Preparation of P&L and Balance Sheet with Ratio Analysis

FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
A) Preparation of P&L and Balance Sheet..................................................................................3
B) Reason of balancing of financial position statements.............................................................5
Question 2........................................................................................................................................5
A: Ratio analysis..........................................................................................................................5
B: Financial performance.............................................................................................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................10

INTRODUCTION
Financial statements are the reflation of the company's financial performance. These are
the base that will enable the company and the concerned stakeholders to determine its financial
position and performance. Likewise, with the analysis of ratio the financial health of the
company will be determined. This report cover the concept of preparation of financial statements
along with ratio analysis.
MAIN BODY
A) Preparation of P&L and Balance Sheet
Profit and loss account:
Particular Amount
Sales 826,650
Less: Cost of sales (578,650)
Gross profit 248000
- Sales commission (3000)
- Director remuneration (5000)
- Administrative expense (30000)
- Distribution cost (28000)
EBIT 152000
- interest (4000)
EBT 148000
- Tax (68000)
EBT 110000
- Preference dividend (30000)
Earnings available to equity shareholders 80000
- Ordinary dividend (20000)
Retained earning 60000

Balance sheet:
Particulars Amount Amount
ASSETS
Fixed assets
Plant & equipment 632730
Current assets
Stock 329620
Cash and Bank 12900
Debtors 171105
Total assets 1146355
LIABILITIES
Long term liabilities
4% Debentures 100000
Current liabilities
Outstanding interest 2000
Creditors 171355
Tax payable 68000
Outstanding commission 3000
Shareholders’ equity 802000
Ordinary shares 310000
10% preference shares 300000
Retained earnings 82000
Profit for the period 110000