Question

The following are the Balance Sheets of Mohan Ltd., at the end of 2004 and 2005.

Liabilities	2011	2012	Assets	2011	2012
Equity share capital	400	600	Land and buildings	270	170
Reserves and surplus	312	354	plants and machinery	310	786
Debentures	50	100	Furniture and fixtures	9	18
Long-term loans	150	255	other fixed assets	20	30
Accounts payable	255	117	Loans and advances	46	59
other currect Liabilities	7	10	cash and bank	118	10
			Account Receivable	209	190
			Inventory	160	130
			prepaid expenses	3	3
			Othe current assets	29	40
	1,174	1,436		1,174	1,436

Prepare a Comparative Balance Sheet and study the financial position of the company.

Answer 1

Working note: 

Comments 

(i) Decrease in current Liabilities is more than decrease in current assets which indicates that the current ratio has improved. 

(ii) Decrease in cash and bank may result in delay in payments. 

(iii) Fixed Assets have increased along with share capital. It indicates that such asset has been purchased using Long term sources of finance. 

(iv) Increase in reserve and surplus is a healthy indicator