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Accounting Ratios 3.9
Illustration 4.
From the following Balance Sheet of Channel Ltd., compute Shareholders’ Funds by
following Liabilities Side Approach and Assets Side Approach:
BALANCE SHEET as at 31st March, 2024

Particulars Note No. `
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 5,00,000
(b) Reserves and Surplus 4,00,000
2. Non-Current Liabilities
Long-term Borrowings 5,00,000
3. Current Liabilities
(a) Trade Payables 1,50,000
(b) Short-term Provisions 50,000
Total 16,00,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible Assets:
(i) Property, Plant and Equipment 9,68,000
(ii) Intangible Assets 90,000
2. Current Assets
(a) Inventories 3,00,000
(b) Trade Receivables 1,60,000
(c) Cash and Cash Equivalents 82,000
Total 16,00,000

Solution:
Particulars `
Shareholders’ Funds under Liabilities Side Approach:
Share Capital 5,00,000
Reserves and Surplus 4,00,000
Shareholders’ Funds 9,00,000
Shareholders’ Funds under Assets Side Approach:
Property, Plant and Equipment and Intangible Assets (Property, Plant and Equipment + Intangible) 10,58,000
Add: Working Capital (Note) 3,42,000
14,00,000
Less: Non-current Liabilities (Long-term Borrowings) 5,00,000
Shareholders’ Funds 9,00,000

Working Note: Current Assets ` Current Liabilities `
Inventories 3,00,000 Trade Payables 1,50,000
Trade Receivables 1,60,000 Other Current Liabilities 50,000
Cash and Cash Equivalents 82,000
5,42,000 2,00,000
Working Capital = Current Assets – Current Liabilities = ` 5,42,000 – ` 2,00,000 = ` 3,42,000.