Salman Hardware Stores (“SHS”) is a medium sized family business located in Lahore. SHS has been in business for the past some twenty years. The firm’s balance sheets and income statements for the past four years are given below. Balance sheet 2015 2016 2017 2018 cash 35 40 40 45 account recevivale 110 135 165 211 inventory 215 265 340 418 prepaid expenses 30 30 30 28 current asset 390 470 575 702 property plant and equipment 300 310 325 350 total asset 690 780 900 1052 current portion of LT debt 10 10 10 10 bank loan 300 325 350 350 accounts payable 80 109 144 223 accruals 25 20 25 25 current liabilities 415 464 529 608 long tern debt 120 110 100 90 total liabilities 535 574 629 698 contributed liabilites 75 75 75 75 retained earning 80 131 196 279 total debt and equity 690 780 900 1052 Income statement 2015 2016 2017 2018 sales 1120 1400 1740 2200 opening inventory 172 215 265 340 purchases 906 1131 1416 1773 closing inventory 215 265 340 418 COGS 863 1081 1341 1695 Gross profit 257 319 399 505 opreating expenses 171 210 267 344 EBIT 86 109 132 161 interest expense 30 31 32 34 EBT 56 78 100 127 Income tax@35% 20 27 35 44 net earning 36 51 65 83 Undertake an expanded Du-Pont analysis on SHS data Prepare SHS’s pro-forma balance sheet and income statement for year 2019 assuming 25% sales growth for the year. Make appropriate calculations on potential growth

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter1: Introduction To Accounting And Business

Section: Chapter Questions

Problem 26E

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Salman Hardware Stores (“SHS”) is a medium sized family business located in Lahore. SHS has been in business for the past some twenty years. The firm’s balance sheets and income statements for the past four years are given below.

Balance sheet

	2015	2016	2017	2018
cash	35	40	40	45
account recevivale	110	135	165	211
inventory	215	265	340	418
prepaid expenses	30	30	30	28
current asset	390	470	575	702
property plant and equipment	300	310	325	350
total asset	690	780	900	1052
current portion of LT debt	10	10	10	10
bank loan	300	325	350	350
accounts payable	80	109	144	223
accruals	25	20	25	25
current liabilities	415	464	529	608
long tern debt	120	110	100	90
total liabilities	535	574	629	698
contributed liabilites	75	75	75	75
retained earning	80	131	196	279
total debt and equity	690	780	900	1052

Income statement

	2015	2016	2017	2018
sales	1120	1400	1740	2200
opening inventory	172	215	265	340
purchases	906	1131	1416	1773
closing inventory	215	265	340	418
COGS	863	1081	1341	1695
Gross profit	257	319	399	505
opreating expenses	171	210	267	344
EBIT	86	109	132	161
interest expense	30	31	32	34
EBT	56	78	100	127
Income tax@35%	20	27	35	44
net earning	36	51	65	83

Undertake an expanded Du-Pont analysis on SHS data

Prepare SHS’s pro-forma balance sheet and income statement for year 2019 assuming 25% sales growth for the year.

Make appropriate calculations on potential growth

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