Financial Statement Analysis
Practice Questions
Q. No.1: Following are the selected data taken from Books of A Ltd at the end of year 2005
Cash Rs.108,000
Account Receivable beg 380,000
Account Receivable end 350,000
Marketable Securities 142,000
Merchandise Inventory beg 120,000
Merchandise Inventory end 150,000
Accounts Payable 200,000
Bills Payable 50,000
Credit Sales(Net) 18,25,000
Cost of Goods Sold 540,000
Total Operating Expenses 600,000
REQUIRED: On the basis of above information, find out:
1 Working Capital 2 Current Ratio 3 Quick Ratio 4 Inventory Turnover
Account
Gross Profit Net Profit Operating
5 Receivable 6 7 8
Percentage Percentage Expenses Rate
Turnover
Q. No.2: The following items are taken from the financial statements of S Company Ltd at June 30, 2004
Cash Rs.50,000 Merchandise Inventory Rs.200,000
Marketable Securities 30,000 Land 200,000
Notes Receivable 20,000 Machinery 600,000
Prepaid Expenses 20,000 Accounts Payable 250,000
Accounts Receivable (Net) 300,000 Notes Payable 50,000
10% Debenture Payable 260,000 Gross Profit 30%
Share Capital (Rs.10 Per Share) 600,000 Advances from Customer 5,000
Retained Earnings 140,000 Operating Expenses 240,000
Reserve for plant extension 100,000 Market Price Per Share 15
Sales (including Cash Sales Rs.200,000) 20,00,000
REQUIRED: On the basis of above information, find out:
1 Working Capital 2 Current Ratio 3 Acid Test Ratio 4 Inventory Turnover
Account Receivable Net Profit
5 6 7 Earning Per Share 8 Price Earning Ratio
Turnover Percentage
3
Q. No.3: The following information has been taken from the records of B Company Ltd at the end of the year
Total Assets Rs.450,000 Sales (including Cash Sales Rs.100,000) Rs.10,00,000
Quick Assets 80,000 Gross Profit 30%
Total Liabilities 202,500 Average Inventory 70,000
Current Liabilities 100,000 Average Receivable 90,000
Non Current Assets 250,000 Operating Expenses 180,000
Retained Earinings 47,500 Market Price of Rs.20 share is Rs.25
REQUIRED:
Inventory
1 Working Capital 2 Current Ratio 3 Acid Test Ratio 4
Turnover
Account Receivable Price Earning
5 6 Net Profit Percentage 7 Earning Per Share 8
Turnover Ratio
Operating Expenses Total Days of Operating
9 10 11 Equity Ratio 12 Debt Ratio
Rate Cycle
Q. No.4: The data shown below were taken from the financial records of J Ltd at the end of the year
Accounts Payable Rs.50,000 Accrued Liabilities Rs.33,000
Cash 32,000 Inventories Jan 42,000
Inventories Dec 38,000 Marketable Securities 10,000
Operating Expenses 120,000 Prepaid Expenses 25,000
Purchases (Net) 360,000 Accounts Receivable Jan 61,000
Accounts Receivable Dec 61,000 Long Term Loan 150,000
Plant Assets 400,000 Sales 604,000
Sales Returns 20,000 Retained Earning 133,000
Share Capital (Rs.10 Par) ? Market Price 18
REQUIRED:
Inventory
1 Working Capital 2 Current Ratio 3 Acid Test Ratio 4
Turnover
Account Receivable Rate of Net Income on Price Earning
5 6 7 Earning Per Share 8
Turnover Sales Ratio
Cost of Goods Sold
9 10 Boo Value Per Share 11 Equity Ration 12 Debt Ratio
Rate
4
Q. No.5: Analysis and Interpretation of Financial Statements
HO, HO, Corporation
Balance Sheet
For the year ended December 31 2000
(In Thousands of Rupees)
Current Assets Liabilities
Cash ? Current Liabilities ?
Account Receivable ? Long Term Debt 8% Interest ?
Inventory ?
Total Current Assets ? Total Liabilities ?
Plant Assets Stock Holder's Equity
Equipment 1,800 Capital Stock Rs.10 Par 1,000
Less: Accumulated Depreciation 300 1,500 Retained Earning 200 1200
Total Assets ? Total Equities ?
HO, HO, Corporation
Income Statement
For the year ended December 31 2000
(In Thousands of Rupees)
Net Sales ?
Cost of Goods Sold ?
Gross Profit (25% of Net Sales) ?
Operating Expenses ?
Operating Income (10% of Net Sales) ?
Interest Expenses 84
Income before Income Tax ?
Income Tax (40% of income before income tax) ?
Net Income 180
Additional Information:
1) The equity ratio 40%, the debt ratio was 60%
2) The only interest expense was on the long term debt.
3) The beginning inventory was Rs.500,000; the inventory turnover was 4.8 times
4) The current ratio was 2 to 1. The quick ratio was 1.07 to 1
5) The beginning balance in accounts receivable was Rs.280,000 the account receivable turnover for the
year was 12.8 times. All sales were made on account
Required:
a) Complete the Financial Statements by use of available information
b) Give all computations of amounts appearing in the Balance Sheet and Income Statement
