Fortune Ltd. has furnished the following information relating to the year ended 31st March, 2024 and 31st March, 2025: 31 st March, 2024 (₹) 31 st…

CA Intermediate · Financial Management and Strategic Management · MTP · September 2025
Fortune Ltd. has furnished the following information relating to the year ended 31st March, 2024 and 31st March, 2025: 31 st March, 2024 (₹) 31 st March, 2025 (₹) Share Capital 60,00,000 60,00,000 Reserve and Surplus 30,00,000 40,00,000 Long term loan 40,00,000 40,00,000 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 of credit sales.The company holds cash equivalent to 11/2 months cost of goods sold.Ignore taxation and assume 360 days in a year.All sales are credit sales. You are required to PREPARE Balance Sheet as on 31st March, 2025 in the 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:

(b) (i) Change in Reserve & Surplus = 40,00,000 - 30,00,000 = 10,00,000 So, Net profit = 10,00,000 Net Profit Ratio = 8% ∴ Sales = 10,00,000 / 8% = 1,25,00,000 (ii) Cost of Goods sold = Sales - Gross profit Margin = 1,25,00,000 – 20% of 1,25,00,000 = 1,00,00,000 (iii) Fixed Assets = 40,00,000 / 40% = 1,00,00,000 (iv) Stock = Cost of Goods Sold / Stock Turnover ratio = 1,00,00,000 / 4 = 25,00,000 (v) Debtors = 1,25,00,000 × 90 / 360 = 31,25,000 (vi) Cash Equivalent = 1,00,00,000 × 1.5 / 12 = 12,50,000 Balance Sheet as on 31st March 2025 Liabilities (₹) Assets (₹) Share Capital 60,00,000 Fixed Assets 1,00,00,000 Reserve and Surplus 40,00,000 Sundry Debtors 31,25,000 Long-term loan 40,00,000 Closing Stock 25,00,000 Sundry Creditors (Balancing Figure) 28,75,000 Cash in hand 12,50,000 1,68,75,000 1,68,75,000

Topics: Part-A: Financial Management

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