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The Motto of 'Nav Hind Pharma Limited', a Company Engaged in the Manufacturing and Distribution of Ayurvedic Medicines is 'Healthy India' 1) Calculate New Profit Ratio for the Years Ending 31.3.2013 and 31.3.2014 2) Identify Any Two Value Which 'Nav Hind Pharma Limited' is Trying to Communicate - Accountancy

The motto of 'Nav Hind Pharma Limited', a company engaged in the manufacturing and distribution of Ayurvedic medicines is 'Healthy India'. Its management and employees are hardworking, honest and motivated. The net profit of the company doubled during the year ended 31.3.2014. Encouraged by its performance, the company decided to pay one month's extra salary to all its employees. Following is the Comparative Statement of Profit and Loss of the company for the years ended 31.3.2013 and 31.3.2014:

Nav Hind Pharma Ltd
Comparative Statement of Profit and Loss
Particulars Note
No

2012-13

Rs

2013-14

Rs

Absolute
Change

Rs

%
Change
Revenue from operations   40,00,000 60,00,000 20,00,000 5.0
Less : Employee benefit expenses   24,00,000 28,00,000 4,00,000 16.67
Profit before tax   16,00,000 32,00,000 16,00,000 100
Tax Rate 50%   8,00,000 16,00,000 8,00,000 100
Profit after tax   8,00,000 16,00,000 8,00,000 100

1) Calculate New Profit Ratio for the years ending 31.3.2013 and 31.3.2014

2) Identify any two value which 'Nav Hind Pharma Limited' is trying to communicate

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Solution

For 2013

Net Profit Ratio = `"Net Profit after tax"/"Revenue from Operations" xx 100`

`= 800000/4000000xx100`

= 20%

For 2014

Net Profit Ratio = `"Net Profit after Tax"/"Revenue from Operations"`

` =1600000/6000000  xx 100`

= 26.67%

The following are the values that are propagated:

1) The welfare of the staff

2) Enhancing the morale of the employees

Concept: Comparative Statements
  Is there an error in this question or solution?
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