Stratum Drinks Wholesaler Ltd

Forecast Data Sheet for Year ending $31$ December $2023$

$$ The company forecast the opening stock, goods produced and purchased as a total of $48$ million units at an average cost of $1\mathrm{.}50$ each.

$$ The company anticipates selling $44$ million units at a selling price of $2\mathrm{.}00$ each.

$$ Both the distribution and administrative costs were each anticipated to be $10\%$ of the years forecast revenue.

$$ The finance expense interest is expected to be about $8\%$ of the loan which remains the same as $2022$ and there are no further non$-$ current liabilities.

$$ As an estimate Tax is to be shown as $20\%$ of the operating profit.

$$ The carrying amount of the non$-$current assets is expected to reduce by $800,000$ and the depreciation has already been incorporated into the estimated distribution and administrative expenses that were shown previously.

$$ The $$other receivables will$$ reduce by $8$m and the trade receivables are expected to be $18$m by the end of the year.

$$ The trade payables are forecast to increase by $1,200,000$ by the end of December $2023$ and the $$other payables$$ will go up by $10\%.$

$$ The company now receives two months credit from its suppliers and it gives two months credit to its customers.

$$ The called$-$up share capital will remain the same, and no payment of dividend is anticipated at this stage. The profit and loss retained profit in the Balance Sheet will increase by the forecast profit for the year.

$$ The accounts section has estimated from their cash budget that the end of year cash and cash equivalents balance will be $3,240,000.$

$$ The staff numbers for $2023$ remain the same as for $2022$ which were $200.$

$$ The estimated inflation rate for the year is $7\%.$

the CEO in particular has staked a lot of his reputation on the acquisition of Stratum Drinks Wholesaler Ltd$.$ The accounts for the year ending $31$st December $2022$ are attached in a folder together with forecast data for the rest of this year, $2023.$ Using appropriate ratios, you are to critically analyse the accounts for $2022$ and the forecast accounts for $2023.$ Prepare a report for the Bridgewater board to include this analysis. The report should also identify any concerns for the future performance of Stratum together with your recommendations.