Kenya Kwanza ltd wants to determine its liquidity position in 5 years from closure of business in
Question:
Kenya Kwanza ltd wants to determine its liquidity position in 5 years from closure of business in year 2023. The financial position as at December 2023 was:
Balance sheet as at 31 December, 2023
Fixed assets: | Ksh. '000' | Ksh. '000' |
Freehold premises | 1,680,000 | |
Leasehold premises | 1,200,000 | |
Plant and equipment | 1,120,000 | |
Motor vehicles | 600,000 | 4,600,000 |
Current assets: | ||
Stocks | 2,120,000 | |
Debtors | 880,000 | |
Bank balance | 240,000 | 3,240,000 |
7,840,000 | ||
Capital & liabilities: | ||
Creditors | 1,440,000 | |
Accrued expenses | 1,120,000 | |
Ordinary share capital | 4,000,000 | |
Reserves | 380,000 | |
15% loan | 900,000 | 7,840,000 |
7,840,000 |
Additional information:
1. The loan will mature before the end of the 5 year period and will be duly settled.
2. Sales for year 2023 amounted to ksh 16,000m and are expected to grow by 8% per year in each of the five years from 2024 to 2028.
3. Dividend payout ratio of 40% is to be maintained.
4. Profit after tax is to be maintained at 14% of sales
5. Except for the ordinary share capital and reserves, all the remaining balance sheet items are to maintain their current (2023) percentage of sales
Required:
Determine the Total Uses of funds as at December 2028.
Determine the Total Sources of funds as at December 2028. Determine the Total increase in reserves as at December 2028.
Accounting And Finance For Non Specialists
ISBN: 9780273745884
7th Edition
Authors: Peter Atrill, Eddie Mclaney