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### Chapter 9 Analysis of Financial Statements Book - Keeping and Accountancy 12th Stantard HSC Maharashtra State Board 2020 Latest

Chapter 9: Analysis of Financial Statements

Select the most appropriate alternative from the given below and rewrite the sentence

Gross Profit Ratio indicates the relationship of gross profit to the___________.

Net-Cash

Net-Sales

Net Purchases

Gross Sales

Current Ratio =

Current Liabilities

Current Liabilities

Quick Assets

Quick Liabilities

Current Assets

None of these

Liquid Assets =____________

Current Assets + Stock

Current Assets - Stock

Current Assets - stock + prepaid Expenses

None of these

Cost of goods sold___________

Sales - Gross profit

Sales - Net Profit

Sales Proceeds

None of these

Net-Profit Ratio is equal to______________

Operating ratio

Operating net-profit ratio

Gross Profit Ratio

Current Ratio

The Common Size Statement requires______________

Common base

Journal Entries

Cash Flow

Current Ratio

Bill Payable is_________________

Long term loan

Current Liabilities

Liquid Assets

Net Loss

Generally Current Ratio should be___________

2:1

1:1

1:2

3:1

From financial statement analysis the creditors are specially interested to know_________________

Liquidity

Profits

Sale

Share Capital

Give one word/term/phrase for the following statement.

The statement showing profitability of two different periods

Comparative Income Statement.

The ratio measures the relationship between Gross Profit and Net Sales.

Gross Profit Ratio

Critical evaluation of financial statements to measure profitability.

Analysis of Financial Statement

A particular mathematical number showing relationship between two accounting figures.

Ratio

An asset which can be converted into cash immediately

Liquid Asset

The ratio measuring the relationship between net profit and ownership capital employed.

ROCE

The statement showing financial position for different periods of previous year and current year.

Comparative Balance Sheet

Statement showing changes in cash and cash equivalent during a particular period.

Cash Flow Statement

Activity related to acquisition of long term assets and investment.

Financing Activities

The ratio that establishes relationship between Quick Assets and Current Liabilities

Liquid Ratio

State true or false with reason.

Financial Statement includes only Balance Sheets.

True

False

This statement is False.

Financial statements include Balance Sheet and Profit and Loss A/c. This is because financial statements are prepared by business organisations to find out efficiency, solvency, profitability, growth, strength and status of the business. For this they need information from the balance sheet as well as from Profit and Loss A/c.

Analysis of financial statements is a tool but not a remedy.

##### Options

True

False

This statement is True.

Based on analysis of financial statement one can get idea of financial strength and weakness of the business. However, based on this one cannot take decision about the business on various issues. Hence analysis of financial statement is a tool but not a remedy.

Purchase of Fixed Assets is operating cash flow.

##### Options

True

False

This statement is False.

Purchase of fixed assets is cash flow from investing activities. It is not a day to day operations activities like office/selling/distribution finance expenses/activities.

Dividend paid is not a source of fund

##### Options

True

False

This statement is True.

Dividend is always paid on shares issued by a company is an expense. Shares itself is a source of fund. In payment of dividend cash goes out from the company. It is an out flow of cash and not a source of fund.

Gross Profit depends upon Net Sales.

##### Options

True

False

This statement is True.

Gross profit ratio discloses the relation between gross profit and total net sales. Gross profit ratio is an income-based ratio, where gross profit is an income. There is direct relation between net sales and gross profit. Higher the net sales higher the gross profit.

Payment of cash against purchase of stock is use of fund.

##### Options

True

False

This statement is True.

Cash payment for purchase of stock is made from cash balance or/and from bank balance which is a part of business fund. When stock or materials we purchase we use cash for payment.

Ratio Analysis is useful for inter-firm comparison

##### Options

True

False

This statement is True.

The comparision of the operating performance of a business entity with the other business entities is known as inter-firm comparision. This ratio analysis assist to know how and to what extent a business entity is strong or weak as compared to other business entity

The short term deposits are considered as cash equivalent.

##### Options

True

False

This statement is True.

The short-term deposits are liquid assets. It means deposits kept for some period (usually less than one year) and they are kept with an intention to get money quickly as and when required. They are as good as cash and considered as cash equivalent

Activity Ratios Turnover Ratios are the same.

##### True

False

This statement is True.

