A Company's paid up Capital is ₹1000 lakh (Owner's Equity). The Ratios for the Company are: Current Debt to Total Debt: 0.40 Total Debt to Owner's Equity: 0.60 Fixed Assets to Owner's Equity: 0.60 Total Assets Turnover:

CS Professional · Valuations & Business Modelling · PYQS · December 2019
A Company's paid up Capital is ₹1000 lakh (Owner's Equity). The Ratios for the Company are: Current Debt to Total Debt: 0.40 Total Debt to Owner's Equity: 0.60 Fixed Assets to Owner's Equity: 0.60 Total Assets Turnover: 2 times Inventory Turnover: 8 times Complete the following Balance Sheet given the information above: Liabilities Assets Owner's Equity XXX Fixed Assets Xxx Long Term Debt Xxx Cash Xxx Current Debt Xxx Inventory Xxx Total Debt XXX Total Current Assets Xxx Total Liabilities XXXX Total Assets Xxxx

Answer & Explanation:

Given: Owner's Equity = ₹1000 Lakh Current Debt to Total Debt = 0.40 Total Debt to Owner's Equity = 0.60 Fixed Assets to Owner's Equity = 0.60 Total Assets Turnover = 2 times Inventory Turnover = 8 times Calculations: Total Debt: Total Debt / Owner's Equity = 0.60 Total Debt = 0.60 * Owner's Equity = 0.60 * ₹1000 Lakh = ₹600 Lakh Current Debt: Current Debt / Total Debt = 0.40 Current Debt = 0.40 * Total Debt = 0.40 * ₹600 Lakh = ₹240 Lakh Long Term Debt: Long Term Debt = Total Debt - Current Debt = ₹600 Lakh - ₹240 Lakh = ₹360 Lakh Fixed Assets: Fixed Assets / Owner's Equity = 0.60 Fixed Assets = 0.60 * Owner's Equity = 0.60 * ₹1000 Lakh = ₹600 Lakh Total Liabilities / Total Assets: Total Liabilities = Owner's Equity + Total Debt = ₹1000 Lakh + ₹600 Lakh = ₹1600 Lakh Total Assets = Total Liabilities = ₹1600 Lakh Total Assets Turnover: Total Assets Turnover = Revenue / Total Assets = 2 times Revenue = 2 * Total Assets = 2 * ₹1600 Lakh = ₹3200 Lakh (This is not directly used in the balance sheet but is an intermediate calculation for inventory) Inventory: Inventory Turnover = Revenue / Inventory = 8 times Inventory = Revenue / 8 = ₹3200 Lakh / 8 = ₹400 Lakh Total Current Assets: Total Assets = Fixed Assets + Total Current Assets ₹1600 Lakh = ₹600 Lakh + Total Current Assets Total Current Assets = ₹1600 Lakh - ₹600 Lakh = ₹1000 Lakh Cash (Balancing Figure): Total Current Assets = Cash + Inventory ₹1000 Lakh = Cash + ₹400 Lakh Cash = ₹1000 Lakh - ₹400 Lakh = ₹600 Lakh Liabilities (₹ In Lakhs) Assets (₹ In Lakhs) Owner's Equity 1000 Fixed Assets 600 Long Term Debt 360 Cash (Balancing figure) 600 Current Debt 240 Inventory 400 Total Debt 600 Total Current Assets 1000 Total Liabilities 1600 Total Assets 1600

Topics: Financial Statement Analysis

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