Question

The following are the balance sheets of Devi Company Limited at the end of 2011 and 2012. Prepare a comparative Balance Sheet and study the financial position of the concern. $$\begin{array}{cccccc}\text{Liabilities}& \text{2011 (Rs.)}& \text{2012 (Rs.)}& \text{Assets}& \text{2011 (Rs.)}& \text{2012 (Rs.)}\\ \text{Equity Capital}& 1,20,000& 1,85,000& \text{Fixed Assets}& 1,40,000& 1,95,000\\ \text{Preference}& 70,000& 95,000& \text{Stock}& 40,000& 45,000\\ \text{Capital}& & & & & \\ \text{Reserves}& 30,000& 35,000& \text{Debtors}& 70,000& 82,500\\ \text{P and L}& 17,500& 20,000& \text{Bills}& 20,000& 50,000\\ & & & \text{Receivables}& & \\ \text{Bank Overdraft}& 35,000& 45,450& \text{Prepaid}& 6,000& 8,000\\ & & & \text{Expenses}& & \\ \text{Creditors}& 25,000& 35,000& \text{Cash at Bank}& 40,000& 48,500\\ \text{Provision for}& & & \text{Cash in Hand}& 5,000& 29,000\\ \text{Taxation}& 15,000& 22,500& & & \\ \text{Proposed}& & & & & \\ \text{Dividend}& 8,500& 20,050& & & \\ & \overline{\underset{–}{3,21,000}}& \overline{\underset{–}{4,58,000}}& & \overline{\underset{–}{3,21,000}}& \overline{\underset{–}{4,58,000}}\end{array}$$

Answer 1

$\begin{array}{ccccc}& & & \text{Absolute}& \text{Percentage}\\ & & & \text{Increase}& \text{Increase}\\ \text{Particulars}& \text{2011}& \text{2012}& \text{(Or)}& \text{(Or)}\\ & \text{(Rs.)}& \text{(Rs.)}& \text{Decrease (Rs.)}& \text{Decrease (\%)}\\ \text{Assets}& & & & \\ \text{Current Assets}& & & & \\ \text{Stock}& 40,000& 45,000& 5,000& 12.50\\ \text{Debtors}& 70,000& 82,500& 12,500& 17.86\\ \text{Bills Receivables}& 20,000& 50,000& 30,000& 150.00\\ \text{Prepaid Expenses}& 6,000& 8,000& 2,000& 33.33\\ \text{Cash at Bank}& 40,000& 48,500& 8,500& 21.25\\ \text{Cash in Hand}& 5,000& 29,000& 24,000& 480.00\\ \text{Total Current Assets (A)}& \overline{\underset{–}{1,81,000}}& \overline{\underset{–}{2,63,000}}& \overline{\underset{–}{82,000}}& \overline{\underset{–}{45.30}}\\ \text{Fixed Assets (B)}& \underset{–}{1,40,000}& \underset{–}{1,95,000}& 55,000& 39.29\\ \text{Total Assets (A+ B)}& \underset{–}{3,21,000}& \underset{–}{4,58,000}& \underset{–}{1,37,000}& \underset{–}{42.68}\\ \text{Liabilities}& & & & \\ \text{Current Liabilities}& & & & \\ \text{Bank Overdraft}& 35,000& 45,450& 10,450& 29.86\\ \text{Creditors}& 25,000& 35,000& 10,000& 40.00\\ \text{Provision for Taxation}& 15,000& 22,500& 7,500& 50.00\\ \text{Proposed Dividend}& 8,500& 20,050& 11,550& 135.88\\ \text{Total Current Liabilities (A)}& \overline{\underset{–}{83,500}}& \overline{\underset{–}{1,23,000}}& \overline{\underset{–}{39,500}}& \overline{\underset{–}{47.31}}\\ \text{Equity Capital}& 1,20,000& 1,85,000& 65,000& 54.17\\ \text{Preference Capital}& 70,000& 95,000& 25,000& 35.71\\ \text{Reserves}& 30,000& 35,000& 5,000& 16.67\\ \text{P and L}& 17,500& 20,000& 2,500& 14.29\\ \text{Shareholder Fund(B)}& \overline{\underset{–}{2,37,500}}& \overline{\underset{–}{3,35,000}}& \overline{\underset{–}{97,500}}& \overline{\underset{–}{41.05}}\\ \text{Total Liabilities and Sharefolder Fund}& & & & \\ \text{(A+ B)}& \underset{–}{\underset{–}{3,21,000}}& \underset{–}{\underset{–}{4,58,000}}& \underset{–}{\underset{–}{1,37,000}}& \underset{–}{\underset{–}{42.68}}\end{array}$

Comments:
(i) Change in current assets and current Liabilities is almost same. It indicates that ratio is same as of previous year.
(ii) Fixed Assets have increased along with share capital which shoes that assets are purchased wih long term sources of finance.
(iii) The overall financial position of company is satisfactory.

Working Note:
Absolute Change = Current year – Previous year
Change in Percentage = $\frac{\text{Absolute change}}{Previousyear}\times 100$