Turnover ratio is an efficiency ratio to check how efficiently company is using different assets to extract earnings from them. Activity ratio are financial analysis tools used to measure a business ability to convert its assets into cash. From both these definitions we can say that Activity ratios and Turnover ratios are same.

Current Ratio measures the liquidity of the business.

##### Options

True

False

This statement is True.

Current ratio shows relation between current assets and current liabilities. If the proportion of current assets is higher than current liabilities, liquidity position of business entity is considered good. More liquidity means more short-term solvency. From the above it is proved that current ratio measures the liquidity of the business.

Ratio analysis measures profitability efficiency and financial soundness of the business.

##### Options

True

False

This statement is True.

With the help of profitability ratios (Gross profit, Net profit and Operating profit) one can get the idea of profitability efficiency of the firm and with the help of liquidity ratios (Current ratio and liquid ratio) one can get the idea of solvency or financial soundness of the business.

Usually the current ratio should be 3:1.

##### Options

True

False

This statement is False.

Usually the current ratio should be 2:1. It means current assets are double of current liabilities. It shows the short-term solvency of business enterprises.

Mention two objectives of comparative statement?

Objectives of comparative statements are :

(i) Compare financial data at two points of time and

(ii) Helps in deriving the meaning and conclusions regarding the changes in financial positions and operating results.

State three examples of cash inflows?

Examples of cash inflows are :

(3) Sale of asset/investment,

State three examples of cash outflows?

Examples of cash outflows are :

(1) Interest paid,

(2) Loss on sale of asset,

(3) Dividend paid,

(4) Repayment of short-term borrowings.

Give the formula of Gross Profit Ratio?

Gross profit ratio = (Gross profit / Net sales) x 100

Where Gross profit = Net sales – Cost of goods sold

Cost of goods sold = Opening stock + Purchase – Purchase return + Direct expense – Closing stock

Net sales = Sales – Sales return.

Give the formula of gross profit?

Gross profit = Net sales – Cost of goods sold.

Cost of goods sold = Opening stock + Purchase – Purchase return + Direct expense – Closing stock

Net sales = Sales – Sales return.

Give any three examples of current assets?

Cash or cash equivalent short-term lending and advances,

are the examples of current assets.

Give the formula of current ratio?

Current ratio = Current assets / Current liabilities

Give the formula of quick assets?

Quick assets = Current assets – (Stock + Prepaid expense)

State the formula of Cost of goods sold?

Cost of goods sold = Opening stock + Purchase – Purchase return + Direct expense – Closing stock

State the formula of Average Stock?

Average stock = (Opening stock of goods + Closing stock of goods) / 2

Practical Problems.

Accounts Chapter 9: Analysis of Financial Statements.

Practical problem | Q 1 | Page 376

From the Balance Sheet of Amar Traders as on 31st March 2018 and 31st, March 2019 prepare comparative Balance Sheet.

 Liabilities 31.3.2018 (₹) 31.3.2019 (₹) Assets 31.3.2018 (₹) 31.3.2019 (₹) Capital 60,000 72,000 Fixed Assets 1,20,000 1,50,000 Reserves and Surplus 24,000 30,000 Current Assets 28,000 27,000 Loans 34,000 51,000 Creditors 30,000 24,000 1,48,000 1,77,000 1,48,000 1,77,000

Solution:

Comparative Balance Sheet of Amar Traders as on 31st March 2018 and 31st March 2019

 Particulars 31 – 03 – 2018 (₹) 31 – 03 – 2019 (₹) Absolute Change (₹) Percentage Change I. Sources of Funds (a) Capital 60,000 72,000 12,000 20 % Increase (b) Reserve and Surplus 24,000 30,000 6,000 25 % Increase (A) Net Worth 84,000 1,02,000 18,000 21.43 % Increase Borrowed Funds (a) Loans 34,000 51,000 17,000 50 % Increase (B) Total Borrowed Funds 34,000 51,000 17,000 50 % Increase Total Funds Available (A + B) 1,18,000 1,53,000 35,000 29.66 % Increase

 II. Application of Funds A. Fixed Assets 1,20,000 1,50,000 30,000 25 % Increase B. Working Capital (1) Current Assets 28,000 27,000 (1,000) (3.57 %) Decrease Less : (2) Current LiabilitiesCreditors 30,000 24,000 (6,000) (20 %) Decrease Working Capital (Current Assets – Current Liabilities) (2,000) 3,000 5,000 (250 %) Increase Total Funds Applied (A + B) 1,18,000 1,53,000 35,000 29.66 % Increase

Percentage change = (Amount of Absolute Change ÷ Amount of Previous Year) × 100

Practical problem | Q 2 | Page 376

From the following Balance Sheet of Alpha Limited prepare a comparative Balance Sheet as on 31st March 2018 and 31st March 2019.

