Question

9.The following are the balance sheet and profit and loss account of Sundara products limited as on

31st December 2015.

Profit and Loss Account

To Opening Stock 1,00,000 By Sales 8,50,000

Purchases 5,50,000 Closing Stock 1,50,000

Direct Expenses 15,000

To Admn. Expenses 50,000

Office exp 1,50,000 Non-Operating Income 15,000

Interest Expenses 50,000

Income tax 50,000

Net Profit 50,000

----------- -----------

10,15,000 10,15,000

------------------------------------------------------------------------------------------

Balance Sheet as on 31st December 2015

Liabilities Rs. Assets Rs.

Equity Share Capital Land & Buildings 1,50,000

(2000 @ 100) 2,00,000 Plant & Machinery 1,00,000

5%Preference capital 50,000 Goodwill 30,000

Reserves 1,00,000 Stock in Trade 1,50,000

Debentures 1,50,000 A/C Receivables 1,00,000

Current Liabilities 1,50,000 Short term investment1,20,000

P&L A/C Balance 50,000 Cash & Bank 50,000

---------- ----------

7,00,000 7,00,000

Note: a) On 1st Jan 2015, the Company is having Account receivables of 95,000.

b) Assume 20% sales are cash sales.

Required:

1)Working capital (2) Return on investment (3) Interest coverage ratio 4) Current Ratio 5) operating profit ratio 6) Debt Equity Ratio 7) Earnings per share 8)If Company has a PE Ratio is quoting at 12 times, what would be the Market Price of the share? (9) Stock Turnover ratio (time & days) (10) Receivable turnover ratio (time and Day).

Answer 1

Solution: