Capital gearing ratio and interpret the same

07 Sep

Financial Accounting & Analysis

1. Mr. Berrybell wants to assess the ability of an enterprise named Anyway, so as to confirm whether the enterprise is capable to generate sufficient cash flows or not. Anyway submits the following information for the year ended 31 March2017.

Particulars (Rs. In lacs)
Shares issued during the year 5
Capital assets purchased 1.5
Proceed from sale of an asset 2
Dividend declared and paid 1
Increase in debtors 1.5
Loss on sale of asset 0.2
Net income before taxes 8.8
Depreciation & Amortisation 3.8

Discuss the relevance of preparing the cash flow statement. Indicate and comment on the following:

  • Cash from operation
  • Cash from investing activities
  • Cash from financing activities
  • Closing balance

2. You are being appointed as the accounts executive of Jayesh Motiwala & Company. The principal business of the company is dealing in pearl ornaments at its retail outlet in Jaipur. The management is unaware about the relevance of accounting standard applicable while accounting for the business. Your responsibility is to convince them to comply with the Accounting Standards, by giving a brief presentation on the objectives behind complying with the accounting standard and the benefits to the enterprise by following the same.

3. The following is the Balance Sheet of Caterpillar Ltd as on 31st March 2017

Equity share capital 500000 Fixed assets 695800
Preference share capital 300000 Stock 135000
Reserves & Surplus 255000 Debtors 145000
Creditors 45500 Cash & Bank 150600
Outstanding liablilites 25900
1126400 1126400

Ascertain –

a) Current ratio and liquid ratio. What if the industry average for the same is 2 and 1 respectively.

b) Capital gearing ratio and interpret the same.

Current ratio and liquid ratio. What if the industry average for the same is 2 and 1 respectively

07 Sep

Financial Accounting & Analysis

1. Mr. Berrybell wants to assess the ability of an enterprise named Anyway, so as to confirm whether the enterprise is capable to generate sufficient cash flows or not. Anyway submits the following information for the year ended 31 March2017.

Particulars (Rs. In lacs)
Shares issued during the year 5
Capital assets purchased 1.5
Proceed from sale of an asset 2
Dividend declared and paid 1
Increase in debtors 1.5
Loss on sale of asset 0.2
Net income before taxes 8.8
Depreciation & Amortisation 3.8

Discuss the relevance of preparing the cash flow statement. Indicate and comment on the following:

  • Cash from operation
  • Cash from investing activities
  • Cash from financing activities
  • Closing balance

2. You are being appointed as the accounts executive of Jayesh Motiwala & Company. The principal business of the company is dealing in pearl ornaments at its retail outlet in Jaipur. The management is unaware about the relevance of accounting standard applicable while accounting for the business. Your responsibility is to convince them to comply with the Accounting Standards, by giving a brief presentation on the objectives behind complying with the accounting standard and the benefits to the enterprise by following the same.

3. The following is the Balance Sheet of Caterpillar Ltd as on 31st March 2017

Equity share capital 500000 Fixed assets 695800
Preference share capital 300000 Stock 135000
Reserves & Surplus 255000 Debtors 145000
Creditors 45500 Cash & Bank 150600
Outstanding liablilites 25900
1126400 1126400

Ascertain –

a) Current ratio and liquid ratio. What if the industry average for the same is 2 and 1 respectively.

b) Capital gearing ratio and interpret the same.

The following is the Balance Sheet of Caterpillar Ltd as on 31st March 2017

07 Sep

Financial Accounting & Analysis

1. Mr. Berrybell wants to assess the ability of an enterprise named Anyway, so as to confirm whether the enterprise is capable to generate sufficient cash flows or not. Anyway submits the following information for the year ended 31 March2017.

Particulars (Rs. In lacs)
Shares issued during the year 5
Capital assets purchased 1.5
Proceed from sale of an asset 2
Dividend declared and paid 1
Increase in debtors 1.5
Loss on sale of asset 0.2
Net income before taxes 8.8
Depreciation & Amortisation 3.8

Discuss the relevance of preparing the cash flow statement. Indicate and comment on the following:

  • Cash from operation
  • Cash from investing activities
  • Cash from financing activities
  • Closing balance

2. You are being appointed as the accounts executive of Jayesh Motiwala & Company. The principal business of the company is dealing in pearl ornaments at its retail outlet in Jaipur. The management is unaware about the relevance of accounting standard applicable while accounting for the business. Your responsibility is to convince them to comply with the Accounting Standards, by giving a brief presentation on the objectives behind complying with the accounting standard and the benefits to the enterprise by following the same.

3. The following is the Balance Sheet of Caterpillar Ltd as on 31st March 2017

Equity share capital 500000 Fixed assets 695800
Preference share capital 300000 Stock 135000
Reserves & Surplus 255000 Debtors 145000
Creditors 45500 Cash & Bank 150600
Outstanding liablilites 25900
1126400 1126400

Ascertain –

a) Current ratio and liquid ratio. What if the industry average for the same is 2 and 1 respectively.

b) Capital gearing ratio and interpret the same.

You are being appointed as the accounts executive of Jayesh Motiwala & Company

07 Sep

Financial Accounting & Analysis

1. Mr. Berrybell wants to assess the ability of an enterprise named Anyway, so as to confirm whether the enterprise is capable to generate sufficient cash flows or not. Anyway submits the following information for the year ended 31 March2017.

