Q.

1) Preparation of Comparative balance sheet of Inspire Ltd

Particulars 31.03.2020 31.03.2021
Reserves and surplus 600,000 1,200,000
Share capital 5,000,000 5,200,000
Cash credit 90,000 150,000
Trade payables 900,000 1,200,000
Land and buildings 5,500,000 5,800,000
Plant and machinery 500,000 800,000
Computer 70,000 90,000
Computer software 40,000 40,000
Goodwill 100,000 80,000
Long term investments 80,000 120,000
Trade receivables 500,000 800,000
Cash and cash equivalents 200,000 220,000
Closing stock 100,000 200,000
Long term bank loan 500,000 400,000

Solution: Comparative balance sheet as at

Particulars 31.03.2020 31.03.2021

I) EQUITY AND LIABILITIES PY (Rs) CY (Rs)

A) Shareholders funds/ Owned funds
a) Share capital 5,000,000 5,200,000
b) Reserves and surplus 600,000 1,200,000

B) Non current liabilities/ Debt/ Borrowed funds

a) Long term bank loan 500,000 400,000

C) Current liabilities
a) Cash credit 90,000 150,000
b) Trade payables 900,000 1,200,000
TOTAL 7,090,000 8,150,000

II) ASSETS:
A) Non current assets
I) Fixed assets
1) Tangible assets
a) Land and buildings 5,500,000 5,800,000
b) Plant and machinery 500,000 800,000
c) Computer 70,000 90,000

2) Intangible assets
a) Computer software 40,000 40,000
b) Goodwill 100,000 80,000

II) Long term investments 80,000 120,000

B) Current assets
Trade receivables 500,000 800,000
Cash and cash equivalents 200,000 220,000
Closing stock 100,000 200,000
TOTAL 7,090,000 8,150,000

Conclusions:
A) Share holders funds/ Owned funds:
Company has raised money by issuing new shares this year
Reserves are created (ploughing back of profits). Its mandatory for the companies to create reserves. It is known as reinve

B) Borrowed funds:
Decrease in the long term bank loan denotes that the company has repaid its long term borrowing

C) Current liabilities
There is a rise in the short term liabilities

D) Non current assets:

There is increase in the non current assets. Fixed assets are financed more from the owned funds than the borrowed fund

E) Assest side tells us about the effective utilisation of funds. Funds are also invested in long term investments

F) Rise in current assets is not necessarily a good sign. Rise in the debtors is due to increase in Debtors, closing stock and ca
Which means company lack in collection policy, sales policy and investment decisions.

Q.2) Comparative statement of profit and loss

Assuming this is a Non financing company
Particulars CY (Rs) 31.03.2021 PY (Rs) 31.03.2020
Sale of goods 7,500,000 6,000,000
Interest earned 40,000 20,000
Office and administration expenses 80,000 65,000
Staff welfare expenses 320,000 280,000
Interest on long term loans 80,000 60,000
Depreciation and amortization expenses 100,000 120,000
Cost of materials consumed 4,000,000 2,500,000
Selling and ditribution expenses 25,000 40,000
Tax rate @ 30%

Solution:
Comparative statement of profit and loss for the years ended 31.03.2020 and 31.03.2021

Particulars
PY (Rs) 31.03.2020 CY (Rs) 31.03.2021
I) Revenue from operations
Sale of goods 6,000,000 7,500,000
II) Other income
Interest earned 20,000 40,000
III) Total revenue 6,020,000 7,540,000

IV) Expenses:
Cost of materials consumed 2,500,000 4,000,000
Employee benefit expenses/ Staff welfare
expenses 280,000 320,000
Finance costs- Interest on long term borrowings 60,000 80,000
Depreciation and amortization expenses 120000 100000
Other expenses
Office and administration expenses 65000 80000
Selling and ditribution expenses 40000 25000
TOTAL EXPENSES 3,065,000 4,605,000

V) Profit before tax (PBT) (III-IV) 2,955,000 2,935,000

VI) Less: Tax @ 30% 886,500 880,500
VII) Profit after tax (PAT) (V-VI) 2,068,500 2,054,500

Conclusion:
Though the RFO has gone up in the CY as compared to PY, profit has decreased as there is also a rise in the overall expense
Profit after tax is almost the same for both the years.
As there is very less variance in the total revenue and total expenses
 Absolute
% increase/
increase/
decrease
decrease (Rs)

200,000 4
600,000 100

-100,000 -20

60,000 67
300,000 33
1,060,000 15

300,000 5
300,000 60
20,000 29

- -
-20,000 -20

40,000 50

300,000 60
 20,000 10
100,000 100
1,060,000 15

create reserves. It is known as reinvesting the profits into the business.

rm borrowing

owned funds than the borrowed funds.

in long term investments

crease in Debtors, closing stock and cash and cash equivalents

Absolute
% increase/
increase/
decrease
decrease (Rs)

1,500,000 25

20,000 100
1,520,000 25

1,500,000 60
 40,000 14
20,000 33
-20,000 -17

15,000 23
-15,000 -38
1,540,000 50

-20,000 -1
-6,000 -1
-14,000 -1

ere is also a rise in the overall expenses this year.

