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Question
Prepare Common-size Balance Sheet and comment on the financial position of Sun Ltd. and Star Ltd. The Balance Sheet of Sun Ltd. and Star Ltd. as at 31st March, 2019 are:
|
Particulars |
Sun Ltd. (₹) |
Star Ltd. (₹) |
| 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 |
|
|
|
Trade Payables (Creditors) |
2,00,000 |
2,50,000 |
|
Total |
15,00,000 |
18,00,000 |
| II. ASSETS | ||
|
1. Non-Current Assets |
||
|
Fixed Assets (Tangible) |
10,00,000 |
16,00,000 |
|
2. Current Assets |
|
|
|
Trade Receivables (Debtors) |
5,00,000 |
2,00,000 |
|
Total |
15,00,000 |
18,00,000 |
Solution
Common Size Balance Sheet
as at March 31, 2019
|
Particulars |
Absolute Amount (Rs) |
Percentage of Balance Sheet Total (%) |
||
|
Sun Ltd. |
Star Ltd. |
Sun Ltd. |
Star Ltd. |
|
|
I. Equity and Liabilities |
|
|
|
|
|
1. Shareholders’ Funds |
|
|
|
|
|
a. Share Capital |
9,00,000 |
12,00,000 |
60.00 |
66.67 |
|
b. Reserve and Surplus |
4,00,000 |
3,50,000 |
26.67 |
19.44 |
|
2. Current Liabilities |
|
|
|
|
|
a. Trade Payables |
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. Trade Receivables |
5,00,000 |
2,00,000 |
33.33 |
11.11 |
|
Total |
15,00,000 |
18,00,000 |
100.00 |
100.00 |
Comments:
1. Star Ltd. has a greater share of Capital in the total sources of funds i.e. 66.67% in comparison to 60% of Sun Ltd.
2. Sun Ltd. retains 26.67% of their earnings as a part of Reserves and Surplus. Whereas, Star Ltd. retains only 19.44% of their earnings.
3. Star Ltd. has invested major portion of its funds on acquiring the Fixed Assets as these are 88.89% of the total application of funds in comparison to 66.67% of Sun Ltd. On the other hand, Sun Ltd. emphasises more on Current Assets as these are 33.33% of the total applications of funds in comparison to 11.11% of Star Ltd.
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