Common Size Financial Statements

Q.

This analysis is also known as ‘Vertical analysis’.

1. Common size statements

2. Cash flow statements

3. None of these

4. Comparative statements

Q.

Q.

From the following particulars of Bharat Gas Limited, calculate Cash Flows from Investing Activities. Also, show the workings clearly preparing the ledger accounts:

Balance Sheet of Bharat Gas Ltd. as on 31 Mar. 2016 and 31 Mar. 2017
Particulars	Note No.	Figures as the end of 2017 (Rs)	Figures as at the end of reporting 2016 (Rs)
II) Assets
1. Non-current Assets
a) Fixed assets
i) Tangible assets	1	12, 40, 000	10, 20, 000
ii) Intangible assets	2	4, 60, 000	3, 80, 000
b) Non-current investments	3	3, 60, 000	2, 60, 000

Notes	1	Tangible assets = Machinery
	2	Intangible assets = Patents

Notes

	Figures of current year	Figures of previous year
1. Tangible Assets
Machinery	12, 40, 000	10, 20, 000
2. Intangible Assets
Goodwill	3, 00, 000	1, 00, 000
Patents	1, 60, 000	2, 80, 000
	4, 60, 000	3, 80, 000
3. Non-current Investments
10% long term investments	1, 60, 000	60, 000
Investment in land	1, 00, 000	1, 00, 000
Shares of Amartex Ltd.	1, 00, 000	1, 00, 000
	3, 60, 000	2, 60, 000

Additional Information:

(a) Patents were written-off to the extent of Rs. 40, 000 and some Patents were sold at a profit of Rs. 20, 000.

(b) A Machine costing Rs. 1, 40, 000 (Depreciation provided thereon Rs. 60, 000) was sold for Rs. 50, 000. Depreciation charged during the year was Rs. 1, 40, 000.

(c) On March 31, 2016, 10% Investments were purchased for Rs. 1, 80, 000 and some Investments were sold at a profit of Rs. 20, 000. Interest on Investment was received on March 31, 2017.

(d) Amartax Ltd. paid Dividend @ 10% on its shares.

(e) A plot of Land had been purchased for investment purposes and let out for commercial use and rent received Rs. 30, 000.

Q.

Find the absolute change and the relative change in the following case. The number of daily newspapers in a country decreased from $2025$ in $1900$ to $1251$ in $2010$.

The absolute change is ___. (Simplify your answer. Write an integer or a decimal.)

The relative change is ___$\%$. (Round to the nearest integer as needed.)

Q.

Which of the following statements are true?

1. Common-size balance sheet shows relative value of the various items.

2. In the common size income statement, each product is represented as a percentage of the net sales figure.

3. Both :

   Common-size balance sheet shows relative value of the various items.

   In the common size income statement, each product is represented as a percentage of the net sales figure.

4. None of these

Q. Common size statement analysis is also known as analysis.

1. Vertical
2. Horizontal
3. Intra firm
4. non-comparative firm

Q.

How to enter fixed assets in tally with GST?

Q.

From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow Statement:

Balance Sheet of Tiger Super Steel Ltd.
as at 31st March 2014 and 31st March 2017

Particulars	Note No.	March 31, 2017 (Rs)	March 31, 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	1, 40, 000	1, 20, 000
b) Reserves and surplus	2	22, 800	15, 200
2. Current Liabilities
a) Trade payables	3	21, 200	14, 000
b) Other current liabilities	4	2, 400	3, 200
c) Short-term provisions	5	28, 400	22, 400
Total		2, 14, 800	1, 74, 800
II) Assets
1. Non-Current Assets
a) Fixed assets
i) Tangible assets	6	96, 400	76, 000
ii) Intangible assets		18, 800	24, 000
b) Non-current investments		14, 000	4, 000
2. Current Assets
a) Inventories		31, 200	34, 000
b) Trade receivables		43, 200	30, 000
c) Cash and Cash Equivalents		11, 200	6, 800
Total		2, 14, 800	1, 74, 800

Notes to accounts:

	2017	2016
1. Share Capital
Equity share capital	1, 20, 000	80, 000
10% Preference share capital	20, 000	40, 000
	1, 40, 000	1, 20, 000
2. Reserves and surplus
General reserve	12, 000	8, 000
Balance in statement of profit and loss	10, 800	7, 200
	22, 800	15, 200
3. Trade payables
Bills payable	21, 200	14, 000
4. Other current liabilities
Outstanding expenses	2, 400	3, 200
5. Short-term provisions
Provision for taxation	12, 800	11, 200
Proposed dividend	15, 600	11, 200
	28, 400	22, 400
6. Tangible assets
Land and building	20, 000	40, 000
Plant	76, 400	36, 000
	96, 400	76, 000

Additional Information:
Depreciation Charge on Land & Building Rs 20, 000, and Plant Rs 10, 000 during the year.

