A company has maintained the following relationships in recent years: 

 

Quick assets comprise 25% cash, 15% marketable securities and 60% book debts.

 During 2017−2018, the company eamed Rs. 1,20,000 or Rs. 4.68 per equity share; the market value of one equity share was Rs. 78. 

The capital consisted of equity shares issued at a premium of 10% and 12% preference shares of Rs. 100 each. 

redemption in 2019.

 During 20×7−20×8 there was no change in the level of inventory, book debts, debentures and shareholders funds. 

All purchases and sales were on account. 

Preference dividsnd paid in 20×7−20×8, in full, was Rs. 3,000.

 Required 

 Prepare the balance sheet and the income statement relating to 20×7−20×8. 

Comment on the performance of the company in terms of capilal structure, profitability, assets efficiency and liquidity.  Tax rate is 25%.

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Gross profit to net sales Net profit to net sales Selling expenses to net sales Book debts turnover Inventory turnover Quick ratio Current ratio Assets tumover (sales basis) Total assets to intangible assets Accumulated depreciation to cost of fixed assets Book debts to sundry creditors (for goods) Shareholders* funds to working capital Total debt to shareholders funds 40% 10% 20% 8 p.a. 6 p.a. 2 3 2 p.a. 20 1/3 1.5 1.6 0.5 Gross profit to net sales Net profit to net sales Selling expenses to net sales Book debts turnover Inventory turnover Quick ratio Current ratio Assets tumover (sales basis) Total assets to intangible assets Accumulated depreciation to cost of fixed assets Book debts to sundry creditors (for goods) Shareholders* funds to working capital Total debt to shareholders funds 40% 10% 20% 8 p.a. 6 p.a. 2 3 2 p.a. 20 1/3 1.5 1.6 0.5

Answer rating: 100% (QA)

Answer To prepare the balance sheet and income statement for the year 207208 and analyze the perfo... View the full answer