EPL Ltd. has furnished the following information relating to the year ended 31st March 2023 and 31st March, 2024: 31 st March, 2023 31 st March,…

CA Intermediate · Financial Management and Strategic Management · MTP · September 2024
EPL Ltd. has furnished the following information relating to the year ended 31st March 2023 and 31st March, 2024: 31 st March, 2023 31 st March, 2024 Share Capital 50,00,000 50,00,000 Reserve and Surplus 20,00,000 25,00,000 Long term loan 30,00,000 30,00,000 Net profit ratio: 8%Gross profit ratio: 20%Long-term loan has been used to finance 40% of the fixed assets.Stock turnover with respect to cost of goods sold is 4.Debtors represent 90 days sales.The company holds cash equivalent to 11/2 months cost of goods sold.Ignore taxation and assume 360 days in a year. You are required to PREPARE Balance Sheet as on 31st March 2024 in following format: Liabilities (₹) Assets (₹) Share Capital Fixed Assets - Reserve and Surplus Sundry Debtors - Long-term loan Closing Stock - Sundry Creditors Cash in hand -

Suggested Answer and Working Notes:

Change in Reserve & Surplus = 25,00,000 - 20,00,000 = 5,00,000 So, Net profit = 5,00,000 (i) Net Profit Ratio = 8% ∴ Sales = 5,00,000 / 8% = 62,50,000 (ii) Cost of Goods sold = Sales – Gross profit Margin = 62, 50,000 – 20% of 62, 50,000 = 50,00,000 (iii) Fixed Assets = 30,00,000 / 40% = 75,00,000 (iv) Stock = Cost of Goods Sold / STR = 50,00,000 / 4 = 12,50,000 (v) Debtors = 62,50,000 / 360 X 90 = 15,62,500 (vi) Cash Equivalent = 50,00,000 / 12 X 1.5 = 6,25,000 Balance Sheet as on 31st March 2024 Liabilities (₹) Assets (₹) Share Capital 50,00,000 Fixed Assets 75,00,000 Reserve and Surplus 25,00,000 Sundry Debtors 15,62,500 Long-term loan 30,00,000 Closing Stock 12,50,000 Sundry Creditors (Balancing Figure) 4,37,500 Cash in hand 6,25,000 1,09,37,500 1,09,37,500

Topics: Part-A: Financial Management

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