Prepare proforma forecasts of financial statements of Simple, Inc for two years, 2021 and 2022. What are the companys forecasted Net Earnings (profit/loss after tax) and additional financing requirements (overdrafts) in 2021 and in 2022?

Assumptions: in 2021 and 2022, sales will grow at 10% per year, CGS will equal 42% of sales, SGA will equal 48% of sales, DRO and DPO will be maintained at 30 days, while DSI will be maintained at 100 days. All other accounts will be maintained at ratios to sales similar to those during 2020.

Simple, Inc. Financial Statements in $ millions) Fiscal Year Ended Dec. 31 2017 ($) ($) 2018 ($) 2019 ($) TO FORECAST TO FORECAST 2020 2021 2022 Assumptions estimated (% sales) (% sales) (% sales Past data Income Statement Turnover Cost of sales Gross profit 303.7 127.7 176.0 100.0 42.0 58.0 330.1 130.9 199.2 100.0 39.7 60.3 374.1 149.0 225.1 100.0 13.33% 39.8 % of sales 60.2 mechanical 15% 39.80% 430.2 171.2 259.0 50% 0% 0% % Operating expenses - excluding exceptional 151.4 - exceptional costs 4.5 Restructuring costs 16.6 Net interest expense 0.1 Profit before tax 3.4 Tax expense 8.0 Profit/(loss) after tax (4.6) 49.9 1.5 5.5 0.0 1.1 2.6 -1.5 166.2 0.0 2.7 1.5 28.8 10.4 18.4 50.3 0.0 0.8 0.5 8.7 3.2 5.6 195.7 11.2 1.0 4.4 12.8 3.5 9.3 52.3 % of sales 3.0 unusual 0.3 unusual 1.2 interest rate 3.4 mechanical 0.9 =pre-taxtax ra = 2.5 mechanical 9% 216.4 0 0 5.2 37.4 10.2 27.2 27.34% 10.9 10.9 Ordinary dividends Profit/(loss) retained (15.5) 3.6 -5.1 10.9 7.5 3.3 2.3 10.9 (1.6) 2.9 constant -0.4 mechanical 16.3 8.69% sales growth interest rate, approximate tax rate 13.33% 9.13% 27.34% Fiscal Year Ended Dec. 31 2017 ( ($) 2018 ($) Balance Sheet (% sales) (% sales) % ) 2019 ($) (% sales) 34.0 11.2 19.2 5.8 13.7 Assets Cash Excess cash (PLUG) Accounts receivable Inventories Other current assets Net fixed assets Other assets Total assets 27.8 38.6 12.5 87.8 0.0 200.7 9.2 12.7 4.1 28.9 0.0 66.1 30.3 44.7 15.6 104.7 6.0 220.5 9.2 13.5 4.7 31.7 1.8 66.8 30.3 51.3 17.5 110.6 6.7 230.1 3.7 min level PLUG 8.1 DRO 13.7 DSI 4.7% of sales 29.6 % of sales 1.8% of sales 61.5 mechanical 29.6 125.7 4.68% 29.56% 1.79% 13.7 0 34.8 59.0 20.1 127.2 7.7 262.5 Liabilities and equity Accounts payable Taxes payable Accruals Overdrafts (PLUG) Other current liabilities Long-term liabilities Other liabilities Shareholders' equity Total liabs. and equity 13.0 11.3 10.8 0.0 21.6 28.0 1.7 114.3 200.7 4.3 3.7 3.6 0.0 7.1 9.2 0.6 37.6 66.1 20.5 11.7 15.6 0.3 13.3 36.7 1.0 121.4 220.5 6.2 3.5 4.7 0.1 4.0 11.1 0.3 36.8 66.8 10.7 7.1 11.5 0.7 16.9 61.2 0.4 121.6 230.1 2.9DPO 26.2 1.9% of sales 1.90% 3.1 % of sales 3.07% 0.2 PLUG 4.5 % of sales 4.52% 16.4 DEBT constant 0.1% of sales 0.11% 32.5] =last year's + IS ret earn 61.5 mechanical 12.3 8.2 13.2 9.1 19.4 61.9 0.5 137.9 262.5 difference 9.1 1. Net earnings 2. Overdrafts base case 27.0949 9.3 27.2 9.1 PLUG OVERDRAFTS TA>TLE TA