The balance sheet of Major Ltd. as on 31st March, 2010 is as under:
|
Liabilities |
Rs. |
Assets |
Rs. |
|
Share capital: |
|
Fixed assets: |
|
|
2,000 equity shares of |
|
At cost |
5,00,000 |
|
Rs.100 each fully paid |
2,00,000 |
Less: Depreciation |
1,60,000 3,40,000 |
|
8% preference shares |
1,00,000 |
|
|
|
General reserve |
60,000 |
Current assets: |
|
|
12% debentures |
60,000 |
Stock |
60,000 |
|
Current liabilities: |
|
Debtors |
80,000 |
|
Sundry creditors |
80,000 |
Bank |
20,000 |
|
|
5,00,000 |
|
5,00,000 |
The company wishes to forecast balance sheet as on 31st March, 2011. The following additional particulars are available:
(i) Fixed assets costing Rs.1,00,000 have been installed on 1st April, 2010 but the payment will be made on 31st March, 2011.
(ii) The fixed assets turnover ratio on the basis of gross value of fixed assets would be 1.5.
(iii) The stock turnover ratio would be 14.4 (calculated on the basis of average stock).
(iv) The break up of cost and profit would be as follows:
|
Material |
40% |
|
Labour |
25% |
|
Manufacturing expenses |
10% |
|
Office and selling expenses |
10% |
|
Depreciation |
5% |
|
Profit |
10% |
|
100% |
The profit is subject to interest and taxation at 50%.
(v) Debtors would be 1/9 of sales.
(vi) Creditors would be 1/5 of material consumed.
(vii) In March 2011 a dividend @ 10% on equity capital would be paid.
(viii) 12% debentures for Rs.25,000 have been issued on 1st April, 2010.
Prepare the forecast balance sheet as on 31st March, 2011 and show the following resultant ratios:
(a) Current ratio;
(b) Fixed assets/net worth ratio; and
(c) Debt equity ratio