Rearrange the given statement in a form suitable for analysis and calculate :-
i) Ratio of current assets to current liabilities
ii) Ratio of outside liabilities to net worth
iii) Ratio of net worth to fixed assets
iv) Ratio of sales to fixed assets
v) Ratio of sales to net worth
vi) Liquid ratio
vii) Fixed assets ratio
viii) Proprietary ratio
ix) Capital turnover
x) Debtors Turnover ratio
Condensed Balance Sheet
2003 2004
Rs. Rs.
Assets :
Cash at Bank 1,53,800 2,60,000
Trade debtors 1,12,600 1,17,100
Stock 5,61,600 4,94,600
Fixed Assets less:-Depreciation 21,72,000 21,98,100
Trade debtors 1,12,600 1,17,100
Stock 5,61,600 4,94,600
Fixed Assets less:-Depreciation 21,72,000 21,98,100
30,00,000 30,70,000
Liabilities and Capital
Creditors 2,00,000 1,60,000
Bills payable 1,27,500 65,000
Debentures 10,00,000 10,00,000
Reserve and surplus 6,72,000 8,45,000
Paid up capital 10,00,000 10,00,000
Bills payable 1,27,500 65,000
Debentures 10,00,000 10,00,000
Reserve and surplus 6,72,000 8,45,000
Paid up capital 10,00,000 10,00,000
30,00,000 30,70,000
Sales 18,00,000 19,50,000
Sales 18,00,000 19,50,000
Working notes
1. Current assets = Cash at bank + debtor + stock
(year 2003)= 153800 + 112600+ 561600
= 828000
= 828000
(year 2004)= 260200 +117100 +494600
= 871900
= 871900
2. Current liabilities = Creditor + Bill payable
(year 2003)= 200000 +127500
= 327500
= 327500
(year 2004)= 160000 +65000
= 225000
= 225000
3. Outside Liabilities = Creditors + Bill payable + debentures
(year 2003)= 200000 +127500+1000000
= 1327500
= 1327500
(year 2004)= 160000 + 65000 + 1000000
= 1225000 •
4. Liquid assets = Cash at bank + debtors
(year 2003)= 153800 + 112600
= 266400
= 266400
(year 2004)= 260200 + 117100
= 377300
= 377300
5. Net Worth / Shareholder fund = Paid up capital + reseVve and surplus
(year 2003)= 1000000 +672500
= 1672500
= 1672500
(year 2004)= 1000000 +845000
= 1845000
= 1845000
6. Total fund = Paid up capital + reserve and surplus + debenture
(year 2003)= 1000000 +672500+1000000 .
= 2672500
= 2672500
(year 2004)= 1000000 + 845000 + 1000000
= 2845000
= 2845000
Liquidity Ratio
Ratio of current assets to current liabilities = Current assets/Current liabilities
(year 2003) = 828000/327500 = 2.5:1
t
(year 2004) = 871900/225000 = 3.87 : 1
Liquid ratio = Liquid assets/Current liabilities
(year 2003) = 266400/327500 = .81 : 1
(year 2004) = 377300/225000 = 1.68 : 1
Solvency ratios/Capital structure ratio
Ratio of outstanding liability to net worth = outstanding liability / net worth
(year 2003) = 1327500/1672500 = .79 : 1
(year 2004) = 1225000/1845000 = .66 : 1
Ratio of net worth to fixed assets = net worth/fixed assets
(year 2003) = 1672500/2172000 = .77 : 1
t
(year 2004)= 1845000/2198100 = .84: 1
Fixed assets ratio = total fund/fixed assets
(year 2003) = 2672500/2172000= 1.23 : 1
(year 2004) = 2845000/2198100= 1.29: 1
Proprietary ratio = shareholder fund/total assets
(year 2003) = 1672500/3000000 = .56 : 1
(year 2004) = 1845000/3070000 = .60: 1
Activity Ratio/Turnover ratio '
Ratio of sales to fixed assets = sales / fixed assets
(year 2003) = 1800000/2172000 = .83 : 1
(year 2004) = 1950000/2198100 = .89: 1
Ratio of sales to net worth = sales / net worth
(year 2003) = 1800000/1672500 = 1.08 : 1
(year 2004)= 1950000/1845000= 1.06: 1
Debtor turnover ratio = net sale / debtor
(year 2003) = 1800000/112600 = 15 times
(year 2004) = 1950000/117100 = 16.65 times
NOTE: For the purpose of comparison instead of average debtor, closing debtor is taken because it is not possible to ascertain the average debtor of both year.
Capital turnover ratio = sale / total fund
(year 2003) = 1800000/2672500 = .67 : 1
(year 2004) = 1950000/2845000 = .69: 1
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