(a) Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances responsible for its limitations .If any
(b) Why do you understand by the term ‘pay-out ratio’? What factors are taken into consideration while determining pay-out ratio? Should a company follow a fixed pay-out ratio policy? Discuss fully.
ACCOUNTING FOR MANAGERS
2 . A company manufactures a single product in its factory utilizing 600% of its capacity. The selling price and cost details are given below:
Sales (6,000 units)
Fixed overheads : Factory
Administration…show more content…
To Opening balance
To Cash sales
To Receipt from debtors
To Misc. receipts
To Loan from Dass @ 9% per annum (taken on 1.10.2003)
By Payments to creditors
By Sunday office expenses
By Machinery purchased (on 1.10.2003)
By Closing balance
Discount allowed totaled Rs.7,000 and discount received was Rs.4,000. Bad debts written off were Rs.8,000. Depreciation was written off on furniture @5% per annum and machinery @10% per annum under the straight line method of depreciation. The office expenses included Rs.5,000 paid as insurance premium for the year ending 30th June, 2004. Wages amounting to Rs.20,000 were still due on 31st March, 2004.
Prepare trading and profit and loss account for the year ended 31sl March, 2004 and the balance sheet as on that date.
7 . What procedure would you adopt to study the liquidity of a business firm? Who are all the parties interested in knowing this accounting information? What ratio or other financial statement analysis technique will you adopt for this.
8 . From the following particulars, determine the bank balance as per pass book of Priya& Co. as on 28th February 2008.