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Question 22 Chapter 2 VK Publications Class 12 Part 2 - 2021
22. Prepare a Common Size Balance Sheet and comment on the financial position of X Ltd.and Y Ltd. The Balance Sheets of X Ltd. and Y Ltd. as on 31st March,2018 are given below:
| Particulars | 2018 (Rs.) | 2017 (Rs.) | |
| I.EQUITY AND LIABILITIES | |||
| 1. Shareholders’ Funds | |||
| (a) Share Capital | 9,00,000 | 12,00,000 | |
| (b) Reserves and Surplus | 4,00,000 | 3,50,000 | |
| 2. Current Liabilities | |||
| (a) Short-term Borrowings | 2,00,000 | 2,50,000 | |
| Total | 15,00,000 | 18,00,000 | |
| II. ASSETS | |||
| 1. Non-Current Asset | |||
| (a) Fixed Assets | 10,00,000 | 16,00,000 | |
| 2. Current Assets | |||
| (a) Cash and Cash Equivalents | 5,00,000 | 2,00,000 | |
| Total | 15,00,000 | 18,00,000 | |
Common Size Balance Sheet Statement For the years ended 31st March, 2017 and 2018
| Particulars | Note | Absolute Amounts | Percentage of the Balance sheet Total | ||
|---|---|---|---|---|---|
| X Ltd. | Y Ltd. | X Ltd. | Y Ltd. | ||
| Rs. | Rs. | % | % | ||
| I. Equity & Liabilities | |||||
| 1. Shareholder’s Fund | |||||
| a. Share Capital | 9,00,000 | 12,00,000 | 60.00 | 66.67 | |
| b. Reserve & Surplus | 4,00,000 | 3,50,000 | 26.67 | 19.44 | |
| 2. Current Liabilities | |||||
| a. Long term Borrowings | 2,00,000 | 2,50,000 | 13.33 | 13.89 | |
| Total | 15,00,000 | 18,00,000 | 100.00 | 100.00 | |
| II. Assets | |||||
| 1. Non – current Assets | |||||
| a. Fixed Assets | 10,00,000 | 16,00,000 | 66.67 | 88.89 | |
| 2. Current Assets | |||||
| a. Cash & Cash equivalent | 5,00,000 | 2,00,000 | 33.33 | 11.11 | |
| Total | 15,00,000 | 18,00,000 | 100.00 | 100.00 | |
Comment:
(i) The short-term financial position of X Ltd. is better as compared to Y Ltd. as currentliabilities of X Ltd. are 13.33% of total funds invested and current assets are 33.33% ofthese funds. On the other hand, current liabilities of Y Ltd. are 13.89% of total funds and current assets are 11.11% of these funds.
(ii) Y Ltd. has invested more (88.89%) in fixed assets as composed to X Ltd. (66.67%).
(iii) The long-term financial position of both companies is almost equal and sound. Net worth is 86.67% (60 + 26.67) of total funds in case of X Ltd. and 86.11% (66.67 + 19.44) of total : funds in case of Y Ltd.
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