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Model Test Papers M.459

(b) Intra-firm Analysis is a comparison of Financial Statements of an enterprise for
two or more accounting periods whereas, Inter-firm Analysis is a comparison of
Financial Statements of two or more enterprises for the same accounting period.

Or
(a) Objectives of Financial Analysis:

(i) To determine Liquidity (Short-term solvency), i.e., ability of the enterprise to
meet its short-term obligations as and when they become due for payment.

(ii) To determine Operating Efficiency with which resources are utilised in
generating revenue.

(b) Objectives of Common-size Balance Sheet:
(i) To analyse the changes in individual items of Balance Sheet.
(ii) To determine the trend of different items of Assets, Equity and Liabilities.

21. (a) Calculation of Credit Revenue from Operations
Let Total Revenue from Operations be X
Total Revenue from Operations = Cost of Revenue from Operations + Gross Profit

Ê 1 ˆ
X = ` 3,20,000 + 20% of X or 5 X ˜ ¯
Á
Ë
1
X – X = ` 3,20,000
5
4
X = ` 3,20,000
5
5
X = ` 3,20,000 × = ` 4,00,000 (Total Revenue from Operations)
4
Let Credit Revenue from Operations be x
Credit Revenue from Operations = Total Revenue from Operations
– Cash Revenue from Operations
1
x = ` 4,00,000 – x
3
1
x + x = ` 4,00,000
3
4
x = ` 4,00,000
3
x = ` 4,00,000 × 3 = ` 3,00,000 (Credit Revenue from Operations)
4
Calculation of Opening Trade Receivables and Closing Trade Receivables:

Credit Revenue from Operations
Trade Receivables Turnover Ratio =
Average Trade Receivables