For the years ended December 31 Rs in million 2004 2005 2006 2007 2008 Sales

For the years ended december 31 rs in million 2004

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Income statements of A Limited for the years ended December 31 2004 to 2008 are given below. For the years ended December 31 (Rs. in million) 2004 2005 2006 2007 2008 Sales 2,002 1,990 2,220 2,701 3,240 Cost of sales (460) (358) (377) (432) (551) Gross profit 1,542 1,632 1,843 2,269 2,689 Selling and distribution expenses (701) (697) (821) (1,026) (1,166) Research and development expense (320) (358) (400) (513) (617) Other expenses (40) (40) (44) (136) (32) Finance cost (21) (20) (10) (10) (12) Profit before tax 460 517 568 584 862 Tax (160) (159) (168) (189) (251) Profit after tax 300 358 400 395 611 Required: 1. Examine the trend of the business activities of the company on the basis of vertical analysis. 2. Examine the trend of the business activities of the company by performing horizontal analysis over the years by considering 2004 as base year.
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Question # 3: From the condensed balance sheets as on December 31 and income statements for the years ended December 31 2003-2008 of M corporation. Condensed comparative balance sheets as on December 31 (Rs. in millions) 2003 2004 2005 2006 2007 2008 Assets Current assets Inventory 122 146 170 242 308 366 Receivables 130 134 144 270 320 340 Cash 36 50 66 38 34 38 Total current assets 288 330 380 550 662 744 Non current assets 304 310 312 620 650 600 Total assets 592 640 692 1,170 1,312 1,344 Liabilities and owners’ equity Current liabilities 82 86 104 306 390 440 Long term debt 60 60 60 260 260 320 Total liabilities 142 146 164 566 650 760 Share capital 220 220 220 420 500 500 Retained earnings 230 274 308 184 162 84 Total owners’ equity 450 494 528 604 662 584 Condensed comparative income statement as on December 31 (Rs. in millions) 2003 2004 2005 2006 2007 2008 Sales 500 574 680 760 850 870 Cost of goods sold (326) (378) (456) (538) (616) (628) Gross profit 174 196 224 222 234 242 Administrative expenses (110) (120) (150) (180) (212) (228) Other expenses (8) (10) (4) (12) (10) (12) Net income 56 66 70 30 12 2 Required: 1. Analyze the trend of the business activities and financial position of the corporation by performing vertical analysis and horizontal analysis by taking 2003 as base year. 2. Comment on the performance of the company.
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  • Fall '19
  • Balance Sheet, Generally Accepted Accounting Principles, M Corporation, Horizontal and Vertical Analysis

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