TREND PERCENTAGES - FINANCIAL STATEMENT ANALYSIS

Question Paper 4 Pages

Bengaluru City University

Bachelor of Business Administration

Contributed by

Prajwal Hallale

CORPORATE ACCOUNTING AND REPORTING_2ND SEMESTER BBA_BANGALORE CENTRAL UNIVERISTY

Vinutha T.N, Assistant Professor, MES Institute of Management
1

FINANCIAL STATEMENT ANALYSIS
TREND PERCENTAGES
The Financial Statements may be analysed by comparing the trends of series of information.
This method determines upwards or downwards and involves the computation of the
percentage relationship that each statement item bears to the same item in base year.
The information for a number of years is taken up and one year generally first year is taken as
base year. The figures of base year are taken as 100 and trend ratios for other years are
calculated on the basis of base year.
PROBLEMS
1. From the following information, interpret the results of operations of a manufacturing
concern using trend ratios. (Amounts are in lakhs)
Particulars
2015-16
2016-17
2017-18
2018-19
Revenue from Operations
100
90
120
150
Cost of Goods Sold
60
60
70
80
Other expenses
10
10
15
20
Income Taxes
15
10
17.5
25
Profit after Tax
15
10
17.5
25

Solution: Comparative Statement of Profit and Loss using Trend Percentages
Particulars
Amounts (Rs. in lakhs)
Percentages
15-16
16-17
17-18
18-19
15-16
16-17
17-18
18-19
i)Revenue from
operations
100
90
120
150
100
90
120
150
ii)Other Income
-
-
-
-
-
-
-
-
iii)Total Revenue
100
90
120
150
100
90
120
150
iv)Expenses
Cost of Goods
Sold
60
60
70
80
100
100
116.67
133.33
Other expenses
10
10
15
20
100
100
150
200
Total Expenses
70
70
85
100
100
100
121.43
142.86
v)Profit before
Tax
30
20
35
50
100
66.67
116.67
166.67
vi)Taxes
15
10
17.5
25
100
66.67
116.67
166.67
vii)Net Profit
15
10
17.5
25
100
66.67
116.67
166.67

Page 1
CORPORATE ACCOUNTING AND REPORTING_2ND SEMESTER BBA_BANGALORE CENTRAL UNIVERISTY

Vinutha T.N, Assistant Professor, MES Institute of Management
2

2. From the following information, interpret the results of operations of ABC Ltd. using
trend ratios. (Amounts are in lakhs)
Particulars
2015-16
2016-17
2017-18
2018-19
Revenue from Operations
100
95
120
130
Cost of Goods Sold
60
58.90
69.60
72.80
Other expenses
10
9.70
11
12
Net Profit
30
26.40
39.40
45.20

Solution: Comparative Statement of Profit and Loss using Trend Percentages
Particulars
Amounts (Rs. in lakhs)
Percentages
15-16
16-17
17-18
18-19
15-16
16-17
17-18
18-19
i)Revenue from
operations
100
95
120
130
100
95
120
130
ii)Other Income
-
-
-
-
-
-
-
-
iii)Total Revenue
100
95
120
130
100
95
120
130
iv)Expenses
Cost of Goods
Sold
60
58.90
69.60
72.80
100
98.17
116
121.33
Other expenses
10
9.70
11
12
100
97
110
120
Total Expenses
70
68.60
80.60
84.80
100
98
115.14
121.14
v)Profit before
Tax
30
26.40
39.40
45.20
100
88
131.33
150.67
vi)Taxes
-
-
-
-
-
-
-
-
vii)Net Profit
30
26.40
39.40
45.20
100
88
131.33
150.67

3. From the following Balance Sheet of the Himalaya Industries Ltd. Compute the trend
percentages using 2016-17 as base and comment on the result.
Particulars
2016-17
2017-18
2018-19
Share Capital
2,00,000
2,50,000
3,00,000
Reserves
1,00,000
1,50,000
1,50,000
Loan
2,00,000
1,00,000
50,000
Creditors
3,00,000
4,00,000
2,00,000
Building
2,00,000
2,50,000
3,00,000
Plant
2,00,000
2,50,000
1,00,000
Stock
2,50,000
2,50,000
1,50,000
Debtors
1,00,000
1,00,000
1,00,000
Cash at Bank
50,000
50,000
50,000

Page 2
CORPORATE ACCOUNTING AND REPORTING_2ND SEMESTER BBA_BANGALORE CENTRAL UNIVERISTY

Vinutha T.N, Assistant Professor, MES Institute of Management
3

Solution: Comparative Balance Sheet using Trend Percentages
Particulars
Amount (Rs. in lakhs)
Percentages
2016-17
2017-18
2018-19
2016-17
2017-
18
2018-
19
EQUITY AND LIABILITY

A. Shareholders Fund

a. Share Capital
2,00,000
2,50,000
3,00,000
100
125
150
b. Reserves
1,00,000
1,50,000
1,50,000
100
150
150
Total Shareholder’s Fund
3,00,000
4,00,000
4,50,000
100
133.33
150
B. Non-Current
Liabilities

Long Term Borrowings Loan
2,00,000
1,00,000
50,000
100
50
25
Total Non-Current
Liabilities
2,00,000
1,00,000
50,000
100
50
25
C. Current Liabilities

Creditors
3,00,000
4,00,000
2,00,000
100
133.33
66.67
Total Current Liabilities
3,00,000
4,00,000
2,00,000
100
133.33
66.67
TOTAL EQUITY AND
LABILITIES
8,00,000
9,00,000
7,00,000
100
112.50
87.50
ASSETS

A. Non-Current Assets

a. Fixed Assets

Building
2,00,000
2,50,000
3,00,000
100
125
150
Plant
2,00,000
2,50,000
1,00,000
100
125
50
Total Non-current Assets
4,00,000
5,00,000
4,00,000
100
125
100
B. Current Assets

Inventory - Stock
2,50,000
2,50,000
1,50,000
100
100
60
Trade Receivables - Debtors
1,00,000
1,00,000
1,00,000
100
100
100
Cash at Bank
50,000
50,000
50,000
100
100
100
Total Current Assets
4,00,000
4,00,000
3,00,000
100
100
75
TOTAL ASSETS
8,00,000
9,00,000
7,00,000
100
112.50
87.50

Practice Questions (To be worked out in assignment book)
1. From the following information, interpret the results of operations using trend ratios.
(Amounts are in lakhs)
Particulars
2015-16
2016-17
2017-18
2018-19
Revenue from Operations
200
180
240
300
Cost of Goods Sold
120
120
140
160
Other expenses
20
20
30
40
Income Taxes
30
20
35
50
Profit after Tax
30
20
35
50
Page 3
CORPORATE ACCOUNTING AND REPORTING_2ND SEMESTER BBA_BANGALORE CENTRAL UNIVERISTY

Vinutha T.N, Assistant Professor, MES Institute of Management
4

2. From the following information, interpret the results of operations of X Ltd. using trend
ratios. (Amounts are in lakhs)

Year
Revenue
from
Operations
Employee
Benefit
expenses
Other
Expenses
Purchases
2014-15
1,24,000
43,000
10,300
88,000
2015-16
1,31,000
43,000
11,600
93,000
2016-17
1,28,000
46,000
11,900
97,000
2017-18
1,33,000
48,000
11,100
1,01,000
2018-19
1,30,000
50,000
12,000
97,000
Page 4