 Balance Sheet As on 31st March 2018 and 31st March 2019 Liabilities 31.3.2018 (₹) 31.3.2019 (₹) Assets 31.3.2018 (₹) 31.3.2019 (₹) Equity Share Capital 2,00,000 2,50,000 Land 80,000 1,00,000 12% Preference Shares 80,000 80,000 Building 60,000 90,000 Reserves and Surplus 1,00,000 1,40,000 Plant and Machinery 73,000 1,73,000 15% Debentures 60,000 51,000 Stock 1,50,000 1,10,000 Creditors 50,000 80,000 Debtors 1,28,000 1,40,000 Bills Payable 10,000 6,000 Bank 34,000 37,000 Provision for Taxation 25,000 43,000 5,25,000 6,50,000 5,25,000 6,50,000

Solution:

Balance Sheet As on 31st March 2018 and 31st March 2019

Comparative Balance Sheet of Alpha Limited as on 31st March, 2018 and 31st March, 2019

 Particulars 31 – 03 – 2018 (₹) 31 – 03 – 2019 (₹) Absolute Change (₹) Percentage Change I. Sources of Funds (a) Equity Share Capital 2,00,000 2,50,000 50,000 25 % Increase (b) 12 % Preference Shares 80,000 80,000 – – (c) Reserve and Surplus 1,00,000 1,40,000 40,000 40 % Increase (A) Net Worth 3,80,000 4,70,000 90,000 23.68 % Increase Borrowed Funds Secured Loan – 15 % Debentures 60,000 51,000 (9,000) (15 %) Decrease (B) Total Borrowed Funds 60,000 51,000 (9,000) (15 %) Decrease Total Funds Available (A + B) 4,40,000 5,21,000 81,000 18.41 % Increase

II. Application of Funds

 A. Fixed Assets – Land 80,000 1,00,000 20,000 25 % Increase Building 60,000 90,000 30,000 50 % Increase Plant and Machinery 73,000 1,73,000 1,00,000 137 % Increase 2,13,000 3,63,000 1,50,000 70.42 % Increase I. B. Working Capital Current Assets – Stock 1,50,000 1,10,000 (40,000) (26.67) % Decrease Debtors 1,28,000 1,40,000 12,000 9.375 % Increase Bank 34,000 37,000 3,000 8.82 % Increase Less : Current Liabilities Creditors 50,000 80,000 30,000 60 % Increase Bills Payable 10,000 6,000 (4,000) (40 %) Decrease Provision for Taxation 25,000 43,000 18,000 72 % Increase Working Capital (Current Assets – Current Liabilities) 2,27,000 1,58,000 (69,000) (30.40 %) Decrease Total Funds Applied (A + B) 4,40,000 5,21,000 81,000 18.41 % Increase

Practical problem | Q 3 | Page 377

Prepare Comparative Balance Sheet for the year ended 31.3.18 and 31.3.19 Assets & Liabilities as follows

 Particulars 31.3.18 (₹) 31.3.19 (₹) 1) Fixed Assets 1,20,000 1,50,000 2) Share Capital 60,000 72,000 3) Current Assets 28,000 27,000 4) Reserve & Surplus 24,000 30,000 5) Loan 34,000 57,000 6) Current liabilities 30,000 24,000

Solution:

Comparative Balance Sheet as on 31st March 2018 and 31st March 2019

I. Sources of Funds

 Particulars 31 – 03 – 2018 (₹) 31 – 03 – 2019 (₹) Absolute Change (₹) Percentage Change (a) Share Capital 60,000 72,000 12,000 20 % Increase (b) Reserve and Surplus 24,000 30,000 6,000 25 % Increase (A) Net Worth 84,000 1,02,000 18,000 21.43 % Increase (B) Borrowed Funds – Loan 34,000 57,000 23,000 67.65 % Increase Total Funds Available (A + B) 1,18,000 1,59,000 41,000 34.74 % Increase

