COMPREHENSIVE ASSIGNMENT MANAC Course: MANAGEMENT ACCOUNTING / PGCBM 21. Name of the faculty: Prof. Ram Kumar Kakani. Subject :..Management Accounting

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1 COMPREHENSIVE ASSIGNMENT MANAC Course: MANAGEMENT ACCOUNTING / PGCBM 21 Name of the faculty: Prof. Ram Kumar Kakani Subject :..Management Accounting RB1225 Name of center:- NOIDA (NEW DELHI)

2 KUMAR HOME FURNITURES About the company: The company owned by M/S Chandan Kumar Mohanty, is in to manufacturing futuristic home furniture products, from cost effective raw material compressed teak wood imported from Singapore; Raw materials are purchased in standard size boxes; The raw material will be processed and final finished goods are the furniture of various size, style, mainly catering to Living room, Children's room & Dinning area & Bed rooms; The firm is in to wholesale business and do not deal with retail customers; The product will be marketed in National Capital Region of Delhi i.e. NOIDA, Faridabad, Ghaziabad, Dwaraka & Rohini; This is a new venture. It has 3 types of product sets category "Bedroom set", "Living room set" & "Children's room set" ; The factory of this company is located in the Industrial belt of Noida, Sector-63, where the premise is taken on rent; It has also made a factory outlet shop. The marketing price strategy would be "Market Skimming Pricing"; Target consumer segment would be the upper middle-class, who can pay extra money for the value additions in the product Assumptions 1 Date of commencement of company 23-Apr-8 2 Capital contributed 66, Long term loans equal to maximum of 2 times capital available at the rate of 1% per annum; Long Term loans has to be at least equal to capital 4 Credit sales can be 7 times cash sales 5 Credit purchase can be 8 times cash purchase

3 6 Wage cost could be 1% to 3 % of Sales 7 Cash balance at the end of any year is to be maximum of 4 months and minimum of 1 month cash expenses. Deployment of surplus cash on short-term inter-corporate market at 6% per annum is possible 8 Sales volume will increase by 1% over the previous month ; sale price will increase by 5% over previous month and purchase price will increase by 5% every 15 days, all reckoned on a calendar month basis. 9 All cost will remain stable over the period 1 No gestation period business starts operation from day one 11 At least 1 transactions per accounting period 12 Income tax is not considered for the 3 periods TRANSACTIONS IN CHRONOLOGICAL ORDER Date April-28 to March-29 (FY-8-9) FISCAL YEAR 1 Transaction Details Transaction Amount (in Rupees) 23-Apr Owner contributed capital to business 66, Apr Business Legal & Administrative expense 1,. 3-Apr Sanctioned a loan of 1. from IDBI bank, 1% per annum reducing; Repayable in 5 years 1,,. Remarks EMI for 6 months

4 5-May 7-May Taken a factory in 24, per year; Paid 3 months rent as security deposit 6,. Factory & material general 2,/- yearly premium; 1 year premium paid. 1,. 25-May Electricity Installation, Power backup provisioning 8,. 3-May bank 21, Jun Electricity Expense Advance payment 15,. 2-Jun Fire Safety Installation 7,. 3-Jun bank 21, Jul Purchased machineryby cash 5,. 15-Jul Factory Interior expense 1,. 3-Jul bank 21, Aug Hired 1 supervisor + 5 skilled laborer+ 5 normal labor from XYZ agency on a yearly payment of 3/- ; Advance paid 6/- 6,. 5-Aug Raw material purchase from Singapore (5 big 1/- per box) 5,. 25-Aug Supplies & Spares purchase on 6% per annum 2,. 31-Aug bank 21, Sep 1/- worth raw material converted to Finished 1,. 25-Sep 3-Sep Raw material purchase from Singapore (5 big 11/- per credit; interest 1% per annum 55,. Able to sell all finished goods worth 1/- manufactured on 2-Sep 3,. 3-Sep bank 21, Oct 5/- worth raw material converted to finished good 5,. 3-Oct Finished goods worth 5/- were Sold at markup sale price (2 bed room 2 children s 1/- & 2 living room cash 75,. 31-Oct bank 21, Nov bank 21,247.4

