Financial Accountinga and Analysis NMIMS June 18

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NMIMS Solution for Financial Accountinga and Analysis

Q1. From the following information of A star Ltd. prepare the Cash Flow statement for the year ended 2017 and 2018 as per AS – 3. (10 Marks)

 

Liabilities 31-3-2017 31-3-2018 Assets 31-3-2017 31-3-2018
Equity share capital 2,20,000 2,50,000 machinery 2,00,000 2,30,000
9% Preference Share Capital 1,00,000 1,10,000 Building 1,50,000 1,76,000
Securities Premium 20,000 26,000 Land 18,000 18,000
Profit & Loss A/c 1,04,000 1,34,000 Stock 84,000 98,000
5% Debentures 70,000 64,000 Debtors 38,000 38,000
Creditors 38,000 46,000 Bills Receivable 42,000 62,000
Bills Payable 5,000 4,000 Cash 42,000 32,000
Provision for Tax 10,000 12,000
Dividends payable 7,000 8,000
5,74,000 6,54,000 5,74,000 6,54,000

 

Q2. Balance Sheet for JK Ltd. for the year ended 31st March 2016 & 2017 (10 Marks)

Liabilities 2016 2017 Assets 2016 2017
Equity Share Capital 2,00,000 2,00,000 Land 50,000 50,000
9% Preference Share Capital 1,50,000 1,50,000 Building 1,50,000 1,35,000
Reserves 1,00,000 1,22,500 Plant & Machinery 1,50,000 1,35,000
17% Debentures 50,000 75,000 Furniture 50,000 70,000
Creditors 75,000 1,00,000 Stock 1,00,000 1,50,000
Bills Payable 25,000 37,500 Debtors 1,00,000 1,50,000
Tax payable 50,000 75,000 Cash 50,000 70,000
650000 760000 650000 760000

 

Profit & Loss Account for JK Ltd. for the year ended 31st March 2016 and 2017

Particulars 2016 2017 Particulars 2016 2017
To Cost of goods sold 3,00,000 3,75,000 By Sales 4,00,000 5,00,000
To Operating Expenses
Administrative 6,500 7,250
Selling 10,000 10,000
To Interest on Debentures 8,500 12,750
To Net Profit 75,000 95,000
4,00,000 5,00,000 4,00,000 5,00,000

 

Using the tool of common size financial statement analysis, comment about the improvement or decline of financial performance of the company.

 

Q3. The following extracts are available from the financial statements of companies V ltd. and J Ltd. for the year ended 31st March 2017: (Rs. In Lakhs)

 

Particulars V Ltd. J Ltd.
Revenue from operations 1,500 6,000
Manufacturing cost 900 4,050
Interest paid 105 375
Depreciation 135 675
Selling expenses 135 225
Income Tax 90 225
Non-operating income 45 285
Dividend paid 120 600
Fixed Assets 1,500 7,350
Current Assets 525 2,250
Current Liabilities 375 2100
Debentures 600 3,300
Reserves 450 1,200
Share Capital 600 3,000

 

From the above information answer the following questions with the help of suitable ratios:

Q3a)

Which company has better solvency using current ratio and share value using earning per share?

Which company would you recommend for investment? Justify. (5 Marks)

 

Q3b)

Which company has efficiently employed capital using return on capital employed and better operational efficiency using operating profit ratio?

Which company would you recommend for investment? Justify.