II. Application of Funds

 A. Fixed Assets 1,20,000 1,50,000 30,000 25 % Increase Working Capital (1) Current Assets 28,000 27,000 (1,000) (3.57 %) Decrease Less : (2) Current Liabilities 30,000 24,000 (6,000) (20 %) Decrease B. Working Capital (Current Assets – Current Liabilities) (2,000) 3,000 5,000 (250 %) Decrease Total Funds Applied (A + B) 1,18,000 1,53,000 35,000 29.66 % Increase

Practical problem | Q 4 | Page 377

Prepare Comparative Balance Sheet for the year ended 31.3.17 and 31.3.18

 Particulars 31.3.17 (₹) 31.3.18 (₹) 1) Current liabilities 60,000 48,000 2) Fixed Assets 2,40,000 3,00,000 3) Loan 68,000 1,02,000 4) Share Capital 1,20,000 1,44,000 5) Reserve & Surplus 48,000 60,000 6) Current Assets 56,000 54,000

Solution:

Comparative Balance Sheet as on 31st March 2017 and 31st March 2018

 Particulars 31 – 03 – 2017 (₹) 31 – 03 – 2018 (₹) Absolute Change (₹) Percentage Change I. Sources of Funds (a) Share Capital 1,20,000 1,44,000 24,000 20 % Increase (b) Reserve and Surplus 48,000 60,000 12,000 25 % Increase (A) Net Worth 1,68,000 2,04,000 36,000 21.43 % Increase (B) Borrowed Funds – Loan 68,000 1,02,000 34,000 50 % Increase Total Funds Available (A + B) 2,36,000 3,06,000 70,000 29.66 % Increase II. Application of Funds A. Fixed Assets 2,40,000 3,00,000 60,000 25 % Increase B. (1) Current Assets 56,000 54,000 (2,000) (3.57 %) Decrease Less : (2) Current Liabilities 60,000 48,000 (12,000) (20 %) Decrease B. Working Capital (Current Assets – Current Liabilities (4,000) 6,000 10,000 (250 %) Decrease Total Funds Applied (A + B) 2,36,000 3,06,000 70,000 29.66 % Increase

Practical problem | Q 5 | Page 377

Prepare Comparative Income Statement of Noha Limited for the year ended 31.3.17 and 31.3.18

 Particulars 31.3.17 (₹) 31.3.18 (₹) Sales 2,00,000 3,00,000 Income Tax 50% 50% Cost of Sales 1,20,000 80,000 Indirect Expenses 8,000 12,000

Solution:

Comparative Income Statement of Noha Limited For the year ended 31st March, 2017 and 31st March, 2018

 Particulars 31 – 03 – 2017 (₹) 31 – 03 – 2018 (₹) Absolute Change (₹) Percentage Change Sales 2,00,000 3,00,000 1,00,000 50 % Increase Less: Cost of Sales 1,20,000 80,000 (40,000) (33.33 %) Decrease Gross Profit 80,000 2,20,000 1,40,000 175 % Increase Less : Indirect Expenses 8,000 12,000 4,000 50 % Increase Net Profit before Tax 72,000 2,08,000 1,36,000 188.89 % Increase Less : Tax 50 % 36,000 1,04,000 68,000 188.89 % Increase Net Profit after Tax 36,000 1,04,000 68,000 188.89 % Increase

Practical problem | Q 6 | Page 378

Prepare comparative Income Statement of Sourabh Limited for the year ended 31.3.17 and 31.3.18

 Particulars 31.3.17 (₹) 31.3.18 (₹) Sales 4,00,000 6,00,000 Indirect Expenses 16,000 24,000 Cost of Sales 24,000 56,000 Income Tax 50% 50%

Solution:

Comparative Income Statement of Sourabh Limited For the year ended on 31st March, 2017 and 31st March, 2018

 Particulars 31 – 03 – 2017 (₹) 31 – 03 – 2018 (₹) Absolute Change (₹) Percentage (%) Change Sales 4,00,000 6,00,000 2,00,000 50 % Increase Less : Cost of Sales 24,000 56,000 32,000 133.33 % Increase Gross Profit 3,76,000 5,44,000 1,68,000 44.68 % Increase Less : Indirect Expences 16,000 24,000 8,000 50 % Increase Net Profit before Tax 3,60,000 5,20,000 1,60,000 44.44 % Increase Less : Tax 50 % 1,80,000 2,60,000 80,000 44.44 % Increase Net Profit after tax 1,80,000 2,60,000 80,000 44.44 % Increase