5 1-Dec Raw material purchase from Singapore (2 big 132/- per credit; interest 1% per annum 2,64,. 5-Dec 5/- worth raw material converted to finished good 5,. 1-Dec Paid 2/- to raw material supplier with 4/- interest 24,. 15-Dec Machine breakdown repair expense 1,. 3-Dec Finished goods worth 5/- were sold at markup sale price (2 bed room 3 children s 15/- & 3 living room cash 787,5. 31-Dec bank 21, Jan Distributed New Year gifts to workers 2,. 31-Jan bank 21, Feb bank 21, Mar 3-Mar 18/- worth raw material converted to finished goods manufactured 1,8,. Finished goods worth 1/- were sold at markup sale price (3 bed room 5 children s 1275/-& 4 living room cash 1,75, Mar bank 21, Mar Interest paid on pro rata basis for loan taken on 25-Sept 29,75. 3-Mar Factory Rent paid pro rata basis for 5 months 22,. 3-Mar Interest paid on pro rata basis for loan taken on 1-Dec 88,. Date April-29 to March-21 (FY9-1 FISCAL YEAR 2 Transaction Details Transaction Amount (in Rupees) 15-Apr Applied Trade licenses ; charges 6 6,. REMARKS Remarks 29-Apr Business Legal & Administrative expense 1,. 3-Apr bank 21,247.4

6 31-May Received Govt. grant from Tourism India 1,,. 31-May bank 21, Jun Invested in Market securities 2,. 3-Jun bank 21, Jul Raw material purchase from Singapore (1 big 1456/- per box) 1,456,. 3-Jul bank 21, Aug Installed new wood designer machines on yearly rent of 1/-; Paid 1 year rent in advance. 1,. 2-Aug Sold old machine with a historical value 2 15,. 25-Aug Manufactured finished good 1,8,. 31-Aug bank 21, Sep 2,,/- worth finished goods sold at markup sale price (7 bed room 5 children s & 5 living room cash with 1/5 net 3 3,282, Sep Given 1% discount to whole seller 328, Sep bank 21, Oct bank 21, Nov bank 21, Dec Raw material purchase from Singapore (15 big 2384/- per box) 3,57,6. 18-Dec Received discount 6% on total purchases 183, Dec bank 21, Jan Manufactured finished good 3,. 31-Jan bank 21, Feb Wholesaler's meet organized in a 3-Star hotel 3,. 28-Feb bank 21, Mar Administrative expenses 1,. 3-Mar bank 21, Mar Interest paid on pro rata basis for loan taken on 25-Sept FY9 55,.

7 3-Mar Factory Rent paid 24,. 3-Mar Interest paid on pro rata basis for loan taken on 1-Dec FY9 264,. Date 1-Apr April-21 to March-211 (FY-1-11) FISCAL YEAR 3 Transaction Details Transaction Amount (in Rupees) Owner sold a personal land and from that money he infused 4,,/- in this business 4,,. 5-Apr Paid 15 to creditor for the loan taken on 1-Dec FY9 1,5,. 1-Apr Manufactured finished good 1,,. REMARKS Remarks 16-Apr 25-Apr 3/- worth finished goods sold at markup sale price (7 bed room 4 children s & 5 living room cash with 1/7 net 3 4,228, Transferred 15% discount amount electronically to bank account of "Siyaram Furniture" whole seller on the Sale price for the items sold on 16-April 422, Apr bank 21, May Accounting software purchased for the business 1,. 31-May bank 21, Jun Raw material imported from Malaysia (15 big 2 a price lower than the previous vendor) 3,,. 3-Jun bank 21, Jul Business Travel expense incurred 5,. 3-Jul bank 21, Aug Manufactured finished good 3,,. 31-Aug bank 21, Sep 2/- worth finished goods sold at markup sale price (5 bed room 4 children s & 3 living room cash with 15/7 net 3 ; penalty of 15% flat on pending amount after 3 days 3,884, Sep bank 21,247.4