Q.1) Preparation of Common size balance sheet of Inspire Ltd
Particulars 31.03.2020 31.03.2021
Reserves and surplus 600,000 1,200,000
Share capital 5,000,000 5,200,000
Cash credit 90,000 150,000
Trade payables 900,000 1,200,000
Land and buildings 5,500,000 5,800,000
Plant and machinery 500,000 800,000
Computer 70,000 90,000
Computer software 40,000 40,000
Goodwill 100,000 80,000
Long term investments 80,000 120,000
Trade receivables 500,000 800,000
Cash and cash equivalents 200,000 220,000
Closing stock 100,000 200,000
Long term bank loan 500,000 400,000

Solution:
Particulars 31.03.2020 31.03.2021
I) EQUITY AND LIABILITIES PY (Rs) CY (Rs)
A) Shareholders funds/ Owned funds
a) Share capital 5,000,000 5,200,000
b) Reserves and surplus 600,000 1,200,000

B) Non current liabilities/ Debt/ Borrowed funds

a) Long term bank loan 500,000 400,000

C) Current liabilities
a) Cash credit 90,000 150,000
b) Trade payables 900,000 1,200,000
TOTAL 7,090,000 8,150,000

II) ASSETS:
A) Non current assets
I) Fixed assets
1) Tangible assets
a) Land and buildings 5,500,000 5,800,000
b) Plant and machinery 500,000 800,000
c) Computer 70,000 90,000

2) Intangible assets
a) Computer software 40,000 40,000
b) Goodwill 100,000 80,000

II) Long term investments 80,000 120,000

B) Current assets
Trade receivables 500,000 800,000
Cash and cash equivalents 200,000 220,000
Closing stock 100,000 200,000
TOTAL 7,090,000 8,150,000

Q.2) Comparative statement of profit and loss

Assuming this is a Non financing company
Particulars CY (Rs) 31.03.2021 PY (Rs) 31.03.2020
Sale of goods 7,500,000 6,000,000
Interest earned 40,000 20,000
Office and administration expenses 80,000 65,000
Staff welfare expenses 320,000 280,000
Interest on long term loans 80,000 60,000
Depreciation and amortization expenses 100,000 120,000
Cost of materials consumed 4,000,000 2,500,000
Selling and ditribution expenses 25,000 40,000
Tax rate @ 30%

Solution:
Common size statement of profit and loss for the years ended 31.03.2020 and 31.03.2021
Particulars PY (Rs) 31.03.2020 CY (Rs) 31.03.2021
I) Revenue from operations
Sale of goods 6,000,000 7,500,000
II) Other income
Interest earned 20,000 40,000
III) Total revenue 6,020,000 7,540,000

IV) Expenses:
Cost of materials consumed 2,500,000 4,000,000
Employee benefit expenses/ Staff welfare expenses 280,000 320,000
Finance costs- Interest on long term borrowings 60,000 80,000
Depreciation and amortization expenses 120000 100000
Other expenses
Office and administration expenses 65000 80000
Selling and ditribution expenses 40000 25000
TOTAL EXPENSES 3,065,000 4,605,000

V) Profit before tax (PBT) (III-IV) 2,955,000 2,935,000

VI) Less: Tax @ 30% 886,500 880,500
VII) Profit after tax (PAT) (V-VI) 2,068,500 2,054,500
 % of total
PY CY

70.52 63.80
8.46 14.72

7.05 4.91

1.27 1.84
12.69 14.72
100.00 100.00

77.57 71.17
7.05 9.82
0.99 1.10

0.56 0.49
1.41 0.98

1.13 1.47

7.05 9.82
2.82 2.70
1.41 2.45
 100.00 100.00

% of total
PY CY
100.00 100.00

0.33 0.53
100.33 100.53

41.67 53.33
4.67 4.27
1.00 1.07
2.00 1.33

1.08 1.07
0.67 0.33
51.08 61.40

49.25 39.13
14.77 11.74
34.48 27.39