Case let 2: XYZ Ltd provides you the following information at the year-end, March 31, 2021: Income Statement for the year ended 31-Mar-2021 Particulars Amounts in INR Sales 69,800 Cost of Goods Sold (52,000) 17,800 Operating Expenses (including Depreciation INR 3,700) (14,700) 3,100 Other Income /(Expenses): Interest expense paid (2,300) Interest income received 600 Gain on Sale of Investments 1,200 Loss on Sale of Plant (300) (800) 2,300 Income Tax (700) Net Profit 1,600 Balance Sheet (Amounts in INR) 31-Mar-2021 Plant 71,500 Less: Accumulated Depreciation (10,300) 61,200 Investments (Long term) 11,500 Inventory 14,400 Trade Receivables 4,700 Cash 4,600 Prepaid expenses 100 TOTAL ASSETS 96,500 Share Capital 46,500 Reserves and Surplus 14,000 Bonds 29,500 Trade Payables 5,000 Outstanding liabilities 1,200 Income taxes payable TOTAL LIABILITIES 96,500 31-Mar-2020 50,500 (6,800) 43,700 12,700 11,000 5,500 1,500 500 74,900 31,500 13,200 24,500 4,300 900 300 500 74,900 Additional information: 1) Sold investments for INR 10,200. These investments cost INR 9,000. The company also purchased some investments during the year. 2) Issued INR 10,000 of bonds at face value in an exchange for plant assets on 31st March, 2021. Some bonds were redeemed (repaid) at face value during the year. 3) Sold plant assets that cost INR 1,000 with accumulated depreciation of INR 200 for INR 500. The company also purchased some plant assets during the year. 4) To take care of funding requirements, the company also issued share capital at par during the year. 5) As decided by the management, the company paid cash dividends of INR 800 during the year. You are required to answer the following questions: Q6. Prepare Cash Flow Statement using Indirect Method. Show all required calculations as separate working notes. (7 Marks) Q7. Comment on the financial health and cash generating efficiency of the company based on cash flow analysis. (max 100 words) (2 Marks) Q8. The company has issued bonds and share capital during the year, and has also increased the inventory, cash and plant assets. Do you agree with such an approach? Comment on the suitability of each of these 5 transactions, and any different approach that you would have undertaken. (max 200 words) (3 Marks) Case let 2: XYZ Ltd provides you the following information at the year-end, March 31, 2021: Income Statement for the year ended 31-Mar-2021 Particulars Amounts in INR Sales 69,800 Cost of Goods Sold (52,000) 17,800 Operating Expenses (including Depreciation INR 3,700) (14,700) 3,100 Other Income /(Expenses): Interest expense paid (2,300) Interest income received 600 Gain on Sale of Investments 1,200 Loss on Sale of Plant (300) (800) 2,300 Income Tax (700) Net Profit 1,600 Balance Sheet (Amounts in INR) 31-Mar-2021 Plant 71,500 Less: Accumulated Depreciation (10,300) 61,200 Investments (Long term) 11,500 Inventory 14,400 Trade Receivables 4,700 Cash 4,600 Prepaid expenses 100 TOTAL ASSETS 96,500 Share Capital 46,500 Reserves and Surplus 14,000 Bonds 29,500 Trade Payables 5,000 Outstanding liabilities 1,200 Income taxes payable TOTAL LIABILITIES 96,500 31-Mar-2020 50,500 (6,800) 43,700 12,700 11,000 5,500 1,500 500 74,900 31,500 13,200 24,500 4,300 900 300 500 74,900 Additional information: 1) Sold investments for INR 10,200. These investments cost INR 9,000. The company also purchased some investments during the year. 2) Issued INR 10,000 of bonds at face value in an exchange for plant assets on 31st March, 2021. Some bonds were redeemed (repaid) at face value during the year. 3) Sold plant assets that cost INR 1,000 with accumulated depreciation of INR 200 for INR 500. The company also purchased some plant assets during the year. 4) To take care of funding requirements, the company also issued share capital at par during the year. 5) As decided by the management, the company paid cash dividends of INR 800 during the year. You are required to answer the following questions: Q6. Prepare Cash Flow Statement using Indirect Method. Show all required calculations as separate working notes. (7 Marks) Q7. Comment on the financial health and cash generating efficiency of the company based on cash flow analysis. (max 100 words) (2 Marks) Q8. The company has issued bonds and share capital during the year, and has also increased the inventory, cash and plant assets. Do you agree with such an approach? Comment on the suitability of each of these 5 transactions, and any different approach that you would have undertaken. (max 200 words)