Exercise 3. Financial Statements Forecasting

Company ABC is a retailer. Below there is a balance sheet statement as of 1.01.2019. Additional information about the companys operations in 2019 is the following:

• Revenue is 3600000 USD. Average receivables turnover is 4,5. Gross profit is 600 000 USD.
• Ending inventory turnover is 5 (it is computed on the basis of COGS only).
• During the year the company bought PPE in the amount of 380000 USD. This was paid in 2019. Depreciation expense (not included into COGS) was 170000 USD.
• 85% of purchases of 2019 were paid off in 2019.
• Selling and administrative expenses (salaries) were 200 000 USD. 40% of then were paid in 2019.
• The company took a loan from a bank to the amount of 500000 USD. Interest rate is 9%. Period 5 years. Interest payments for 2019 were paid in 2020.
• Income tax rate: 18%. Income tax was paid in 2019.
• Company accrued 50000 USD of dividends with the intention to pay them in 2020.

Required:

Prepare an income statement and cash flow statement for 2019 as well as fill in balance sheet data at the end of 2019.

BALANCE SHEET, USD

INDICATOR	31.12.18	31.12.19	Calculations
Assets
PPE	4 000 000
Merchandise inventory	360 000
Accounts receivable	700 000
Short-term investments	480 000
Cash	95 000
Total assets:	5 635 000
Liabilities and equity
Common stock	1 400 000
Retained earnings	1 835 000
Long-term loans, incl.	2 000 000
interest payable	0
Accounts payable, incl.	400 000
suppliers	250 000
personnel	150 000
other, for ex., dividends	0
Total liabilities and equity	5 635 000