Paper I — Q7
(a) During the current financial year, XYZ Ltd. generated a profit of ₹5,00,000/- on a sale of ₹1,05,00,000/-. The variable…
During the current financial year, XYZ Ltd. generated a profit of ₹5,00,000/- on a sale of ₹1,05,00,000/-. The variable expenses were ₹55,00,000/-. Compute the following : Fixed expenses of the company.
Break-even sales for the current financial year.
Break-even sales if variable costs increase by 20%.
Break-even sales required to maintain the profit as at present, if the selling price has to be reduced by 10%. 20 marks
How would you analyse the financial position of a company from the point of view of (i) An Investor; (ii) A Creditor; (iii) An Employee of the firm; and (iv) A Supplier of the firm ? 20 marks
Critically evaluate the impact of online marketing on traditional marketing channel. In view of the fierce competition by online retailers in emerging post-pandemic situation, evolve a strategy for traditional retailers for survival and growth. 10 marks
हिंदी में प्रश्न पढ़ें
चालू वित्तीय वर्ष के दौरान, XYZ लिमिटेड ने ₹1,05,00,000/- की बिक्री पर ₹5,00,000/- का लाभ कमाया । परिवर्तनशील खर्चे ₹55,00,000/- थे । निम्नलिखित की गणना कीजिए : कंपनी के स्थायी खर्चे ।
चालू वित्तीय वर्ष के लिये सम-विच्छेद बिक्रय ।
सम-विच्छेद बिक्रय यदि परिवर्तनशील लागतों में 20% की वृद्धि हो ।
लाभ को वर्तमान स्तर पर बनाए रखने के लिये सम-विच्छेद बिक्रय, यदि बिक्रय मूल्य 10% कम किया जाना है । 20
एक निवेशक; (ii) एक लेनदार; (iii) प्रतिष्ठान का एक कर्मचारी; एवं (iv) प्रतिष्ठान का एक पूर्तिकार के दृष्टिकोण से आप कंपनी की वित्तीय स्थिति का विश्लेषण कैसे करेंगे ? 20 अंक
पारंपरिक विपणन सरनी (चैनल) पर ऑनलाइन विपणन के प्रभाव का आलोचनात्मक मूल्यांकन कीजिए । वैश्विक महामारी के बाद उभरती परिस्थिति में ऑनलाइन खुदरा विक्रेताओं द्वारा दी जा रही प्रखर प्रतिस्पर्धा के नजरिये से पारंपरिक खुदरा विक्रेताओं के अस्तित्व और विकास के लिये रणनीति विकसित कीजिए । 10
Model answer
Drafted with AI by UPSC Answer Check against this question's marking rubric, to the expected length. UPSC does not publish answers for Mains — this is one way to score well, not an official key. How we build rubrics and answers.
(a) Cost-volume-profit calculations for XYZ Ltd.
Data: sales ₹1,05,00,000; variable expenses ₹55,00,000; profit ₹5,00,000.
(i) Contribution = 1,05,00,000 − 55,00,000 = ₹50,00,000. Fixed expenses = contribution − profit = 50,00,000 − 5,00,000 = ₹45,00,000.
(ii) P/V ratio = 50,00,000 / 1,05,00,000 = 47.62%. Break-even sales = fixed expenses / P/V ratio = 45,00,000 / 0.47619 = ₹94,50,000.
(iii) If variable costs rise 20%, they become 55,00,000 × 1.2 = ₹66,00,000. Contribution = 1,05,00,000 − 66,00,000 = ₹39,00,000, and P/V ratio = 39,00,000 / 1,05,00,000 = 37.14%. Break-even sales = 45,00,000 / 0.37143 = ₹1,21,15,385 (approx.).
(iv) If the selling price falls 10% with the same volume, sales fall to 94,50,000 while variable cost stays ₹55,00,000. Contribution = 94,50,000 − 55,00,000 = ₹39,50,000, so the P/V ratio = 39,50,000 / 94,50,000 = 41.80%. To keep a profit of ₹5,00,000, required contribution = fixed expenses + profit = 45,00,000 + 5,00,000 = ₹50,00,000. Required sales at the new price = 50,00,000 / 0.41799 = ₹1,19,62,025 (approx.), about 26.6% more volume than the present.
