Financial Analysis and Management

05 Oct

Financial Analysis and Management

1. From the following details prepare and mention the relevance of comparative income statement.

2016 2017
Sales 150,000 175,000
Cost of Goods Sold -90,000 -105,000
60,000 70,000
Indirect Expenses -30,000 -45,000
30,000 25,000
Provision for tax -8,000 -12,000
Net Profit 22,000 13,000


2. Following information is pertaining to Alpha Ltd. Estimate Net Working Capital. Calculate Net Working Capital and interpret the result.

Raw Material Cost per unit                                                                 300

Direct Labor Cost per unit                                                                   100

Overheads (excluding depreciation) Cost per unit                         200

Total Cost                                                                                                600

Selling Price per unit                                                                              900

Output (Production) per annum                                                          50000 units

Raw material in stock                                                                             Average 4 weeks

Work in Progress(assuming 50% completion stage with               Average 2 weeks

100% material consumption)

Finished goods in stock                                                                         Average 4 weeks

Credit Allowed by suppliers                                                                  Average 4 weeks

Credit Allowed to Debtors                                                                    Average 8 weeks

Cash at bank is expected to be                                                             75,000

Assume 52 weeks in year and even production throughout a year. Assume all sales as credit sales.

3. The Balance Sheet is as follows:

Balance Sheet
Liabilities  Amount  Assets  Amount
Equity Share Capital 100,000  Fixed Assets 1,75,000
12% Debentures 84,000 Current Assets 75,000
Reserves 16,000
Current Liabilities 50,000
250,000 250,000

Net Sales during the year is Rs 5, 00,000. Calculate and interpret the result of:

(a) Total Capital Turnover Ratio

(b) Working Capital Turnover Ratio

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