Q.

From the following Balance Sheets of Tiger Super Steel Ltd., prepare Cash Flow Statement:

Balance Sheet of Tiger Super Steel Ltd. as on 31 Mar. 2016 and 31 Mar. 2017

Particulars	Note No.	March 31, 2017 (Rs)	March 31, 2016 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital	1	1, 30, 000	2, 00, 000
b) Reserves and surplus	2	22, 800	15, 200
2. Current Liabilities
a) Trade payables	3	21, 200	14, 000
b) Other current liabilities	4	2, 400	3, 200
c) Short-term provisions	5	38, 400	22, 400
Total		2, 14, 800	1, 74, 800
II) Assets
1. Non-Current Assets
a) Fixed assets
i) Tangible assets	6	96, 400	76, 000
ii) Intangible assets		18, 800	24, 000
b) Non-current investments		14, 000	4, 000
2. Current assets
a) Inventories		31, 200	34, 000
b) Trade receivables		43, 200	30, 000
c) Cash and cash equivalents		11, 200	6, 800
Total		2, 14, 800	1, 74, 800

Notes to accounts:

	2017	2016
1. Share Capital
Equity share capital	1, 20, 000	80, 000
10% Preference share capital	20, 000	40, 000
	1, 40, 000	1, 20, 000
2. Reserves and surplus
General reserve	12, 000	8, 000
Balance in statement of profit and loss	10, 800	7, 200
	22, 800	15, 200
3. Trade payables
Bills payable	21, 200	14, 000
4. Other current liabilities
Outstanding expenses	2, 400	3, 200
5. Short-term provisions
Provision for taxation	12, 800	11, 200
Proposed dividend	15, 600	11, 200
	28, 400	22, 400
6. Tangible assets
Land and building	20, 000	40, 000
Plant	76, 400	36, 000
	96, 400	76, 000

Q.

What is meant by Financial Analysis? Give any one objective of such analysis.

Q.

Q.

These are the statements which indicate the relationship of different items of a financial statement with a common item by expressing each item as a percentage of that common item.

1. None of these

2. Cash flow statements

3. Common size statements

4. Comparative statements

Q.

Prepare Comparative Income Statement from the following information:

Particulars	2016-17 Rs.	2015-16 Rs.
Freight Outward	20, 000	10, 000
Wages (office)	10, 000	5, 000
Manufacturing Expenses	50, 000	20, 000
Stock adjustment	(60, 000)	30, 000
Cash purchases	80, 000	60, 000
Credit purchases	60, 000	20, 000
Returns inward	8, 000	4, 000
Gross profit	(30, 000)	90, 000
Carriage outward	20, 000	10, 000
Machinery	3, 00, 000	2, 00, 000
Charge 10% depreciation on machinery	10, 000	5, 000
Interest on short-term loans	20, 000	20, 000
10% debentures	20, 000	10, 000
Profit on sale of furniture	20, 000	10, 000
Loss on sale of office car	90, 000	60, 000
Tax rate	40%	50%

Q.

Which of the following statements are false?
A) When all the figures in a balance sheet are stated as percentage of the total, it is termed as horizontal analysis.
B) When financial statements of several years are analyzed, it is termed as vertical analysis.
C) Vertical Analysis is also termed as dynamic analysis.

1. Both A and B
2. Both A and C
3. Both B and C
4. A, B and C

Q. Answer the following in brief :

What do you mean by analysis of financial statements?

Q.

Apply common size analysis to ABC Company's selling expenses given the following information: Selling expenses = Rs. 60, 000; Revenue from Operations = Rs. 2, 50, 000; Total assets = Rs. 4, 25, 000; Total liabilities = Rs. 3, 00, 000.

1. 50%

2. 25%

3. 24%

4. 36%

Q.

PRACTICAL PROBLEMS

Anil and Sunil were partners sharing profits and losses in the ratio of 3:2. Their Balance Sheet as on 31^st March, 2009.

