Question
GROWTH IN SALES: 70% Use the pro forma approach using percent of sales method and make a one-year financial plan for the company under consideration.
GROWTH IN SALES: 70%
Use the pro forma approach using percent of sales method and make a one-year financial plan for the company under consideration. The iterations and based on your final pass when the balance sheet is balanced, first comment on the impact of the growth in sales on the balance sheet and income statement of the company. Then, analyze the evolution of the companys key ratios and compare it with status quo.
Assets and liabilities and equities in 2018
| Assets | Libailities and equity | ||
| Cash & sec. | 100 | Accts. pay. & accruals | 300 |
| Accounts rec. | 300 | Notes payable | 200 |
| Inventories | 500 | Total CL | 500 |
| Total CA | 900 | L-T debt | 600 |
| Net fixed Assets | 700 | Common stk | 300 |
| Retained Earnings | 200 | ||
| Total assets | 1 600 | Total claims | 1 600 |
Income statement 2018
| Sales | 3000 |
| Less: COGS (60%) | 1800 |
| SGA costs | 600 |
| EBIT | 600 |
| Interest | 40 |
| EBT | 560 |
| Taxes (30%) | 168 |
| Net income | 392 |
| Dividends (20%) | 78,4 |
| Addn to RE | 313,6 |
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Contemporary Auditing Real Issues And Cases
Authors: Michael Chris Knapp
9th International Edition
1133187900, 978-1133187905