(b) Analysing a company's financial position from four viewpoints
An investor looks at profitability and growth: earnings per share, return on equity and capital employed, margins, dividend payout and yield, price-earnings ratio, and the stability of earnings and cash flows, to judge return and value.
A creditor looks at ability to repay: liquidity through the current and quick ratios and cash flow; solvency through the debt-equity ratio, interest coverage and debt-service coverage; the quality of assets and security offered, and the record of repayments.
An employee looks at job security and rewards: profitability and growth, the ability to pay wages and bonus, liquidity, productivity measures such as value added per employee, and the share of employee cost in sales, together with the firm's long-term stability.
A supplier looks at ability to pay on time: liquidity, working-capital position, the creditors' turnover and payment period, the amount of credit asked in relation to the firm's size and the firm's long-term solvency, to decide credit limits and terms.
Each user reads the same statements through different ratios, and the horizon differs, short for the supplier, long for the investor.
(c) Online marketing, traditional channels and a strategy for traditional retailers
Online marketing has weakened traditional channels by offering wider choice, price comparison, convenience, home delivery and easy returns, with deep discounts funded by heavy capital. It has shifted margin and shoppers to platforms, squeezed small retailers and shortened loyalty. Traditional channels, however, keep strengths in trust, touch and trial, immediate availability, personal service and local relationships, and wholesalers and distributors adapted to supply online sellers.
In the post-pandemic market, traditional retailers can survive and grow by going omnichannel: set up their own online presence or join platforms and ONDC; offer click-and-collect and quick local delivery; use their stores as fulfilment points; build loyalty and personal service; stock local and differentiated products; use digital payments and data analytics; and improve the store experience.
How this answer will be evaluated
Framework: CVP Analysis (Cost-Volume-Profit)
What earns full marks: Accurate CVP calculations; distinct stakeholder analysis with specific ratios; actionable, context-aware retail strategy.
Evaluation rubric
Each sub-part is marked on its own, against the marks and word limit printed on the paper.
- (a) Compute fixed expenses, break-even sales, break-even sales when variable costs rise by 20%, and break-even sales needed to maintain profit when the price is cut by 10%. 20 marks
calculate— given → formula → substitution → result with units → interpretation
Must cover
- Contribution of ₹50,00,000 and fixed expenses of ₹45,00,000
- Break-even sales of ₹94,50,000 (P/V ratio 47.62%) and ₹1,21,15,385 after the 20% cost rise
- Required sales of about ₹1,19,62,025 after a 10% price cut, with working shown
Loses marks
- Arithmetic slip
- Treating the price cut as a cost increase
Earns more
- P/V ratio computed at each step
Extra mark
- Interpretation of extra volume needed after the price cut
- (b) Explain how the financial position of a company is analysed from the viewpoint of an investor, a creditor, an employee and a supplier. 20 marks
analyse— intro → causes → effects → stakeholders/linkages → way forward
Must cover
- Investor: profitability, return and growth ratios
- Creditor: liquidity and solvency
- Employee and supplier: stability, wage-paying ability and payment capacity
Loses marks
- The same ratios used for all four users
- Only one user covered
Earns more
- Named ratios for each user
Extra mark
- Differences in time horizon among users
- (c) Critically evaluate the impact of online marketing on traditional marketing channels and evolve a strategy for traditional retailers for survival and growth. 10 marks
critically evaluate— positives → negatives/limits → conditions/safeguards → conclusion
Must cover
- Impact: choice, price comparison, convenience, margin squeeze on traditional retailers
- Surviving strengths of traditional channels
- Omnichannel strategy for traditional retailers
Loses marks
- Only the online side discussed
- No strategy for retailers
Earns more
- Click-and-collect, local delivery, ONDC and platform tie-ups
Extra mark
- Use of data analytics and loyalty
What "Calculate" is asking you to do
Apply the standard formula or schedule to data the question has already supplied — a table of readings, cost records, a balance sheet — and produce the number. The method is rarely in doubt; the marks sit in the named intermediate quantities, each of which has to appear as a labelled line.
Structure that answers it
Data as given → formula or standard treatment, named → substitution → each intermediate, labelled → result with units
Where marks are lost
Omitting an intermediate the marking scheme pays for separately, or rounding at an intermediate line so the final figure drifts. In commerce and accountancy, any figure in a statement that no numbered working note supports is treated as unearned.
Practice this exact question
Write your answer and it is marked point by point against the model answer above — what you covered, what you missed, what you got wrong.
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