8 31-Oct bank 21, Nov bank 21, Dec bank 21, Jan Invested in Equity & Debentures 5,. 31-Jan bank 21, Feb Machinery expense incurred 8,. 28-Feb bank 21, Feb Advance payment to agency supplying skilled laborers 5,. 15-Mar Sold scrap items 8,. 2-Mar 31-Mar Purchased new furniture designer machines from Italy 1,,. Finalized a new factory in Faridabad with yearly rent of Rs.1.; Paid 1 year advance rent 1,,. 31-Mar Interest paid on pro rata basis for loan taken on 25-Sept FY9 55,. 31-Mar Interest paid on pro rata basis for loan taken on 1-Dec FY9(Remaining loan 114/-) 114,. 31-Mar bank 21, Mar Rent paid for the existing Factory 24,.

9 BALANCE SHEET FY28-29(PERIOD 1) Date Transaction/Event Transaction amount Fixed Asset Invest ment/ Curren t Assets Pre-paid Advances Supplies /spares Raw material Inventory Finished Goods Inventory Cash Capital Past Reserves Loans Payabl es Profit Revenue Expense 23- Apr Owner contributed capital to business 66, , , Apr Business Legal & Administrative expense 1,. (1,. (1,. 3- Apr Sanctioned a loan of 1. from IDBI bank, 1% per annum reducing; Repayable in 5 years 1,,. 1,,. 1,,. 5- May Taken a factory in 24, per year; Paid 3 months rent as security deposit 6,. 6,. (6,. 7- May Factory & material general 2,/- yearly premium; 1 year premium paid. 1,. (1,. (1,.

10 25- May Electricity Installation, Power backup provisioning 8,. (8,. (8,. 3- May bank 21,247.4 (21,247.4) (12, ) (8, ) 1- Jun Electricity Expense Advance payment 15,. 15,. (15,. 2- Jun Fire Safety Installation 7,. (7,. (7,. 3- Jun bank 21,247.4 (21,247.4) (13,21. 33) (8, ) 5-Jul Purchased machinery by cash 5,. 5,. (5,. 15-Jul Factory Interior expense 1,. (1,. (1,. 3-Jul 1-Aug bank 21,247.4 (21,247.4) Hired 1 supervisor + 5 skilled labor+ 5 normal labor from XYZ agency on a yearly payment of 3/- ; Advance 6,. paid 6/- 6,. (6,. (13, ) (8, ) 5-Aug Raw material purchase from Singapore (5 big 1/- per box) 5,. 5,. (5,. 25- Aug Supplies & Spares purchase on 6% per annum 2,. 2,. 2,.

11 31- Aug bank 21,247.4 (21,247.4) (13, ) (8,7.7 9) 2- Sep 1/- worth raw material converted to Finished 1,. (1,. 1,. 25- Sep Raw material purchase from Singapore (5 big 11/- per credit; interest 1% per annum 55,. 55,. 55,. 3- Sep Able to sell all finished goods worth 1/- manufactured on 2-Sep 3,. (1,. ) 3,. 3,. (1,. 3- Sep bank 21,247.4 (21,247.4) (13, ) (7, ) 15- Oct 3- Oct 5/- worth raw material converted to finished good 5,. Finished goods worth 5/- were sold at markup sale price (2 bed room 2 children s 1/- & 2 living room cash 75,. (5,. 5,. (5,. ) 75,. 75,. (5,. 31- Oct bank 21,247.4 (21,247.4) (13,46. 83) (7, )

12 3- Nov bank 21,247.4 (21,247.4) (13,573. (7,674. 5) 1-Dec Raw material purchase from Singapore (2 big 132/- per credit; interest 1% per annum 2,64,. 2,64,. 2,64,. 5-Dec 5/- worth raw material converted to finished good 5,. (5,. 5,. 1- Dec Paid 2/- to raw material supplier with 4/- interest 24,. (24,. (24,. 15- Dec Machine breakdown repair expense 1,. (1,. (1,. 3- Dec Finished goods worth 5/- were sold at markup sale price (2 bed room 3 children s 15/- & 3 living room cash 787,5. (5,. ) 787,5. 787,5. (5,. 31- Dec bank 21,247.4 (21,247.4) (13, ) (7,56.9 4) 5-Jan Distributed New Year gifts to workers 2,. (2,. (2,. 31- Jan bank 21,247.4 (21,247.4) (13,8. 16) (7, )

