23 4 5 6 7 EN3 Prepare a projected Income statement for 2018 Prepare a projected year-end Balance Sheet for 2018 3. Prepare a projected Cash flow statement for 2018 1. 2. = 9 Assumptions for 2018 based on the company's expansion plans: 8 Cost of goods sold = 43.33% of sales 9 Operating expense = 15% of sales 10 Depreciation = No change, assuming the addition (Purchases) occur at the end of 2018. 11 Repayment of principal (Long-term debt) = $20 12 Cost of borrowing is 10%, stays the same FOR 2018 13 Income tax Tax exp./Pre-tax income = 35% Dividend payout of 20% of EAT (Net Income), 14 15 16 17 18 Inventories 19 Net plant (PP&E) 20 Accounts payable 21 22 Reduce Long-term debt by $20 in the B/S 23 Long-term debt-$20 will be repaid in 2011 Assuming the repayment of $20 will not take place until December 2018, 74 External Fin B/S accounts: Accounts receivable = 23.3% of sales = 28.3% of sales = 30.00% of sales = 41.67% of sales D H

23 4 5 6 7 EN3 Prepare a projected Income statement for 2018 Prepare a projected year-end Balance Sheet for 2018 3. Prepare a projected Cash flow statement for 2018 1. 2. = 9 Assumptions for 2018 based on the company's expansion plans: 8 Cost of goods sold = 43.33% of sales 9 Operating expense = 15% of sales 10 Depreciation = No change, assuming the addition (Purchases) occur at the end of 2018. 11 Repayment of principal (Long-term debt) = $20 12 Cost of borrowing is 10%, stays the same FOR 2018 13 Income tax Tax exp./Pre-tax income = 35% Dividend payout of 20% of EAT (Net Income), 14 15 16 17 18 Inventories 19 Net plant (PP&E) 20 Accounts payable 21 22 Reduce Long-term debt by $20 in the B/S 23 Long-term debt-$20 will be repaid in 2011 Assuming the repayment of $20 will not take place until December 2018, 74 External Fin B/S accounts: Accounts receivable = 23.3% of sales = 28.3% of sales = 30.00% of sales = 41.67% of sales D H

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter3: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 19SP

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Financing Deficit Stevens Textile Corporation’s 2018 financial statements are shown here: Balance Sheet as of December 31, 2018 (Thousands of Dollars) Income Statement for December 31, 2018 (Thousands of Dollars) Suppose 2019 sales are projected to increase by 15% over 2018 sales. Use the forecasted financial statement method to forecast a balance sheet and income statement for December 31, 2019. The interest rate on all debt is 10%, and cash earns no interest income. Assume that all additional debt in the form of a line of credit is added at the end of the year, which means that you should base the forecasted interest expense on the balance of debt at the beginning of the year. Use the forecasted income statement to determine the addition to retained earnings. Assume that the company was operating at full capacity in 2018, that it cannot sell off any of its fixed assets, and that any required financing will be borrowed as notes payable. Also, assume that assets, spontaneous liabilities, and operating costs are expected to increase by the same percentage as sales. Determine the additional funds needed. What is the resulting total forecasted amount of the line of credit? In your answers to parts a and b, you should not have charged any interest on the additional debt added during 2019 because it was assumed that the new debt was added at the end of the year. But now suppose that the new debt is added throughout the year. Don’t do any calculations, but how would this change the answers to parts a and b?
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AFN Equation Refer to Problem 9-1. Return to the assumption that the company had 5 million in assets at the end of 2018, but now assume that the company pays no dividends. Under these assumptions, what would be the additional funds needed for the coming year? Why is this AFN different from the one you found in Problem 9-1?
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12. Aqua Ltd has operating profit for the year ended 30 June 2020 of £56,300, after charging depreciation of £18,500 and making a profit on the disposal of a car of £1,000. The balance sheet shows the following: InventoryTrade Receivables Trade Payables 2019 2020 ££ 8,500 13,200 17,000 15,500 12,600 14,200 What is the net cash from operating activities? a) £71,200 b) £72,200 c) £78,100 d) £77,100
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From the following forecast the Balance sheet for the year 2021Balance sheet as of 31/12/2020Liabilities& Equity AmountAssetsAmountEquity33,000 Plant and machinery 10,000Retained earnings 10,000 Land Property20.000Accounts payable 7,000 Accounts receivables 3.000Inventories10.000Cash in hand2000Cash at Bank5.00050,00050,0001. It is expected that the company will make a net income of10% of forecasted sales2. The company will purchase additional 5000 OMR worthmachines by taking an additional loan of 5000 OMR3. Forecasted sales OMR 100,0004. Dividend payout will be 50%5. The following estimates are also given;Accounts payable 10,000Accounts receivable 6,000Inventories 15,000Cash in hand 6.000Cash at bank 1,000
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