Assume , XYZ Ltd. has started its business of manufacturing cell-wire on 1st April 2018 with an equity capital of INR 50 lakh and debt capital of INR Lakh @15% per annum from an investment bank. The company is exempted from making any payments of debt in the first two years of operations and start to repay a minimum of 25% of the outstanding debt (at the end of the year) from the third year of operations. To start its operation, the company has spent INR 25,00,000 for buying one machine on 1st April 2018 and has bought the second piece of machinery for INR 10 lakh on 1st April 2019. Depreciation is chargeable@15% of the yearly written down value. They have planned to start with the production capacity of 5,000 Units, with utilisation ratios of 70%, 75%, 80%, 85% and 90% for years 1, 2, 3, 4, 5 respectively with sales of 80% of total unit produced. The company has hired a store for sale and agreed on paying 10% of the selling price for each unit sold. For the initial two years, the products are expected to be sold at INR 100 and subsequently at INR 150. The yearly indirect expenses (rent, salaries, office exp. Etc.) are estimated to be INR 15,00,000. Raw material costs INR 50 per unit, labour expense cost INR 20 per unit; (expected growth of 5% and 8% respectively). The goods are sold on credit and the company is expecting to recover the receipts from debtors in 35 days in the initial year, which gradually is expected to come down to 31 by the 5th year of the operations whereas the company takes 60 days to make payments to creditors (from whom Raw material is purchased to manufacture products). XYZ Ltd. has also planned to give dividends to shareholders @25% in any year when the net margin is above 15% after paying tax (Tax @25% for the first two years and 30% in the last three years).

Now make 3-statements model for five years for XYZ Ltd.

iNCOME STATEMENT AND BALANCE SHEET

CASH FLOW STATEMENT AND ASSUMPTIONS