13 28- Feb 15- Mar 3- Mar bank 21,247.4 (21,247.4) 18/- worth raw material converted to finished goods (1,8, 1,8,. manufactured 1,8,.. Finished goods worth 1/- were sold at markup sale price (3 bed room 5 children s 1275/-& 4 living room cash 1,75,875. (1,,. 1,75,875. (13, ) 1,75,875. (7, ) (1,,. 3- Mar bank 21,247.4 (21,247.4) (14,31. 12) (7, ) 3- Mar Interest paid on pro rata basis for loan taken on 25- Sept 29,75. (29,75. (29, Mar Rent paid pro rata basis for 5 months 22,. (22,. (22,. 3- Mar Interest paid on pro rata basis for loan taken on 1- Dec 88,. (88,. UNADJUSTED TRIAL BALANCE 5,. 81,. 2,. 79,. 8,. 2,93, , ,51, ,986,. 495, ,588,375. (88,. (3,93, ) ADJUSTMENT FOR PERIOD 1 FY 8-9 Depreciation of machinery 1 Closing stock of Supplies & Spares 175 Contractor agency charges(8 months pro-rata basis) accrued 2 Electricity Expense accrued 25 (1,. (2,. (25,. (25,. (1,. (25,. (2,. (25,.

14 ADJUSTED TRIAL BALANCE 49,. 585,. 175,. 79,. 8,. 2,93, , ,51, ,986,. 235, ,588,375. (3,353, ) PROFIT & LOSS FOR PERIOD 1 - FY 8-9 Profit Revenue Expense 235,27. 3,588,375 (3,353, ) BALANCE SHEET (FY PERIOD Apr 29- Apr 3- Apr 31- May 31- May 15-Jun 3-Jun 25-Jul BALANCE SHEET FOR PERIOD 2 - FY 9-1 Opening Balance Applied Trade licenses ; charges 6 6,. Business Legal & Administrative expense 1,. bank 21,247.4 Received Govt. grant from Tourism India 1,,. bank 21,247.4 Invested in Market securities 2,. bank 21,247.4 Raw material purchased from Singapore (1 big 1456/- per box) 1,456,. Fixed Asset 49. Invest ment 2. Prepaid/ Advance s 585. Supplies /Spared 175. Raw material inventory Finished goods inventory Cash Capital (6. (1. ( ( (2. ( ( Past Reser ves Loans Payables Pro fit Revenu e Expense... (6. ) (1. ( ) ( ( ) ( ( ) ( )

15 3-Jul 16- Aug 2- Aug 25- Aug 31- Aug 15- Sep 2- Sep 31- Sep 31- Oct 3- Nov 14- Dec 18- Dec bank 21,247.4 Installed new wood designer machines on yearly rent of 1/-; Paid 1 year rent in advance 1,. Sold old machine for 15,.(historic al value 2/-) 15,. 18/- worth raw material converted to finished good 1,8,. bank 21, ,,/- worth finished goods sold at markup sale price (7 bed room 5 children s & 5 living room cash with 1/5 net 3 3,282,891.1 Given 1% discount to whole seller 328, bank 21,247.4 bank 21,247.4 bank 21,247.4 Raw material purchase from Singapore (15 big 2384/- per box) 3,57,6. Received discount 6% on total 183,456. (2. 1. ( (2. ( ( ( ( ) ( ( ( ( ( ( ) 15. (2. ( ) ( ) (2. ( ) ( ) ( ) ( ) ( ) ( ) ( )

