	16,00,000	19,20,000
Purchase of Stock-in-trade	9,00,000	11,00,000
Changes in Inventories of stock-in-trade	1,00,000	60,000
Other Expenses
Office and And Administration	2,80,000	3,80,000
Selling and Distribution	1,80,000	1,40,000
General Expenses	20,000	10,000

8

(a)

From the following balance sheets of Sun Ltd as at 31st March, 2014 and 2015, prepare a common size balance sheet

Particulars	Note No	31st March,014 Amt(Rs)	31st March,2015 Amt(Rs)
I.EQUITY AND LIABILITIES
1.Shareholdrs' Funds
(a) Share Capital		30,000	40,00,000
(b) Reserves and Surplus		4,00,000	6,00,000
2.Non-current Liablities
Long-term Browings		10,00,000	12,00,000
3.Current Liabilities
Trade Payables		6,00,000	2,00,000
Total		50,00,000	60,00,000
II.ASSETS
1.Non-Current Assets
(a) Fixed Assets
(i) Tangible Assets		30,00,000	40,00,000
(ii) Intengibla Assets		6,00,000	2,00,000
2.Current Assets
(a) Inventories		10,00,000	12,00,000
(b) Cash and Cash Equivalents		4,00,000	6,00,000
Total		50,00,000	60,00,000

8

(a)

Prepare common size income statement from the following Staement of profit and loss.

Particulars	31st March,2014 Amt(Rs)	31st march,2015 Amt(Rs)
I.Income
Revenue from Operations(Net Sales)	5,00,000	5,00,000
Other Income	5,000	5,500
Total	5,05,000	5,05,000
II.Expenses
Purchase of Stock-in-trade	3,25,000	3,50,000
Changes in Inventories of Stock-in-trade	25,000	24,000
Employees Benefit Expenses	40,000	49,000
Other Expenses	58,750	45,000
III.Profit(I-II)	56250	37500
Total	4,48,750	4,68,000

8

(a)