Exercise No.: 02 Based on comprehensive reading of the financial statements issued by TANJA Corporation (TC) for
Question:
Exercise No.: 02
Based on comprehensive reading of the financial statements issued by TANJA Corporation (TC) for the year 2020 (Sept) and its projections for the coming three years (2021, 2022, 2023), you have been requested to provide a professional opinions and views as could be spelled out by the Executive Financial Model (EFM) and the Kunt and Maks model. A summary of information are as follows:
Year | 2020 | 2021 | 2022 | 2023 |
TA | 72,000,000 | 84,000,000 | 99,000,000 | 110,000,000 |
FA | 0.45 TA | 0.50 TA | 0.52 TA | 0.60 TA |
CA | 0.40 TA | 0.41 TA | 0.40 TA | 0.38 TA |
LTI | 0.10 TA | 0.07 TA | 0.05 TA | Zero |
INT. A. | ? | ? | ? | ? |
Financial Leverage | 65% | 67% | 67% | 66% |
Current liab. | 1,800,000 | 21,000,000 | 28,000,000 | 39,000,000 |
Long-term liab. | ? | ? | ? | ? |
Growth Rate | 15% | 17% | 19% | 18% |
DPR | 35% | 42% | 45% | 48% |
NSI | 0 | 0 | 0 | 0 |
ROTA | 17% | 17% | 17% | 17% |
FA | 12% | 14% | 14% | 15% |
NWC | 16% | 18% | 19% | 20% |
It is clear that TANJA Corporation is adopting stable policy on expansion of capitalization, financial Leverage, DPR, FA, NWC, FA, CA, LTL and the trends of long-term investments.
Required:
- Based on comparison between the EFM and Kunt and Maks model, provide the financial scenarios of TC in 2020, 2021, 2022 and 2023.
- Develop the scenarios for the years 2021, 2020, 2023 under both models and give professional elaboration to the resultants findings (New ideas are well scored and appreciated).