16 purchases 3- Dec bank 21, Jan Manufactured finished good 3,. 31-Jan bank 21,247.4 Wholesaler's meet 2- organized in a 3- Feb Star hotel 3,. 28- Feb bank 21, Administrative Mar expenses 1,. 3- Mar bank 21,247.4 Interest paid on 3- pro rata basis for Mar loan taken on 25- Sept FY9 55,. 3- Mar Rent paid 24,. Interest paid on 3- pro rata basis for Mar loan taken on 1- Dec FY9 264,. UNADJUSTED TRIAL BALANCE PERIOD 2 FY ( ( ( (3. ( (1. ( (55. (24. ( ( ) ( ) ( ) (61.83) (3. ( ) ( ) (1. ( ) ( ) (55. ) (24. ADJUSTMENT FOR PERIOD 2 FY 9-1 Depreciation of machinery 8 (8. (8. Closing stock of Supplies & Spares 145 Machine Rent Contractor agency charges(12 months) accrued 3 Electricity Expense accrued 3 ( ) (3. (3. (3. (264. ( ) (3. ) ( ) (3. (3. )

17 ADJUSTED TRIAL BALANCE PERIOD 2 FY ( ) PROFIT & LOSS FOR PERIOD 2 - FY 9-1 Pro fit 72 7, Revenu e 4,616,3 47. Expense - 3,889,142.8 BALANCE SHEET (FY21 211) PERIOD 3 1- Apr 5- Apr 1- Apr 16- Apr BALANCE SHEET FOR PERIOD 3 - FY 1-11 Owner sold a personal land and from that money he infused 4,,/- in this business 4 Paid 15 to creditor for the loan taken on 1-Dec FY9 15 Manufactured finished goods 1,,. 3/- worth finished goods sold at markup sale price (7 bed room 4 children s 4,228, Fixed Asset 282,. Inves tmen t 2,. Prepaid/ Advance s 288, Supplie s/spare d 145,. Raw material inventory 1,23,6. (1,,. Finished goods inventory Cash Capital 2,9,. 1,,. (3,,. 464, ,,. (1,5,. ) 4,228, ,942. 4,,. Past Reserves 962, Loans 874,11. 7 Paya bles Profit Rev enu e Expens e 2,98 6,.... (1,5,. 4,22 8, (3,,.

18 25- Apr & 5 living room cash with 1/7 net 3 Transferred 15% discount amount electronically to bank account of "Siyaram Furniture" whole seller on the Sale price for the items sold on 16-April 422, Apr bank 21,247.4 Accounting software 15- purchased for the May business 1,. 31- May bank 21, Jun Raw material imported from Malaysia (15 big 2 a price lower than the previous vendor) 3,,. 3- Jun bank 21, Business Travel Jul expense incurred 5,. 3- Jul bank 21, Manufactured finished Aug good 3,,. 31- Aug bank 21, /- worth finished goods sold at markup sale price (5 bed room set 4 Sep children s & 3 living room cash with 15/7 net 3 ; penalty of 15% flat on 3,884, ,. 3,,. (3,,. 3,,. (2,,. (422, ) (21,24 7.4) (1,. (21,24 7.4) (3,,. ) (21,24 7.4) (5,. (21,24 7.4) (21,24 7.4) 3,884, (15,629.53) (15,759.78) (15,891.11) (16,23.53) (16,157.6) 3,88 4,28.27 (422, ) (5,617.51) (5,487.27) (5,355.94) (5,. (5,223.51) (5,89.98) (2,,.

19 pending amount after 3 days 3- Sep bank 21, Oct bank 21, Nov bank 21, Dec bank 21, Invested in Equity & Jan Debentures 5,. 31- Jan bank 21, Machinery expense Feb incurred 8,. 28- Feb bank 21,247.4 Advance payment to 28- agency supplying Feb skilled labors 5,. 15- Mar 2- Mar 31- Mar 31- Mar 31- Mar Sold scrap items 8,. Purchased new furniture designer machines from Italy 1,,. Finalized a new factory in Faridabad with yearly rent of Rs.1.; Paid 1 year advance rent 1,,. Interest paid on pro rata basis for loan taken on 25-Sept FY9 55,. Interest paid on pro rata basis for loan taken on 1-Dec FY9(Remaining loan 114/-) 114,. 1,,. 5,. 5,. 1,,. (21,24 7.4) (21,24 7.4) (21,24 7.4) (21,24 7.4) (5,. (21,24 7.4) (8,. (21,24 7.4) (5,. 8,. (1,,. ) (1,,. ) (55,. (114,. (16,291.71) (16,427.47) (16,564.37) (16,72.4 (16,841.59) (16,981.94) 8,. (4,955.34) (4,819.57) (4,682.68) (4,544.64) (4,45.46) (8,. (4,265.11) (55,. (114,.

