Veer Narmad South Gujarat University 2011 M.Com Commerce S-2588 Financial

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ENGLISH VERSION

(2)    Question no. 1 is compulsory.

(3)    Show necessary working as part of your answer.

1 Answer the following :

(i)    A company has capital of Rs. 10,00,000. Its turnover 4 is three times the capital and gross profit margin on sales is 6%. Find out the return on investment.

(ii)    Calculate funds from operations from the following : 4

Profit and Loss Account

(iii)    Explain the concept of fund.    3

(iv)    Explain profit not dealt with under Section 212 in 3 case of holding company accounts.

2 From the following information, you are required to    14

prepare Balance Sheet :

Stock Turnover................................................6 times

Fixed Assets Turnover Ratio.........................4 times

Capital Turnover Ratio..................................2 times

Gross Profit Ratio............................................20%

Debt Collection Period....................................2 months

Creditors Payment Period..............................73 days

Gross Profit......................................................Rs. 60,000

Closing Stock is Rs. 5000 in excess of the opening stock

OR

2 From the following information, prepare Trading    14

Account, Profit and Loss Account and Balance Sheet :

Gross Profit Ratio.....................................................25%

Stock Turnover Ratio...............................................5 times

Average Debt Collection Period.............................3 months

Creditors Payment Period.......................................3 months

Current Ratio............................................................2

Fixed Assets to Capital Employed Ratio..............80%

Capital Gearing Ratio (Preference Shares

and Debentures to Capital Employed..................30%

Net Profit to Issued Equity Capital......................10%

General Reserve and Profit and Loss

to Issued Equity Capital.......................................25%

Preference Share capital to Debentures................2

Gross Profit...............................................................Rs. 12,50,000

Cost of Sales consists of 50% for materials S-2588]    9    [Contd...

of Nina Ltd. as on 31.3.2009 and 31.3.2010 :

Additional Information :

(i) During the year, the company had redeemed some preference shares at 10% premium and for this purpose, investments of book value Rs. 2,00,000 were sold for Rs. 2,50,000.

(ii)    During the year, the company also purchased a running business comprising of land and building Rs. 1,00,000; Plant and Machinery Rs. 1,00,000; Stock Rs. 50,000; Debtors Rs. 1,00,000 and Creditors Rs. 80,000. The purchase consideration of Rs. 3,60,000 was paid by the issue of equity shares Rs. 2,00,000 and debentures Rs. 1,60,000.

(iii)    Depreciation was charged on Plant and Machinery at Rs. 1,00,000 and on furniture Rs. 20,000.

(iv)    Dividend was paid during the year Rs. 1,20,000 including a part of unclaimed dividend.

Prepare statement showing changes in working capital and statement of sources and Application of Funds.

OR

3 The following are the summarized Balance Sheets of    14

Rina Ltd. as on 31.3.2009 and 31.3.2010 :

(i)    Investments were sold at a profit of Rs. 20,000, the profit being transferred to Capital Reserve.

(ii)    A fixed asset costing Rs. 1,00,000 (written down value Rs. 60,000 was sold for Rs. 20,000

(iii)    Preference dividend was paid during the year.

(iv)    Discount on issue of shares was charged against Share Premium Account.

(v)    Proposed Dividend of 2008-09, together with an interim dividend of Rs. 40,000 were paid during the year.

(vi)    Tax liability for 2008-09 was Rs. 40,000; the balance being transferred to profit and loss account.

(vii)    Preference shares were redeemed at a premium of 15%, the premium being charged against Share Premium Account, the balance, if any, being charged against General Reserve.

Prepare statement showing changes in working capital

and Statement of Sources and Application of Funds.

4 H Ltd. is a holding company of M Ltd. From the    13

following information, prepare a statement under section 212

of the Indian Company Act to be attached by H Ltd. to its

accounts for the year ending 31.3.2010 :

(i)    H Ltd. purchased 8000 equity shares of M Ltd. at a market price of Rs. 300 and 1200 preference shares at Rs. 100 as on 1.4.2007.

(ii)    The capital structure of M Ltd. as on 1.4.2007 was as follows :

Equity share capital

10% Preference share capital

(iii)    On 1.10.2008, M Ltd. had given two equity shares as bonus for five equity shares.

(iv)    On 1.4.2009, H Ltd. sold 300 equity shares of M Ltd. at a market price of Rs. 300 and purchased 200 equity shares of M Ltd.

(v)    The profits and dividend of M Ltd. are as follows:

(vi) The accounting years of both the companies ends on 31^st March.

OR

(i)    On 1.4.2007, Deshi Ltd. purchased 6,000 equity shares at 10% premium of Videshi Ltd. On that date, the profit and loss account and general reserve showed a balance of Rs. 1,00,000 and Rs. 3,50,000 respectively in the books of Videshi Ltd.

(ii)    Videshi Ltd. had distributed dividend as follows :

2007-08    ....................................10%

2008-09    ....................................15%

2009-10    ....................................10%

(iii)    On 1.4.2008, Videshi Ltd. issued 3 shares as bonus shares for every five equity shares held from general reserves.

(iv)    The profit of Rs. 2,00,000 of Videshi Ltd. for the year 2009-10 is included in the above Balance Sheet.

Prepare statement under Section 212 of the Indian Company Act to be attached by Deshi Ltd. to its accounts for the year ending 31.3.2010.

5 Write short notes on : (any three)    15

(i)    Liabilities of an Auditor for the events occurring after Balance Sheet Date

(ii)    Activity Ratios

(iii)    Utility of Funds Flow Statement.

(iv)    Leverage Ratios

(v)    Limitations of Ratio Analysis.

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