Practical problem | Q 7 | Page 378

Following is the Balance Sheet of Sakshi Traders for the year ended 31.3.17 and 31.3.18

 Liabilities 31.3.17 (₹) 31.3.18 (₹) Assets 31.3.17 (₹) 31.3.18 (₹) Equity Share Capital 80,000 80,000 Fixed Assets 1,20,000 1,44,000 Pref. Share Capita 20,000 20,000 Investment 20,000 20,000 Reserve & Surplus 20,000 24,000 Current Assets 60,000 48,000 Secured Loan 40,000 16,000 Unsecured Loan 20,000 36,000 Current Liabilities 20,000 36,000 2,00,000 2,12,000 2,00,000 2,12,000

Prepare common-size Balance Sheet for the year 31.3.17 and 31.3.18

Solution:

 Common Size Statement of Balance Sheet of Sakshi Traders as on 31st March 2017 and 31st March 2018 Particulars Amount (₹) % to total of Balance Sheet 31 – 03 – 2017 (₹) 31 – 03 – 2018 (₹) 31 – 03 – 2017 (₹) 31 – 03 – 2018 (₹) I. Sources of Funds : (1) Owner’s Equity Equity Share Capital 80,000 80,000 44.45 45.45 Preference Shares Capital 20,000 20,000 11.11 11.36 Reserve and Surplus 20,000 24,000 11.11 13.64 Net Worth 1,20,000 1,24,000 66.67 70.45 (2) Borrowed Funds Secured Loans 40,000 16,000 22.22 9.09 Unsecured Loans 20,000 36,000 11.11 20.46 60,000 52,000 33.33 29.55 Total Borrowed Funds 1,80,000 1,76,000 100 100 II. Application of Funds (1) Fixed Assets 1,20,000 1,44,000 66.67 81.82 (2) Investments 20,000 20,000 11.11 11.36 1,40,000 1,64,000 77.78 93.18 (3) Working Capital (A) Current Assets 60,000 48,000 - - Less : (B) Current Liabilities 20,000 36,000 - - 40,000 12,000 22.22 6.82 Total Funds Applied 1,80,000 1,76,000 100 100

Practical problem | Q 8 | Page 378

Prepare common size Income Statement for the year ended 31.3.17 and 31.3.18.

 Particulars 31.3.17 (₹) 31.3.18 (₹) Sales 2,00,000 2,50,000 Cost of goods sold 1,50,000 1,70,000 Office and Administrative Expenses 4,000 6,000 Selling and Distribution Expenses 6,000 1,000

Solution:

Common Size Statement for the year ended on 31st March, 2017 and 31st March, 2018

 Particulars Amount (₹) Percentage (%) Amount (₹) Percentage (%) Sales 2,00,000 100 2,50,000 100 Less: Cost of goods sold 1,50,000 75 1,70,000 68 Gross Profit 50,000 25 80,000 32 Less: Office and Administrative Expenses 4,000 2 6,000 2.4 Less: Selling and Distribution Expenses 6,000 3 1,000 0.4 Net Profit 40,000 20 73,000 29.2

Practical problem | Q 9 | Page 378

Following is the Balance Sheet of Sakshi Limited. Prepare cashflow statement.:

 Liabilities 31.3.17 (₹) 31.3.18 (₹) Assets 31.3.17 (₹) 31.3.18 (₹) Share Capital 2,00,000 3,00,000 Cash 20,000 30,000 Creditors 60,000 90,000 Debtors 1,40,000 2,50,000 Profit and Loss A/c 40,000 70,000 Stock 80,000 70,000 Land 60,000 1,10,000 3,00,000 4,60,000 3,00,000 4,60,000

Solution:

Cash Flow Statement For the year ended 31st March, 2017 and 31st March, 2018

 Particulars Amount (₹) Amount (₹) (A) Cash flow from Operating activities Closing balance of Profit and Loss A/c 70,000 Less: Opening balance of Profit and Loss A/c 40,000 30,000 Add: Decrease in Current Asset – Stock 10,000 Add: Increase in Current Liabilities – Creditors 30,000 70,000 Less: Increase in Current Asset – Debtors 1,10,000 Net Cash from Operating activities (A) (40,000) (B) Cash flow from Investing activities Purchase of Land 50,000 50,000 Net Cash used in Investing activities (B) (C) Cash flow from Financing activities Amount of share capital received 1,00,000 1,00,000 Net Cash from Financing activities (C) Net increase in cash and cash equivalent (A + C – B) 10,000 Cash equivalent in the beginning of period 20,000 Cash equivalent at the end of period 30,000

Practical problem | Q 10 | Page 378

From the following Balance Sheet of Konal Traders prepare cash flow statement.

