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X Ltd. And Y l td. Are two companies in the same industry. Answer each of the following questions by making a comparison of one, or more relevant ratios. Which company is using equity shareholder's money more profitably? which company is better able to meet its current debts?
X Ltd. And Y l td. Are two companies in the same industry. Answer each of the following questions by making a comparison of one, or more relevant ratios. Which company is using equity shareholder's money more profitably? which company is better able to meet its current debts?
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X Ltd. And Y l td. Are two companies in the same industry. Answer each of the following questions by making a comparison of one, or more relevant ratios. Which company is using equity shareholder's money more profitably? which company is better able to meet its current debts?
Copyright:
Attribution Non-Commercial (BY-NC)
Verfügbare Formate
Als DOC, PDF, TXT herunterladen oder online auf Scribd lesen
The information below is taken from the record of two companies in the same industry. The companies are X ltd. and Y ltd. and the data is as follows:
Particulars X Ltd. Y Ltd.
Cash Rs.2,10,000 3,20,000 Debtors 3,30,000 6,30,000 Stock 12,30,000 9,50,000 Plant & equipment 16,95,000 24,00,000 Total Assets 34,65,000 43,00,000 Sundry Creditors 9,00,000 10,50,000 8% Debentures 5,00,000 10,00,000 Equity & Share Capital 11,00,000 17,50,000 Retained earnings 9,65,000 5,00,000 Total Liabilities 34,65,000 43,00,000 Sales 56,00,000 82,00,000 Cost of goods sold 40,00,000 64,80,000 Other operating expenses 8,00,000 8,60,000 Interest Expenses 40,000 80,000 Income taxes 2,66,000 2,73,000 Dividends 1,00,000 1,80,000
Answer each of the following questions by making a comparison of one, or more
relevant ratios. 1. Which Co. is using equity shareholder’s money more profitably? 2. Which Co. is better able to meet its current debts? 3. If you were to purchase the debenture of one Co., which company’s debenture you would buy? 4. Which co. collects its receivables faster assuming all sales to be credit sales? 5. Which co. is extended credit for a longer period by the creditors, assuming all purchases (equivalent to cost of goods sold) to be credit purchases? 6. How long does it take each company to convert an investment in stock to cash? 7. Which company retains the larger proportion of income in the business? 1. Rate of return on Shareholder’s fund = Net profit after taxes x 100 Ave. total shareholder’s equity
= (Rs. 4,94,000/20,65,000) x 100 = 23.9% X Ltd.
= (Rs. 5,07,000/22,25,000) x 100 = 22.5 % Y Ltd.
X is using shareholder’s money more profitably
2. Current ratio = Current Asset/ Current Liability
Dwaraka Doss Goverdhan Doss Vaishnav College (Autonomous) Arumbakkam, Chennai - 600 106. Department of Corporate Secretaryship Core Paper V-Corporate Accounting