Question Angel ple is a listed firm is in the apparel business with the Gabriel brand. It sold 20 million units for 20 per imit in its financial year ending at 30 June 2020. In 2020- 2021, it is introducing their new brand, Magdalene, which is a cheaper brand. This new brand can increase revenue by 40%. Angel expects capital expenditures of 40 million in 2020-2021 to be used for replacement and sales expansion purposes. Angel's summarised balance sheet (Statement of Financial Position) for the year ending 30 June 2020 is as the following: Assets Utilised million million million Fixed 240 (non-current) Current: Inventory 32 Accounts Receivable 46 Cash 12 90 Current Liabilities: Corporate Tax payable (10) Accounts Payable (36) (46) Net current assets 44 12% Debts (More than 1 (40) year) Net assets 244 Equity: Ordinary equity (50pence 120 nominal value) Reserves 124 Investors' funds 244 The company's profit before tax and interest at 30th June, 2020 was 32% of sales, after reducing depreciation of 10 million. The changes in depreciation for 2020-21 is deemed to increase to eighteen million pounds. Corporate tax is 33%, with 1-year delay payment. The fimm plan to increase dividends by 5% per annum. For the financial year ending 30 June, 2020, its paraut amounts to 10 million net. The firm's cash balances cannot be reduced to below 6% of sales. Required As an advisor, evaluate the extemal financing of the firm to raise capital to support their sales expansion. Note: All depreciation provisions are eligible for tax relief. (13 marks) 6) Evaluate SIX (6) appropriate methods of financing to support Angel's sales expansion (12 marks) [Total: 25 marks] Question Angel ple is a listed firm is in the apparel business with the Gabriel brand. It sold 20 million units for 20 per imit in its financial year ending at 30 June 2020. In 2020- 2021, it is introducing their new brand, Magdalene, which is a cheaper brand. This new brand can increase revenue by 40%. Angel expects capital expenditures of 40 million in 2020-2021 to be used for replacement and sales expansion purposes. Angel's summarised balance sheet (Statement of Financial Position) for the year ending 30 June 2020 is as the following: Assets Utilised million million million Fixed 240 (non-current) Current: Inventory 32 Accounts Receivable 46 Cash 12 90 Current Liabilities: Corporate Tax payable (10) Accounts Payable (36) (46) Net current assets 44 12% Debts (More than 1 (40) year) Net assets 244 Equity: Ordinary equity (50pence 120 nominal value) Reserves 124 Investors' funds 244 The company's profit before tax and interest at 30th June, 2020 was 32% of sales, after reducing depreciation of 10 million. The changes in depreciation for 2020-21 is deemed to increase to eighteen million pounds. Corporate tax is 33%, with 1-year delay payment. The fimm plan to increase dividends by 5% per annum. For the financial year ending 30 June, 2020, its paraut amounts to 10 million net. The firm's cash balances cannot be reduced to below 6% of sales. Required As an advisor, evaluate the extemal financing of the firm to raise capital to support their sales expansion. Note: All depreciation provisions are eligible for tax relief. (13 marks) 6) Evaluate SIX (6) appropriate methods of financing to support Angel's sales expansion (12 marks) [Total: 25 marks]
