QUESTION ONE

a) The table below shows the quarterly production of automobile components in a factory over a three year period:

YearQuarterUnits of production

20171104

278

368

496

20181108

284

372

4104

20191118

299

386

4112

Required:

a) Compute the FOUR points moving averages and centre them

b) Plot the time series graph and super-impose the trend line over it

c) Comment on the general direction and speed of the trend

QUESTION TWO

QUESTION TWO

The management of Ndus Ltd. wants to establish the amount of financial needs for the next two years.The balance sheet of the firm as at 31 December 2011 is as follows:

Sh.'000'

Net fixed assets

Stock

Debtors

Cash

Total assets

41,600

12,800

9,600

2,400

66,400

Financed by:

Ordinary share capital

Retained earnings

12% long-term debt

Trade creditors

Accrued expenses

28,000

11,700

6,700

12,000

8,000

66,400

For the year ended 31 December 2011, sales amounted to Sh.80, 000,000.The firm projects that the sales will increase by 15% in year 2012 and by 18% in year 2013.

The after tax profit on sales has been 8% but the management is pessimistic about future operating costs and intends to use an after-tax profit on sales rate of 5% per annum.

The firm intends to maintain its dividend payout ratio of 60%.Assets are expected to vary directly with sales while trade creditors and accrued expenses form the spontaneous sources of financing.Any external financing will be effected through the use of commercial paper.

(a)Determine the amount of external financial requirements for the next two years.

(10 marks)

(b)(i)A proforma balance sheet as at 31 DecembeR 2013.(10 marks)