Page 36 - afs12

3.8 Analysis of Financial Statements—CBSE XII
Illustration 3.
From the following Balance Sheet, calculate Total Assets to Debt Ratio:

BALANCE SHEET OF GOOD LUCK LTD. as at 31st March, 2024
Particulars Note No. `
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 3,00,000
(b) Reserves and Surplus (90,000)
2. Non-Current Liabilities
(a) Long-term Borrowings 4,50,000
(b) Long-term Provisions 50,000
3. Current Liabilities
(a) Trade Payables 1,30,000
(b) Short-term Provisions 10,000
Total 8,50,000
II. ASSETS
1. Non-Current Assets
(a) Property, Plant and Equipment and Intangible Assets:
—Property, Plant and Equipment 4,80,000
(b) Non-current Investments 1 50,000
2. Current Assets
(a) Inventories 1,14,000
(b) Trade Receivables 1,26,000
(c) Cash and Cash Equivalents 70,000
(d) Other Current Assets 10,000
Total 8,50,000

Note to Accounts

Particulars `
1. Non-Current Investments
Government Securities 40,000
Shares in Listed Companies 10,000
50,000

Total Assets ` 8,50,000
Solution: Total Assets to Debt Ratio = = = 1.70 : 1.
Debt ` 5,00,000

Total Assets = Non-current Assets (i.e., Property, Plant and Equipment + Non-current
Investments) + Current Assets (i.e., Inventories + Trade Receivables + Cash
and Cash Equivalents + Other Current Assets)
= ` 4,80,000 + ` 50,000 + ` 1,14,000 + ` 1,26,000 + ` 70,000 + ` 10,000
= ` 8,50,000.

Debt = Long-term Borrowings + Long-term Provisions
= ` 4,50,000 + ` 50,000 = ` 5,00,000.