20 31- Mar bank 21, Rent paid for the Mar existing setup 24,. UNADJUSTED TRIAL BALANCE PERIOD 3 FY1-11 1,382,. 7,. 1,788, ,. 23,6. 1,9,. (21,24 7.4) (24,. 4,559, ,66, , (17,123.45) 677, ,48 6,. 2,892, ,91 2, (4,123.59) (24,. (6,2, ) ADJUSTMENT FOR PERIOD 3 FY 1-11 Depreciation of machinery 8 Closing stock of Supplies & Spares 125 Contractor agency charges 3 Electricity Expense accrued 35 ADJUSTED TRIAL BALANCE PERIOD 3 FY1-11 (8,. 1,374,. 7,. (3,. (35,. 1,453, (2,. 125,. 23,6. 1,9,. 4,559, ,66, , , ,48 6,. 2,529, ,91 2, (8,. (2,. (3,. (35,. (6,383, ) PROFIT & LOSS FOR PERIOD 3 - FY 1-11 Profit 2,529, Rev enu e 8,91 2, Expens e (6,383, )

21 CASH FLOW STATEMENT Operating Activities CASH FLOW FOR PERIOD 1 FY28-9 Finished goods sold 3,588,375. Business Legal & Administrative expense (1,. Pre-paid Rent security deposit (6,. Insurance Premium paid (1,. Electric Installation expense (8,. Pre-paid Electric charge (15,. Fire Safety installation expense (7,. Factory Interior (1,. Pre-paid contractor agency (6,. Paid to suppliers with interest (24,. Machine break down expense (1,. Rent paid (22,. Raw material purchase (5,.

22 A) Net cash from Operating activities 1,34,375. Investing Activities Machinery (5,. New year gifts to contractors for motivation (2,. B) Net cash from Investing activities (52,. Financing Activities Received Capital 66,942. Loan sanctioned 1,,. Loan EMI paid (233,717.44) Interest on Short Term Loan (117,75. C) Net cash from Financing activities 1,39, Starting Cash Balance. Changes in Cash during the Year due to the above activities i.e., (A) + (B) + (C) 2,93, Ending Cash Balance 2,93, CASH FLOW FOR PERIOD 2 FY29-1

23 Operating Activities Finished goods sold 3,282,891. Sale of old machine 15,. Discount received 183,456. Business Legal & Administrative expense (2,. Trade license purchase (6,. Discount given (328,289.11) Whole seller meet expense (3,. Rent paid (24,. Raw material purchase (4,513,6. A) Net cash from Operating activities (1,755,542.11) Investing Activities Pre-paid rent on designer machine (1,. B) Net cash from Investing activities (1,. Financing Activities Govt. Grant 1,,. Market securities (2,. Loan EMI paid (254,964. Interest on Short Term Loan (319,. C) Net cash from Financing activities 226,36. Starting Cash Balance 2,93, Changes in Cash during the Year due to the above activities i.e., (A) + (B) + (C) (1,629,56.11) Ending Cash Balance 464,343.45

24 Operating Activities CASH FLOW FOR PERIOD 3 FY21-11 Finished goods sold 8,112, Sale of scrap items (items generated while manufacturing finished goods) 8,. Discount given (422,813.74) Business Travel Expense (5,. Machinery maintenance (8,. Pre-paid contractor agency (5,. New factory rental advance (1,,. Rent paid (24,. Raw material purchase (3,,. A) Net cash from Operating activities 3,619,63.89

25 Investing Activities Accounting software cash (1,. Designer machines from Italy (1,,. B) Net cash from Investing activities (1,1,. Financing Activities Received Capital 4,,. Invested in Equity & Debenture (5,. Paid to creditor (1,5,. Loan EMI paid (254,964. Interest on Short Term Loan (169,. C) Net cash from Financing activities 1,576,36. Starting Cash Balance 464, Changes in Cash during the Year due to the above activities i.e., (A) + (B) + (C) 4,95, Ending Cash Balance 4,559,983.34

