Jamunapati Limited has furnished the following ratios and information relating to the year ended 31 st March, 2024: Sales 70,00,000 Return on net…

(a) Calculation of Operating Expenses for the year ended 31 st March, 2024 (₹) Net Profit [@ 7% of Sales] 4,90,000 Add: Income Tax (@ 30% of PBT) 2,10,000 Profit Before Tax (PBT) 7,00,000 Add: Debenture Interest 1,05,000 Profit before interest and tax (PBIT) 8,05,000 Now, Sales (given) 70,00,000 Less: Cost of goods sold 24,00,000 Gross Profit 46,00,000 Less: PBIT 8,05,000 Operating Expenses 37,95,000 (b) Balance Sheet as on 31 st March, 2024 Liabilities ₹ Assets ₹ Share Capital 13,72,000 Fixed Assets 23,60,000 Reserve and Surplus 5,88,000 Current Assets: 15% Debentures 7,00,000 Stock 2,40,000 Payables 3,00,000 Receivables 3,00,000 Cash 60,000 29,60,000 29,60,000 Working Notes: (i) Share Capital and Reserves and Surplus The return on net worth is 25%. Therefore, the profit after tax of 4,90,000 should be equivalent to 25% of the net worth. Net worth × (25/100) = 4,90,000 ∴ Net worth = (₹ 4,90,000 × 100) / 25 = 19,60,000 The ratio of share capital to reserves is 7:3 Share Capital = 19,60,000 × (7/10) = 13,72,000 Reserves and Surplus = 19,60,000 × (3/10) = 5,88,000 (ii) Debentures Interest on Debentures @ 15% = 1,05,000 ∴ Debentures = (₹ 1,05,000 × 100) / 15 = 7,00,000 (iii) Current Assets Current Ratio = 2 Payables = 3,00,000 ∴ Current Assets = 2 × Current Liabilities = 2 × ₹ 3,00,000 = 6,00,000 It is assumed that current liabilities include payables only. (iv) Fixed Assets Share capital 13,72,000 Reserves and Surplus 5,88,000 Debentures 7,00,000 Payables 3,00,000 Total Liabilities 29,60,000 Less: Current Assets 6,00,000 Fixed Assets 23,60,000 (v) Composition of Current Assets Inventory Turnover = 10 Cost of goods sold / Closing stock = 10 Closing stock = 24,00,000 / 10 = 2,40,000 Composition ₹ Stock 2,40,000 Receivables 3,00,000 Cash (balancing figure) 60,000 Total Current Assets 6,00,000