THAKUR COLLEGE OF SCIENCE & COMMERCE

BY RAJESHRI SONI

Vertical Statement

FORMAT

Particular	Rs.	Rs.	Rs.
Sales
Cash sales	XX
Credit sales	XX	XX
(-) Sales Return		(XX)	XX
Less: Cost of Goods Sold
Opening Stock		XX
Purchase	XX
(-) Purchase Return	(XX)	XX
Direct Expenses		XX
Factory Expenses		XX
		XX
(-) Closing stock		(XX)	(XX)
Gross Profit			XX
Add : Operating Income
Discount Received		XX
Commission Received		XX
Bad Debt Recovery		XX	XX
			XX
Less: Operating Expenses
a) Office and administrative expenses
Salaries	XX
Insurance	XX
Rent	XX	XX
b) Selling and Distribution expenses
Travelling expenses	XX
Advertisement	XX
Carriage outward	XX	XX
c) Finance expenses
Bad Debts	XX
Interest paid	XX
Discount allowed	XX	XX	(XX)
Net Operating Profit			XX
Add: Non operating Income
Interest Received		XX
Profit on sale of Investment		XX
Dividend Received		XX	XX
			XX
Less: Non operating expenses
Loss by fire /theft		XX
Loss on sale of Investment .Fixed Assets		XX
Donation given		XX	(XX)
Net Profit Before Tax			XX
Less: Income Tax			(XX)
Net Profit After Tax			XX
Add: Opening Balance			XX
			XX
Les: Appropriations Transfer to Reserve		XX
Dividend		XX	(XX)
Closing Balances (Retained earning)			XX

Calculation of Cost of Goods Sold and Gross Profit for Manufacturer

Particular	Rs.	Rs.	Rs.
Sales
Cash Sales	XX
Credit Sales	XX	XX
(-) Sales Returns		(XX)	XX
Less: Cost of Goods Sold
Raw Material Consumed
Opening stock of Raw Material	XX
(+) Purchases (Raw Material)	XX
(-) Closing stock of Raw Material	(XX)	XX
Direct Expenses		XX
Factory Expenses		XX
		XX
(+) Opening stock of work in progress		XX
(-) Closing stock of work in progress		(XX)
(-) Sales scrap		(XX)
COST OF PRODUCTION		XX
(+) Opening stock of finished goods		XX
(-) Closing stock of finished goods		(XX)	(XX)
GROSS PROFIT			XX

Balance Sheet as on

Particular	Rs.	Rs.	Rs.
I) SOURCES OF FUNDS
A) PROPRITORS FUNDS
a) Share Capital
Equity share capital	XX
Preference share capital	XX	XX
b) Reserves and Surplus
General Reserve	XX
Reserve Fund	XX
Capital Reserve	XX
Share Premium	XX
Capital Redemption Reserve	XX
Profit and Loss A/c	XX
	XX
(-) Miscellaneous Expenditure
(to the extent of not written off)	(XX)	XX	XX
B) BORROWED FUNDS
a) Secured Loans
Debentures	XX
Bank Loan	XX	XX
b) Unsecured Loans
Loan from Directors	XX
Public Deposit	XX	XX	XX
CAPITAL EMPLOYED		(A+B)	XX
II) APPLICATION OF FUNDS
A) FIXED ASSETS
Land and Building		XX
Plant and Machinery		XX
Vehicles		XX
Furniture		XX
Goodwill		XX
Patents / Patterns		XX	XX
B) INVESTMENTS
Long term Investment		XX
Trade Investment		XX	XX
C) WORKING CAPITAL
a) Current Assets
Debtors                                                XX
(-) R.D.D                                               XX	XX
Stock	XX
Bills Receivable	XX
Short term Investment	XX
Advance Tax	XX
Cash / Bank	XX	XX
Less: b) Current Liabilities
Creditors	XX
Bills Payable	XX
Outstanding Expenses	XX
Bank overdraft	XX
Proposed Dividend	XX
Provision for Tax	XX	(XX)	XX
CAPITAL EMPLOYED		(A+B+C)	XX

RATIO ANALYSIS

THEORY

NO.	NAME	FORMULA	INDICATES, STD. ETC.
1)	GROSS PROFIT RATIO		Profitability, Higher Favourable
2)	NET PROFIT RATIO		Profitability, Higher Favourable
3)	OPERATING RATIO OR OPERATING COST RATIO		Operating efficiency, Lower favourable, indicates better cost control.
4)	EXPENSES RATIO		Effect of ind. Department, lower favourable
5)	STOCK TURN-OVER RATIO		Activity Ratio Higher favourable, Replacement of stock in Times.
6)	STOCK VELOCITY		Duration of Replacement
7)	CURRENT RATIO OR WORKING CAPITAL RATIO OR BANKERS RATIO		Short term solvency, standard 2:1
8)	QUICK RATIO OR LIQUID RATIO OR ACID TEST RATIO	QA = CA – STOCK - PREPAYMENTS QL = CL – BANK OVERDRAFT	Liquidity OR Immediate Solvency, standard 1:1
9)	STOCK TO WORKING CAPITAL RATIO		Liquidity or immediate solvency, Pref. less than 100%.
10)	PROPRIETORY RATIO		Long term stability and solvency preferable between 65% to 70%
		TOTAL ASSETS = FIXED ASSETS + INVESTMENTS + CURRENT ASSETS
11)	DEBT EQUITY RATIO		Capital structure standard 2:1
12)	CAPITAL GEARING RATIO		Capital structure lower favourable
13)	DEBTORS TURN-OVER RATIO	= ___ TIMES (AV. DEBTORS + AV. BR)	Activity Ratio No. of times good sold and money received Higher favourable
14)	DEBTORS VELOCITY OR AVERAGE COLLECTION PERIOD		Quickness in coll. Dues from drs. Lower favourable.
15)	CREDITIORS TURNOVER RATIO	(AV. CREDITOR + AV. BP)	Activity Ratio N of times goods pursnokey paid Favourable.
16)	CREDITORS VELOCITY DR AV. PAYMENT PERIOD		Quickaess in payment Lower favourable
17)	RETURN ON CAPITAL EMP. OR INVESTMENT		Profitability Higher favourable
18)	RETURN ON PROP. FUND OR NET WORTH/EQUITY		Profitability     favourable
19)	RETURN ON EQUITY CAPITAL		Profitability Favourable
20)	EARNING PER SHARE (E.P.S.)		Profitability Higher favourable
21)	RETURN ON TOTAL RESOURCES (T.A.)		Profitability Higher favourable Earned capital used in business
22)	DEBT SERVICE RATIO OR INTEREST COVERAGE RATIO		Capital of business to pay interest Higher favourable
23)	DEBT SERVICE COVERAGE RATIO		Ability of business to pay interest as well as loan instal Higher favourable.
24)	PRICE EARNING RATIO		Valuation Ratio
25)	DIVIDEND PAYOUT RATIO		Valuation Ratio
26)	DIVIDEND YIELD RATIO		Valuation Ratio