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yar kisi ni assignment solve ki k nahi solution upload kardo agr kisi ni kardi to 

 

Answer Part 1:

 

 

Fahad stitching unit

 

 

 

Balance sheet

 

 

 

As on 31st December 2014

 

 

 

 

 

Assets

Rs.

Liabilities and Owner's Equity

Rs.

Cash(W-5)

50,000

Notes and Payables

100,000

Accounts Receivable(W-4)

50,000

Long term debt (W-1)

100,000

Inventory(W-3)

100,000

Common Stock

100,000

Plant and Equipment(Balance Figure)

200,000

Retained Earnings

100,000

Total Assets(W-2)

400,000

Total Liabilities and shareholder's Equity(W-2)

400,000

 

 

 

 

 

 

Workings:

 

W-1:

 

Long-term debt/ Equity = 0.5

 Long-term debt/200,000=0.5

Long-term debt = 100,000

 

W-2:

Now,

Total liabilities and shareholders' equity = 400,000

 

So, Total assets = 400,000

 

W-3:

Assets turnover ratio is:

 

Sales/ Total assets = 2.5

Sales/400,000=2.5

Sales = 1,000,000

Since Gross Profit Margin is 10%

So,

CGS=90% of sales

=900,000

Now, Inventory turnover ratio is

 

Cost of goods sold/ Inventory = 9

900,000/Inventory =9

900,000/9= Inventory

100,000= Inventory

W-4:

Average Collection period is:

 

Accounts Receivable x 360 days/Sales = 18 days

Accounts Receivable x 360 days/100,000 = 18 days

Accounts Receivable = 50,000

 

W-5:

Acid test Ratio is:

Cash + 50,000/100,000 = 1

Cash +50,000=100,000

Cash =50,000

 

 

Answer Part 2:

 

Both Balance Sheet and Income Statement are important from investment point of view.

Investors have three points in their mind:

  1. Revenue- How much revenue a company is earning in a given period?
  2. Cash Flow- How much Cash company has in a given period?
  3. Debt- How much company owes?

Revenue is taken from Income statement and debt from Balance sheet.

Investors have to make themselves sure that their investment will result in gain. Balance sheet shows Financial Position of company at a given point of time, while Income statement shows activity for the period related to income and expenses of company.

 

If liabilities are more or company is facing loss it will have affect on investment.

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