Question
Calculate both SGR and IGR for both of your assigned companies (Olympic and Johnson). Then create a proforma income statement and Balance sheet for your
Calculate both SGR and IGR for both of your assigned companies (Olympic and Johnson). Then create a proforma income statement and Balance sheet for your Olympic company only - by growing the company sales using the respective SGR only. Comment on the following issues:
Will retain earnings be enough for the desired growth? If not, then consider a loan.
If the loan taken, then check whether the loan will be sustainable or not
Can the company achieve the growth without taking a loan by changing dividend policy?
Keep the following points in mind in calculation:
Use FY 2020 info as current year (31/12/20)
Increase depreciation
Interest expense will not change
The current D/E is optimum
All assets will grow
Among liabilities, only accounts payable will grow (if they have any)
Equity will not change
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started