Get 3 Yrs of CCI Pro Membership at Greater Value. Subscribe Now!

Mixed questions

494 views

Save Share

Join Us Follow Us Add as Source

preity

student

65 Points Posted on 13 December 2012

1 branch a/c

how 2 adjust trade discounts and allowances in branch accounts? what does 'already adjusted in invoice' mean?

2 electricity cos

actual profit 8,50,000 reasonable return 8,00,000 pls help me with the workings of distribution of profits

3 fm

what is the relation between financial break even point and financial risk? ie if plan a has 200000 EBIT at fin BEP and plan b has 320000 EBIT at fin BEP which plan is more risky?

thanx a lot....

Replies (1)

CA Hareesh

1271 Points Posted on 13 December 2012

Ans for qn #2

As per my view, the question of 'disposal of surplus' does not arise on the grounds that the clear profit did not exceed 20% of reasonable return..

Ans for qn#3

The financial break-even point for a company is the level at which the sales of merchandise equals the fixed costs for producing the products i.e the actual break even point where contribution equals FC.

whereas financial risk is something which represents the distortion of level of profit or loss in accordance with the quantum of debt content in the capital structure

and, plan B is riskier because it has the higher BEP i.e it needs 320000EBIT to cover up the fixed costs whereas plan A breaks even at 200000EBIT itself.