Mr. John Miller is the Director of Better Buy Inc (BB Inc.), a canadian store specialized in selling electronic devices and appliances. The management of BB Inc. Needs to establish the balance sheet forecast for the year 2020. 1) From the balance sheet for 2019 provided below, and taking into account the assumptions for 2020, calculate the balance sheet forecast for 2020. (15 points) Better Buy Inc. Balance sheet as at december 2019 and forecast for 2020 (Not audited - see notice to readers) 2019 (real) Assumptions (in thousand $) 2020 (Forecast) Assets $ Short term assets Cash accounts receivable Inventory 47.161 5.000 354 68,515 long term assets Fixed assets - equipment Cummulated depreciation - Equipment Fixed assets - Net 10,040 4,447 5,503 Total assets 74,108 Liabilities Short term liabilities Accounts payable Short term loans 10,089 6,320 Long term liabilities Long term loans 54,835 Total liabilities 71,224 Equity Common shares Retained earnings 2,880 Total Equity 2,884 Liabilities plus equity 74.108 Assumptions for 2020 Account receivables represent 5% of sales which are $ 263 030 000 Net profit is $ 14 525 000 depreciation expense is the only non cash expense and the rate is 8% degressive method. Account payable represent 10% of purchases which are $ 150 000 000 No additional loan The company will pay a dividend of $ 5000, closing CASH ??? To be calculated by the accounting equation COGS =60% OF SALES 2) Perform an horizontal or gap analysis of the calculations from question 1, and comment in maximum 5 lines (10 points) Better Buy Inc. Balance sheet as at december 2019 and forecast for 2020 (Not audited - see notice to readers) 2019 (real) Differences in $ 2020 (Forecast) (in thousand S) Assets Short term assets $ Cash accounts receivable Inventory 47.161 5,000 16,354 68,515 long term assets Fixed assets - equipment Cummulated depreciation - Equipment Fixed assets - Net 10,040 4,447 5,503 Total assets 74,108 Liabilities Short term liabilities 10.069 Accounts payable Short term loans 6,320 Long term liabilities Long term loans 54.835 Total liabilities 71,224 Equity Common shares Retained earnings 2.880 Total Equity 2.884 Liabilities plus equity 74,108 Comment: 3) Perform a vertical or common-size analysis of the calculations from question 1, and comment in maximum 5 lines (10 points) Better Buy Inc Balance sheet as at december 2019 and forecast for 2020 (Not audited - see notice to readers) 2019 (real) 2020 (Forecast) percent/%) - Forecast percent (%) - real in thousand $) Assets Short term assets Cash 47.181 accounts receivable Inventory 5,000 16,354 68,515 long term assets Fixed assets - equipment Cummulated depreciation - Equipment Fixed assets - Net 10,040 4,447 5,593 Total assets 74,108 Liabilities Short term liabilities Accounts payable Short term loans 10,000 6,320 Long term liabilities Long term loans 54.835 Total liabilities 71,224 Equity Equity Common shares Retained earnings 2,880 Total Equity 2,884 Liabilities plus equity 74.108 Comment: Mr. John Miller is the Director of Better Buy Inc (BB Inc.), a canadian store specialized in selling electronic devices and appliances. The management of BB Inc. Needs to establish the balance sheet forecast for the year 2020. 1) From the balance sheet for 2019 provided below, and taking into account the assumptions for 2020, calculate the balance sheet forecast for 2020. (15 points) Better Buy Inc. Balance sheet as at december 2019 and forecast for 2020 (Not audited - see notice to readers) 2019 (real) Assumptions (in thousand $) 2020 (Forecast) Assets $ Short term assets Cash accounts receivable Inventory 47.161 5.000 354 68,515 long term assets Fixed assets - equipment Cummulated depreciation - Equipment Fixed assets - Net 10,040 4,447 5,503 Total assets 74,108 Liabilities Short term liabilities Accounts payable Short term loans 10,089 6,320 Long term liabilities Long term loans 54,835 Total liabilities 71,224 Equity Common shares Retained earnings 2,880 Total Equity 2,884 Liabilities plus equity 74.108 Assumptions for 2020 Account receivables represent 5% of sales which are $ 263 030 000 Net profit is $ 14 525 000 depreciation expense is the only non cash expense and the rate is 8% degressive method. Account payable represent 10% of purchases which are $ 150 000 000 No additional loan The company will pay a dividend of $ 5000, closing CASH ??? To be calculated by the accounting equation COGS =60% OF SALES 2) Perform an horizontal or gap analysis of the calculations from question 1, and comment in maximum 5 lines (10 points) Better Buy Inc. Balance sheet as at december 2019 and forecast for 2020 (Not audited - see notice to readers) 2019 (real) Differences in $ 2020 (Forecast) (in thousand S) Assets Short term assets $ Cash accounts receivable Inventory 47.161 5,000 16,354 68,515 long term assets Fixed assets - equipment Cummulated depreciation - Equipment Fixed assets - Net 10,040 4,447 5,503 Total assets 74,108 Liabilities Short term liabilities 10.069 Accounts payable Short term loans 6,320 Long term liabilities Long term loans 54.835 Total liabilities 71,224 Equity Common shares Retained earnings 2.880 Total Equity 2.884 Liabilities plus equity 74,108 Comment: 3) Perform a vertical or common-size analysis of the calculations from question 1, and comment in maximum 5 lines (10 points) Better Buy Inc Balance sheet as at december 2019 and forecast for 2020 (Not audited - see notice to readers) 2019 (real) 2020 (Forecast) percent/%) - Forecast percent (%) - real in thousand $) Assets Short term assets Cash 47.181 accounts receivable Inventory 5,000 16,354 68,515 long term assets Fixed assets - equipment Cummulated depreciation - Equipment Fixed assets - Net 10,040 4,447 5,593 Total assets 74,108 Liabilities Short term liabilities Accounts payable Short term loans 10,000 6,320 Long term liabilities Long term loans 54.835 Total liabilities 71,224 Equity Equity Common shares Retained earnings 2,880 Total Equity 2,884 Liabilities plus equity 74.108 Comment