 Liabilities 31.3.17 (₹) 31.3.18 (₹) Assets 31.3.17 (₹) 31.3.178 (₹) Share Capital 2,00,000 2,50,000 Cash 30,000 47,000 Creditors 70,000 45,000 Debtors 1,20,000 1,15,000 Profit and Loss A/c 10,000 23,000 Stock 80,000 90,000 Land 50,000 66,000 2,80,000 3,18,000 2,80,000 3,18,000

Solution:

Cash Flow Statement For the year ended on 31st March 2017 and 31st March 2018

 Particular Amount (₹) Amount (₹) (A) Cash flow from Operating activities Closing balance of Profit and Loss A/c 23,000 Less: Opening balance of Profit and Loss A/c 10,000 13,000 Add: Decrease in Current Assets – Debtors 5,000 18,000 Less: Increase in Current Assets – Stock (10,000) Less: Decrease in Current Liabilities – Creditors (25,000) Net Cash from Operating activities (A) (17,000) (B) Cash flow from Investing activities Purchase of Land 16,000 16,000 Net Cash used in Investing activities (B) (C) Cash flow from Financing activities Amount of share capital received 50,000 50,000 Net Cash used in Financing activities (C) Net increase in cash and cash equivalent (A+ C – B) 17,000 Cash equivalent in the beginning of period 30,000 Cash equivalent at the end of period. 47,000

Practical problem | Q 11 | Page 379

A Compay had the following Current Assets and Current Liabilities

 Debtors ₹ 1,20000 Creditors ₹ 60,000 Bills Payable ₹ 40,000 Stock ₹ 60,000 Loose Tools ₹ 20,000 Bank overdraft ₹ 20,000

Calculate Current Ratio.

Solution:

(1) Current Assets = Debtors + Stock + Loose Tools

= 1,20,000 + 60,000 + 20,000

2,00,000

(2) Current liabilities = Creditors + Bills payable + Bank overdraft

= 60,000 + 40,000 + 20,000

1,20,000

(3) Current ratio = Current Assets ÷ Current Liabilities

Current Ratio = 200000 ÷ 120000

Current Ratio = 5 ÷ 3

Current Ratio = 5:3

Practical problem | Q 12 | Page 379

Current Assets of Company  6,00,000 and its Current Ratio is 2:1

Find Current Liabilities

Solution:

Current Ratio = Current Assets ÷ Current Liabilities

2 ÷ 1 = 600000 ÷ Current Liabilities

2 × Current Liabilities = 600000 × 1

Current Liabilities = 600000 ÷ 2

Current Liabilities =  300000

Practical problem | Q 13 | Page 379

Current Liabilities =  3,00,000

Working Capital  =  8,00,000

Inventory =  2,00,000

Calculate Quick Ratio.

Solution:

Current assets = Current liabilities + Working capital

= 3,00,000 + 8,00,000

11,00,000

Quick assets = Current assets – Inventory

= 11,00,000 – 2,00,000

9,00,000

Quick liability = Current liabilities –  Bank O / D

3,00,000

Quick ratio = Quick Assets ÷ Quick Liabilities

Quick Ratio = 900000 ÷ 300000

Quick Ratio = 3 ÷ 1

Quick Ratio = 3:1

Practical problem | Q 14 | Page 379

Calculate the Gross Profit Ratio

 Sales ₹ 2,70,000 Net purchases ₹ 1,50,000 Sales Ratio ₹ 20,000 Closing Stock ₹ 25,000 Operating Stock ₹ 45,000

Solution:

Net sales = Sales – Sales return

= 2,70,000 – 20,000

2,50,000

Cost of goods sold = Opening stock + Net purchase – Closing stock

= 45,000 + 1,50,000 – 25,000

1,70,000

Gross profit = Net sales – Cost of goods sold

= 2,50,000 – 1,70,000

80,000

Gross Profit ratio = (Gross Profit ÷ Net Sales) × 100

Gross Profit Ratio = (80000 ÷ 250000) × 100

Gross Profit Ratio = 32%

Practical problem | Q 15 | Page 379

Calculate Net Profit Ratio from the following

 Sales ₹ 3,80,000 Cost of good sold ₹ 2,60,000 Indirect Exp ₹ 60,000

Solution:

 Sales ₹ 3,80,000 Less: Cost of goods sold ₹ 2,60,000 Gross profit ₹ 1,20,000 Less: Indirect expense ₹ 1,60,000 Net profit ₹ 1,60,000

Net Profit Ratio = (Net Profit ÷ Sales) × 100

Net Profit Ratio = (60000 ÷ 380000) × 100

Net Profit Ratio = 15.79 %

Practical problem | Q 16 | Page 379

Calculate Operating Ratio

 Cost of good sold ₹ 3,50,000 Operating Exp. ₹ 30,000 Sales ₹ 5,00,000 Sales Return ₹ 30,000

Solution:

Net sales = Sales – Sales return

= 5,00,000 – 30,000

4,70,000

Operating ratio = [(Cost of Goods Sold + Operating Expense) ÷  Net Sales ] × 100

Operating Ratio = [(350000 + 30000) ÷ 470000] × 100

Operating Ratio = (380000 ÷ 470000) × 100

Operating Ratio = 80.85 %

Practical problem | Q 17 | Page 379

Calculate

 1) Current Assets ₹ 3,00,000 2) Current Liabilities ₹ 1,00,000

What is current Ratio.

Solution:

Current Ratio = Current Assets / Current Liabilities

Current Ratio = 300000 / 100000

Current Ratio = 3 / 1

The Current Ratio is 3:1

Book-keeping and Accountancy 12th Standard

HSC Maharashtra State Board. Latest Syllabus.

Chapter 1: Introduction to Partnership and Partnership Final Accounts

Chapter 2: Accounts of ‘Not for Profit’ Concerns

Chapter 3: Reconstitution of Partnership (Admission of Partner)

Chapter 4: Reconstitution of Partnership (Retirement of Partner)

Chapter 5: Reconstitution of Partnership (Death of Partner)

Chapter 6: Dissolution of Partnership Firm

Chapter 7: Bills of Exchange

Chapter 8: Company Accounts - Issue of Shares

Chapter 9: Analysis of Financial Statements

Chapter 10: Computer In Accounting

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CHEMISTRY XII HSC SOLUTION 27th, February, 2019

OCM PAPER SOLUTION 2019 27th, February, 2019

HSC MATHS PAPER SOLUTION COMMERCE, 2nd March, 2019

HSC MATHS PAPER SOLUTION SCIENCE 2nd, March, 2019

SSC ENGLISH STD 10 5TH MARCH, 2019.

HSC XII ACCOUNTS 2019 6th March, 2019

HSC XII BIOLOGY 2019 6TH March, 2019

HSC XII ECONOMICS 9Th March 2019

SSC Maths I March 2019 Solution 10th Standard11th, March, 2019

SSC MATHS II MARCH 2019 SOLUTION 10TH STD.13th March, 2019

SSC SCIENCE I MARCH 2019 SOLUTION 10TH STD. 15th March, 2019.

SSC SCIENCE II MARCH 2019 SOLUTION 10TH STD. 18th March, 2019.

SSC SOCIAL SCIENCE I MARCH 2019 SOLUTION20th March, 2019

SSC SOCIAL SCIENCE II MARCH 2019 SOLUTION, 22nd March, 2019

XII CBSE - BOARD - MARCH - 2019 ENGLISH - QP + SOLUTIONS, 2nd March, 2019

HSC Maharashtra Board Papers 2020

(Std 12th English Medium)

HSC ECONOMICS MARCH 2020

HSC OCM MARCH 2020

HSC ACCOUNTS MARCH 2020

HSC S.P. MARCH 2020

HSC ENGLISH MARCH 2020

HSC HINDI MARCH 2020

HSC MARATHI MARCH 2020

HSC MATHS MARCH 2020

SSC Maharashtra Board Papers 2020

(Std 10th English Medium)

English MARCH 2020

HindI MARCH 2020

Hindi (Composite) MARCH 2020

Marathi MARCH 2020

Mathematics (Paper 1) MARCH 2020

Mathematics (Paper 2) MARCH 2020

Sanskrit MARCH 2020

Important-formula

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