Vardhaman Limited gives you the following information related for the year ending 31st March, 2024: Particulars Amount (₹) Current Ratio 3:1 Loan…

WN 1: Calculation of Current Assets & Current Liabilities Current Ratio = CA / CL = 3:1 Therefore, CA = 3 CL Net Working Capital = CA - CL = 5,00,000 = 3 CL (-) CL = 5,00,000 Therefore, CL = 2,50,000, CA = 7,50,000 WN 2: Calculation of Average Stock Value & Closing Stock Total Assets = Fixed Assets + Current Assets = 15 L + 7.5 L = 22.50 lakhs Total Assets Turnover Ratio = Sales / Total Assets = 2.5 (given) Therefore Sales = 22.5 lakhs X 2.5 Sales = 56,25,000 GP Margin = 25%, therefore COGS = 75% of Sales COGS = 56.25 x 75% = 42,18,750 Stock Turnover Ratio = COGS / Average Stock = 10 (given) Average Stock = 42,18,750 / 10 = 4,21,875 Average Stock = Op. Stock + Cl. Stock / 2 4,21,875 = 6,50,500 + Cl. Stock / 2 Cl Stock = 1,93,250 WN 3: Calculation of Cash Profit before Interest & Tax Return on Total Assets (pre-tax) = (EBIT / Total Assets) 0.15 = EBIT / 22.50 lakhs Therefore, EBIT = 3,37,500 Cash Profit before Int & Tax = EBIT + Depreciation = 337500 + 50000 Cash Profit before Int & Tax = 3,87,500 WN 4: Calculation of Loan Funds (Debt) & Owned Funds (Equity) Debt to Equity = 1: 3, which means 3 times Debt = Equity (Owned Funds) As per the Accounting equation, Equity + Debt + Current Liab. = Fixed Assets + Current Assets 3 Debt + Debt + 2,50,000 = 15,00,000 + 7,50,000 4 Debt = 20,00,000 Therefor Debt (Loan Funds) = 5,00,000 Equity (Owned Funds) = 15,00,000 WN 5: Calculation of Earnings Available to Eq. Share holders Particulars Amount (₹) EBIT 3,37,500 (-) Int (5 lakhs x 9%) (45,000) EBT 2,92,500 (-) Tax @ 0.25 (73,125) EAT 2,19,375 (-) Pref Div. (250000 x 12%) (30,000) Earnings For Eq. Sh Holders 1,89,375 1. Quick Ratio = {CA - CI Stock}/CL = 7,50,000 - 1,93,250 / 2,50,000 Quick Ratio = 2.23 : 1 2. Fixed Assets Turnover Ratio = Sales / Total Fixed Assets = 56,25,000 / 15,00,000 Fixed Assets Turnover Ratio = 3.75 times 3. Debt Service Coverage Ratio = Cash profit before Int & Tax / Int + Instalments = 3,87,500 / (45,000+2,00,000) Debt Service Coverage Ratio = 1.58 times. 4. EPS = Earnings for Eq. Shareholders / No of Eq. Shareholders = 1,89,375/75,000 EPS = 2.53 5. Price to Earnings Ratio = MPS / EPS = 20/2.53 Price to Earnings Ratio = 7.91 times