The following information pertains to P Limited for the year ended 31st March, 2025 : Particulars Amount / Ratio Sales 3,60,00,000 Rate of Income…

CA Intermediate · Financial Management and Strategic Management · RTP · May 2026
The following information pertains to P Limited for the year ended 31st March, 2025 : Particulars Amount / Ratio Sales 3,60,00,000 Rate of Income Tax 40% Return on Net Worth 30% Share Capital to Reserves Ratio 6 : 4 Current Ratio 2 : 1 Percentage of Net Profit to Sales 8% Inventory Turnover (based on cost of goods sold) 12 Cost of goods sold 1,44,00,000 Sundry Debtors 12,00,000 Sundry Creditors 16,00,000 Interest on 14% debentures 3,36,000 You are required to CALCULATE: (ii) Share Capital and Reserves

Suggested Answer and Working Notes:

(ii) Share Capital and Reserves Return on Net worth is 30%, hence profit after tax of 28,80,000 is equivalent to 30% of Net Worth. Net worth x 30/100 = 28,80,000 Net Worth = 28,80,000 x 100/30 = 96,00,000 Ratio of Share Capital to Reserves = 6:4 Share Capital = 96,00,000 x 6/10 = 57,60,000 Reserves = 96,00,000 × 4/10 = 38,40,000

Topics: Part-A: Financial Management

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