Income Statement Analysis 2022

Income Statement Overview

• Revenue from Operations totaled ₹5,00,000 for the year ending March 31, 2022.
• Cost of Goods Sold amounted to ₹3,00,000, indicating the direct costs attributable to the production of goods sold.
• Employees Benefit Expenses, including salaries, were ₹70,000.
• Depreciation was recorded at ₹20,000, reflecting the decrease in asset value.
• Other Expenses predominantly consisted of insurance premiums at ₹10,000.
• Total Expenses for the year were ₹4,00,000.
• The resulting Net Profit was ₹1,00,000, computed as total revenue minus total expenses.

Key Financial Metrics and Changes

• Debtors increased from ₹50,000 to ₹60,000, signifying higher amounts owed from customers by year-end.
• Bills Receivable also rose from ₹20,000 to ₹30,000, indicating a growing amount of short-term credit extended.
• Stock levels increased from ₹36,000 to ₹42,000, suggesting a rise in inventory held at year-end.
• Prepaid Insurance Premiums grew from ₹3,000 to ₹4,000, representing advance payments for insurance coverage.
• Creditors decreased from ₹20,000 to ₹16,000, showing a reduction in amounts owed to suppliers.
• Outstanding Salaries increased from ₹10,000 to ₹12,000, indicating higher delinquent salary payments at the end of the period.

Cash Flow from Operating Activities

• Debtors decreased from ₹50,000 to ₹40,000, enhancing cash flow as amounts owed by customers decreased.
• Bills Receivable rose from ₹10,000 to ₹12,500, impacting liquidity with increasing amounts tied up in credit.
• Creditors declined from ₹25,000 to ₹20,000, signifying a reduction in outstanding supplier obligations, which may affect cash flow.
• Monitoring of cash flow is crucial to ensuring operational efficiency and financial health.
• Various other cash flow indicators also demonstrate changes, highlighting the overall transition in cash management and financial position during the year.

This quiz focuses on the income statement for the year ended 31st March 2022. Test your knowledge on revenue, expenses, and net profit calculations. Understand the intricacies of financial statements and their components.