KIEMS ltd has a current sales level of Sh 25,000,000. It has established that sales will be growing at 10% per annum for the next several years. Current assets, fixed assets, creditors and accruals vary directly with sales in the proportions of 70%, 35%, 25% and 8% respectively. On the other hand, income statement bear the following ratios to the level of sales; cost of sales 47%, Administration expenses 25%, Selling expenses 17% and other expenses 20%. The company retains 100% of profits and does not fall in the income tax bracket. Any surplus would be invested in the marketable securities while a deficit would be sourced externally. The current capital structure has been established as follows: Share capital 1,000,000 Long term loans 4,500,000 Retained earnings 1,000,000 Required: Prepare the proforma income statement and statement of financial position after four years
KIEMS ltd has a current sales level of Sh 25,000,000. It has established that sales will be growing at 10% per annum for the next several years. Current assets, fixed assets, creditors and accruals vary directly with sales in the proportions of 70%, 35%, 25% and 8% respectively. On the other hand, income statement bear the following ratios to the level of sales; cost of sales 47%, Administration expenses 25%, Selling expenses 17% and other expenses 20%. The company retains 100% of profits and does not fall in the income tax bracket. Any surplus would be invested in the marketable securities while a deficit would be sourced externally. The current capital structure has been established as follows:
Share capital 1,000,000
Long term loans 4,500,000
Required: Prepare the proforma income statement and
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