Question

Following are the balance sheets of Reddy Limited as on 31 March, 2011 and 2012

Liabilities	Rs.2011	Rs.2012	assets	Rs.2011	Rs.2012
share capital	2,400	3,600	lands and buildings	1,620	1,040
Reserves and suplus	1,872	2,124	plant and machinery	1,860	4,716
Debentures	300	600	furniture and furniture and ffixtures	54	108
long term debt	900	1,530	others fixed assets	120	180
Bills payable	1,530	702	long term loans	276	354
othe current liabilities	42	60	cash and bank balance bill	1,254	1,120
			Receivable stock	960	780
			prepaid expenses	18	18
			other current assets	174	240
	7,044	8,616		7,044	8,616

Analyse the financial position of the company with the help of the Common Size Balance Sheet.

Answer 1

Comments 

(i) Inspite of decrease in current assets and current liabilities, the current ratio has improved. 

(ii) Decrease in cash and bank balance indicates that there will be delay in payments. 

(iii) Increase in fixed assets and share capital shows that assets are purchased with long term sources of finance.