Particulars (Rs. In lacs)
Shares issued during the year 5
Capital assets purchased 1.5
Proceed from sale of an asset 2
Dividend declared and paid 1
Increase in debtors 1.5
Loss on sale of asset 0.2
Net income before taxes 8.8
Depreciation & Amortisation 3.8

Discuss the relevance of preparing the cash flow statement. Indicate and comment on the following:

  • Cash from operation
  • Cash from investing activities
  • Cash from financing activities
  • Closing balance

2. You are being appointed as the accounts executive of Jayesh Motiwala & Company. The principal business of the company is dealing in pearl ornaments at its retail outlet in Jaipur. The management is unaware about the relevance of accounting standard applicable while accounting for the business. Your responsibility is to convince them to comply with the Accounting Standards, by giving a brief presentation on the objectives behind complying with the accounting standard and the benefits to the enterprise by following the same.

3. The following is the Balance Sheet of Caterpillar Ltd as on 31st March 2017

Equity share capital 500000 Fixed assets 695800
Preference share capital 300000 Stock 135000
Reserves & Surplus 255000 Debtors 145000
Creditors 45500 Cash & Bank 150600
Outstanding liablilites 25900
1126400 1126400

Ascertain –

a) Current ratio and liquid ratio. What if the industry average for the same is 2 and 1 respectively.

b) Capital gearing ratio and interpret the same.

Mr. Berrybell wants to assess the ability of an enterprise named Anyway

07 Sep

Financial Accounting & Analysis

1. Mr. Berrybell wants to assess the ability of an enterprise named Anyway, so as to confirm whether the enterprise is capable to generate sufficient cash flows or not. Anyway submits the following information for the year ended 31 March2017.

Particulars (Rs. In lacs)
Shares issued during the year 5
Capital assets purchased 1.5
Proceed from sale of an asset 2
Dividend declared and paid 1
Increase in debtors 1.5
Loss on sale of asset 0.2
Net income before taxes 8.8
Depreciation & Amortisation 3.8

Discuss the relevance of preparing the cash flow statement. Indicate and comment on the following:

  • Cash from operation
  • Cash from investing activities
  • Cash from financing activities
  • Closing balance

2. You are being appointed as the accounts executive of Jayesh Motiwala & Company. The principal business of the company is dealing in pearl ornaments at its retail outlet in Jaipur. The management is unaware about the relevance of accounting standard applicable while accounting for the business. Your responsibility is to convince them to comply with the Accounting Standards, by giving a brief presentation on the objectives behind complying with the accounting standard and the benefits to the enterprise by following the same.

3. The following is the Balance Sheet of Caterpillar Ltd as on 31st March 2017

Equity share capital 500000 Fixed assets 695800
Preference share capital 300000 Stock 135000
Reserves & Surplus 255000 Debtors 145000
Creditors 45500 Cash & Bank 150600
Outstanding liablilites 25900
1126400 1126400

Ascertain –

a) Current ratio and liquid ratio. What if the industry average for the same is 2 and 1 respectively.

b) Capital gearing ratio and interpret the same.

Financial Accounting & Analysis

07 Sep

Financial Accounting & Analysis

1. Mr. Berrybell wants to assess the ability of an enterprise named Anyway, so as to confirm whether the enterprise is capable to generate sufficient cash flows or not. Anyway submits the following information for the year ended 31 March2017.

Particulars (Rs. In lacs)
Shares issued during the year 5
Capital assets purchased 1.5
Proceed from sale of an asset 2
Dividend declared and paid 1
Increase in debtors 1.5
Loss on sale of asset 0.2
Net income before taxes 8.8
Depreciation & Amortisation 3.8

Discuss the relevance of preparing the cash flow statement. Indicate and comment on the following:

  • Cash from operation
  • Cash from investing activities
  • Cash from financing activities
  • Closing balance

2. You are being appointed as the accounts executive of Jayesh Motiwala & Company. The principal business of the company is dealing in pearl ornaments at its retail outlet in Jaipur. The management is unaware about the relevance of accounting standard applicable while accounting for the business. Your responsibility is to convince them to comply with the Accounting Standards, by giving a brief presentation on the objectives behind complying with the accounting standard and the benefits to the enterprise by following the same.

3. The following is the Balance Sheet of Caterpillar Ltd as on 31st March 2017

Equity share capital 500000 Fixed assets 695800
Preference share capital 300000 Stock 135000
Reserves & Surplus 255000 Debtors 145000
Creditors 45500 Cash & Bank 150600
Outstanding liablilites 25900
1126400 1126400

Ascertain –

a) Current ratio and liquid ratio. What if the industry average for the same is 2 and 1 respectively.

b) Capital gearing ratio and interpret the same.

Financial Accounting & Analysis

14 Jun

Question 1

Calculate Net cash flow from operating activities and discuss how here the non-cash item and the non-operating items are to be treated

  • Net profit for the year 155000
  • One of the machinery whose opening written down value is 120000/- depreciation charged on the same Rs 15000 is sold at the year-end for Rs 95000.Loss on sale of machinery included in above.
  • Interest received included in above Rs2000
  • The opening balances of stock is Rs 50000/- and the closing is Rs 55000/-
  • The opening balances of creditors is Rs 75000/- and the closing is Rs 90000/-

Question 2

You being the account’s manager of JVP Ltd in the online grocery business. The account executive recognizes the income arising from lease rentals on the basis of accounting standard -9 which talks about revenue recognition.

You have a difference of opinion with him as this Accounting standard is not applicable to income arising from lease agreement and other income mentioned there. How will you make him understand what exactly AS-9 talks about?

Question 3

From the following information

Liabilities Amount Assets Amount
Equity share Capital 225000 Fixed assets

(net depreciation)

 

226000
Reserves & Surplus 105000 Stock 48000
Bank Over draft 115000 Debtors 72000
Creditors 55000 Bank 154000
Total 500000 Total 500000

 

Calculate –

  1. Cash ratio and interpret the results.
  2. Interpret how quick ratio is different from current ratio if computed in the above scenario.