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CMA Intermediate · Financial Management and Business Data Analytics · Comparative, Common-Size Financial Statements and Trend Analysis

Meera Auto Ltd. has total assets of Rs 40,00,000 in Year 1 and Rs 60,00,000 in Year 2. Its common-size balance sheets show debtors at 10% of total assets in Year 1 and 15% in Year 2. By what percentage did the absolute amount of debtors grow?

Debtors grew by 125%. Year 1 debtors are Rs 4,00,000 (10% of Rs 40,00,000) and Year 2 debtors are Rs 9,00,000 (15% of Rs 60,00,000). The rise of Rs 5,00,000 over Rs 4,00,000 is 125%, far more than the 5-point change in the common-size share.

  1. A50%
  2. B125%Correct
  3. C5%
  4. D100%

Explanation

Year 1 debtors = 10% of 40,00,000 = 4,00,000. Year 2 debtors = 15% of 60,00,000 = 9,00,000. Growth = 5,00,000/4,00,000 = 125%. The 50% option reflects asset growth alone, and 5% is only the change in common-size percentage.

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