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

share capital2,4003,600lands and buildings1,6201,040
Reserves and suplus1,8722,124plant and machinery1,8604,716
Debentures   300   600furniture and furniture and ffixtures     54  108
long term debt   9001,530others fixed assets   120  180
Bills payable1,530   702long term loans    276  354
othe current liabilities     42    60cash and bank balance bill1,2541,120
Receivable stock   960   780
prepaid expenses    18     18
other current assets   174   240

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

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(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.

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