Balance Sheet as on 31st March, 2009
Liabilities	Amount Rs	Assets	Amount Rs
Capital Account		Bank	30, 000
Anil	50, 000	Stock	25, 000
Sunil	30, 000	Debtors	70, 000
Current Account		Plant	45, 000
Anil	15, 000	Building	35, 000
Sunil	10, 000
Creditors	87, 000
Bills payable	13, 000
	2, 05, 000		2, 05, 000

The firm was dissolved on the above date and the assets realised as under:

1) Stock Rs 20, 000, Debtors Rs 60, 000, Plant Rs 40, 000 and Building Rs 30, 000.

2) Anil agreed to pay off the bills payable.

3) Creditors were paid in full.

4) Dissolution expenses were Rs 7, 000.

Prepare:

(i) Realisation Account

(ii) Bank Account

(iii) Current Account and Capital Account of the partners.

Q.

Common size statement analysis is also known as ___ analysis.

1. Vertical

2. Horizontal

3. All of these

4. Intra firm

Q.

A business has earned average profits of Rs. 1, 00, 000 during the last few years. Find out the value of goodwill by capitalisation method, given that the assets of the business are Rs. 10, 00, 000 and its external liabilities are Rs. 1, 80, 000. The normal rate of return is 10%?

Q.

This analysis helps to understand the impact of each item in the financial statement and its contribution to the resulting figure.

1. Comparative statements

2. Common size statements

3. Cash flow statements

4. None of these

Q.

Q. State the meaning of financial statement analysis?

Q. What are Comparative Financial Statements?

Q. The financial statement is prepapred for the year ended 2020. The common size financial statement is prepared for the years ended

1. 2019 and 2020
2. 2018 and 2019
3. 2021 and 2022
4. 2020 and 2021

Q.

PRACTICAL PROBLEM

The Balance Sheet of Rajkumar and Rajendra Kumar as on 31^st March 2012 is set out below, they share profits and losses in the ratio of 2:1.

Balance Sheet as on 31st March, 2012
Liabilities	Amount Rs	Assets	Amount Rs
Capital A/c’s - Rajkumar	2, 00, 000	Buildings	1, 00, 000
Rajendra Kumar	1, 50, 000	Furniture	30, 000
General Reserve	1, 20, 000	Stock	60, 000
Creditors	80, 000	Debtors	3, 00, 000
		Cash	30, 000
		Profit and Loss A/c	30, 000
	5, 50, 000		5, 50, 000

They agreed to admit Dhiraj Kumar on 1^st April, 2012 as a partner into the firm on the following terms on.

(1) Dhiraj Kumar to bring Rs 60, 000 as capital and Rs 45, 000 as a goodwill, which is to be retained in the business. He will be entitled to 1/4^th share of profit of the firm.

(2) 50% of General Reserve is to remain as Reserve for doubtful debts.

(3) Furniture is to be depreciated by 5%.

(4) Stock is to be revalued at Rs 65, 000/-

(5) Creditors of Rs 5, 000 are not likely to claim and hence should be written off.

(6) Rent of Rs 2, 000 due but not received has not been recorded in the books.

Pass the necessary journal entries in the books of new firm and prepare Balance Sheet of the new firm.

Q.

How to build a marketing mix model?

Q.

From the following information, prepare cash flow statement:

Particulars	Note No.	31st March 2015 (Rs)	31st March 2014 (Rs)
I) Equity and Liabilities
1. Shareholders’ Funds
a) Share capital		7, 00, 000	5, 00, 000
b) Reserves and surplus		4, 70, 000	2, 50, 000
2. Non-current Liabilities
(8% Debentures)		4, 00, 000	6, 00, 000
3. Current Liabilities
a) Trade payables		9, 00, 000	6, 00, 000
Total		24, 70, 000	19, 50, 000
II) Assets
1. Non-current assets
a) Fixed assets
i) Tangible		7, 00, 000	5, 00, 000
ii) Intangible-Goodwill		1, 70, 000	2, 50, 000
2. Current assets
a) Inventories		6, 00, 000	5, 00, 000
b) Trade Receivables		6, 00, 000	4, 00, 000
c) Cash and cash equivalents		4, 00, 000	3, 00, 000
Total		24, 70, 000	19, 50, 000

Additional Information:

Depreciation Charge on Plant amount to Rs. 80, 000.

Q.

Q.

___ allows you to compare the financial statements of large companies with the financial statements of smaller companies, because you are comparing percentages instead of rupees.

1. Comparative income statements

2. Common size income statements

3. Comparative balance sheet

4. Common size balance sheet

Q. Give one word/term/ phrase for each of the following statements :

The tool for analysis of financial statement where, individual figures of balance sheet is converted into percentage.