26 Profit and Loss account - FY Particulars Amount (in Rs.) Particulars Amount (in Rs.) To Cost of goods sold 2,1,. By Sales 3,588,375. To Business Legal & Administrative expense 1,. To Rent expense 22,. To Insurance premium 1,. To Electricity Installation, Power backup - provisioning 8,. To Fire Safety Installation 7,. To Factory Interior expense 1,. To Machine breakdown repair expense 1,. To Distributed New Year gifts to workers 2,. To Interest on short term loans 117,75. To Interest on long term loans 85, To Depreciation 1,. To Contractors cost 2,. To Electricity consumed 25,. To Supplies/Spares 25,.

27 To Profit of the year 235, ,588,375. 3,588,375. KUMAR FURNITURE Profit and Loss account - FY Particulars Amount (in Rs.) Particulars Amount (in Rs.) To Cost of goods sold 2,,. By Sales 3,282,891. To Business Legal & Administrative expense 2,. To Rent expense 24,. By Old machine sale 15,. By Discount received 183,456. To Trade License 6,. By Govt. grant 1,,. To Machine Rental 66, To Old machine cost 2,. To Discount given 328, To Business conference 3,. To Interest on short term loans 319,. To Interest on long term loans 77,186. To Depreciation 8,. To Contractors cost 3,. To Electricity consumed 3,. To Supplies/Spares 3,. To Profit of the year 727,24.92

28 4,616, ,616,347. KUMAR FURNITURE Profit and Loss account - FY Particulars Amount (in Rs.) Particulars Amount (in Rs.) To Cost of goods sold 5,,. By Sales 8,112, To Business Travel 5,. By Sale of Scrap items 8,. To Rent expense 24,. - To Machinery Maintenance 8,. To Discount given 422, To Interest on short term loans 169,. To Interest on long term loans 58,571. To Depreciation 8,. To Contractors cost 3,. To Electricity consumed 35,. To Supplies/Spares 2,. To Profit of the year 2,529, ,912, ,912,417.63

29 KUMAR HOME FURNITURES Summarized PROFIT & LOSS STATE MENT FY 28-9 FY FY Item Amount Amount Amount Sales 3,588,375 3,616,347 8,912,418 Less: Cost of Goods Sold (including Salaries) 2,1, 2,, 5,, Gross Profit 1,488,375 1,616,347 3,912,418 Less: Sales Expenses 2, 558, ,814 Less: Administration Expenses (includes Rent Expenses) 815, 896,666 24, Less: General Expenses (includes Supplies Consumed) 25, 3, 2, EBIDTA 448, ,392 2,764,64 Less: Depreciation & Amortization Expenses 1, 8, 8, Operating Profit 438, ,392 2,756,64 Add: Other Income 1,, Adjusted for Extraordinary & Past Period Items EBIT 438,375 1,123,392 2,756,64 Less: Interest Expenses 23, , ,571 Profit Before Tax (PBT) 235,28 727,26 2,529,33

30 Less: Income Tax Expenses Profit After Tax (PAT a.k.a. Net Income) 235,28 727,26 2,529,33 Less: Dividends for the Period Profit/Loss Transferred to the Balance Sheet 235,28 727,26 2,529,33 CASH FLOW ANALYSIS RESPONSE Sl. Criteria FY8-9 FY9-1 FY Sources of Fund 2 Uses of Fund Loan 1 mn. &.7 mn. From capital Grant 1mn. Capital 4mn. Fixed Asset & Operating expenses Raw material & Sale promotion discount 3 Is CFO >CAPEX Yes No Yes 4 Is CFO >Depreciation Yes No Yes 5 IS CFO > CAPEX+Dividend Yes No Yes 6 7 If Q5 is "Yes", where the surplus is invested? No investment made NA If Q5 is "No", what is the source of fund? NA Govt. Grant NA Raw material purchase, renting out New factory & designer machine from Italy Short term loan closure and invested in equity & debentures Analysis: 1) The SG&A cost of the company increased from 1 million to 1.5 million in FY9-1 resulting in negative CFO and again controlled / reduced to 1.1 million in FY 1-11; In the starting year sale was low and CFO was also positive; Main expenses were in CAPEX; Surplus was not invested, company tried to keep a cash reserve for next financial year; Company should have a forecast of higher sales promotion for next FY.

