Al Hindi Company is working under financial mobility and stringent constraint of financial leverage. The company is managed under the liabilities ceiling in the sense that liabilities growth should not exceed 20%. To avoid BPT the company has shifted its operations to the Free Zone of AL AGBA. Because of negative dilutive effects the company is not registered in the capital market and growth of equity highly related to profit retention. Presented below financial information of the company for the year (x) and projected financial indicators:

Year x

1. Total Assets = $4,500,000
2. The relationship between FA and CA is built around the ratio 2:3 respectively
3. Current Liabilities = $ 900,000
4. Long Term Liabilities = 0.7777 CL
5. BPT = 10%
6. Depreciation rate (SLm) = 10%
7. Aggregate demand of products = 20%

Projected financial indicators for x + 1

1. RONA = 10%
2. Growth of FA = 7%
3. NWC =13%
4. Dep rate = 10% for new assets

Required:

As an accountant, you have been requested by the company to find out the workable profit retention rate that could achieve the liabilities ceiling for the year

x +1

2. What would be the case if the company moved outside the free zone under change of investment and fixed asset of 13% and the change in NWC has been adjusted to 10%.