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Common Size Statements — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyCommon Size Statements6 Marks
Question
The following balance sheets relate to Modem Computers Ltd. convert these into common size balance sheet and interpret the same:
✓

Answer



Interpretation: In 2016, Current Assets were 42% of total assets. In 2017, these have increased to 46%. Current liabilities on the other hand have decreased to 20% in 2017 as compared to 22% in 2016. Because of increase in the current assets and decrease in the current liabilities, the working capital position of the company has improved. The percentage of Non-Current assets has come down from 58% in 2016 to 54% in 2017. Owner's equity (Equity Share Capital Plus Reserves) has increased a little i.e., from 61.33% in 2016 to 63.33% in 2017. Non-Current Liabilities have remained constant at 16.67% in both the years.

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