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88 Corporate Finance BRILLIANT’S

PRACTICAL QUESTIONS
2.1.1. Based on information given below, prepare Funds Flow Statement for the year ending
March 31, 2018.
Balance Sheets (As on March 31) (` in’000)

Liabilities 2017 2018 Assets 2017 2018
Trade Creditors 100 40 Cash at Bank 100 65
Bills Payable 50 60 Accounts Receivable 130 140
Outstanding Expenses 25 20 Bills Receivable 105 120
Debentures 220 140 Inventory 110 40
Accumulated Dep. Machinery 120 160
(i) On Machinery 30 35 Building 300 310
(ii) On Building 75 85 Land 60 130
Reserves 100 115 Patents 55 60
Retained Earnings 130 170
Share Capital 250 360
980 1,025 980 1,025

Profit from operations after providing ` 10,000 as depreciation on Building and ` 10,000
on Machinery and ` 5,000 as amortization on Patents for the year 2017-2018 was ` 35,000.
Other revenues for the year were ` 40,000. An old machine with original cost of ` 15,000
was sold at a loss of ` 5,000.
[Hint: Decrease in Working Capital = ` 25,000; Fund Flow Statement Total = ` 2,45,000]
2.1.2. Abhishek Ltd. earned a profit of ` 2,00,000 during the year 2018 after adjusting the
following:
(i) Depreciation for 2015 - ` 1,12,500
(ii) Preliminary Expenses written off ` 12,500
(iii) Goodwill written off ` 18,750
(iv) Discount on issue of debentures ` 25,000
(v) Loss on sale of Long-term Investments ` 5,125
(vi) Dividends received ` 1,250
(vii) Profit on sale of fixed assets ` 1,550.
Find out profit from operations. [Ans. ` 3,71,075]
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