31 2) In FY9-1 company started sales promotion to increase its sale volume, resulting in negative CFO but recognition in quality supplies to Govt Tourism houses; Tried to gain some profit/quick cash through Market Securities. 3) With increase demand, business is expanded in FY1-11 with the help of additional capital; Surplus in invested; Increased Fixed assets. This is a growing company with a rating of 5-6 in a scale of 1-1; 1 being highest COMMON RATIO ANALYSIS Final Comment about the health of the company : The company is back to good health in FY1-11; There was a dip in company performance in FY9-1, in some areas due to high raw material cost, Sales promotion cost to capture market + customer share and Administrative expense; The capital infusion has paid off some debts resulting in reducing interest expense; Company is able to expand its operations and increasing sales volume with greater reach to neighboring cities prime customer; This is a growing company in moderate health. Sales planning is required in near future 1 2 Short term Solvency FY8-9 FY9-1 FY1-11 Analysis Net working capital Current Ratio (Current Asset- Current Liabilities) 1,457, ,215, ,455,916. (Current Asset/Current Liabilities) 149% 174% 62% Positive trend of Net worth of company Positive trend of Liquidity

32 3 Quick Ratio 4 Long term solvency Total Debt to Equity (Quick Asset/Current liabilities) 7% 16% 354% (Current Liabilities+Long Term Liabilities)/Net Worth 277% 174% 29% After an initial dip in FY9-1 due to higher Sales promotion and Administrative expense, the cash balance has increased in FY1-11; Also it is due to fresh capital infusion in FY1-11 Positive indication of trend ; total debts are well secured with Net worth of Kumar Furniture 5 Long term Debt to Equity (Long Term Liabilities/Net Worth) 72% 39% 9% Positive indication of trend ; Long term debts are well secured with Kumar Furniture

33 6 7 8 Long Term Debt to Fixed Asset Times Interest Earned Ratio Operating Efficiency Inventory Turn over (Long Term Debt/Net Fixed Asset) 215% 31% 49% Earnings Before Interest and Tax/Interest Expense) 216% 284% 1211% (Cost of Goods Sold/Average Inventory) 132% 49% 238% This is showing a downward trend after an surge in FY9-1; Organization is back to good health in FY1-11 Lender's interest is always secured with Kumar Furniture from the beginning FY and improving year by year Rate in which inventories are converted to revenue has improved from FY9-1 ; Sales activities slowed down in FY9-1 due to monetary crunch Profitability 9 Gross profit margin (Gross Profit*1/Sales) 41% 45% 44%

34 1 Operating profit margin (Operating Profit*1/Sales) 12% 3% 31% Operating profit dip in FY9-1 due to Sales promotional activities and higher administrative expense Net profit margin Return on Investment (Net Profit*1/Sales) 7% 2% 28% (Operating Profit*1/Average Operating Assets) 9% 2% 27% Company is making profit from the beginning ROI of the company has improved from a dip in FY9-1 FY8-9 FY9-1 FY1-11 CA 4,443, ,21, ,941,916. CL 2,986,. 2,986,. 1,486,. QA 2,93, , ,259, LTL 1,51, , ,77.77 NW 1,457, ,215, ,455,916. LTD 1,51, , ,77.77 NFA 49,. 282,. 1,374,. IE EBIT 438,375. 1,123,392. 2,756,64.

35 23, , ,571. CGS 2,1,. 2,,. 5,,. AI 1,59,. 4,13,6. 2,13,6. GP 1,488,375. 1,616,347. 3,912,418. OP 438, ,392. 2,756,64. NP 235, ,26. 2,529,33. AOA 4,933, ,917, ,315,916. Total Sales 3,588,375. 3,616,347. 8,912,417.63

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39 LOAN EMI CALCULATION Loan Amount 1 Loan Term (Years) 5 Payments Per Year 12 Rate of Interest 1.% Monthly Installment S. No Monthly Installment Interest Principal Balance

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41 THANK YOU