You are provided with the following historical financial information based on 28 February 2019 financial statements of Gruwa Business Enterprise:

Gross profit: $8 400 000

Gross profit margin: Gross Profit / Sales = 70%

Operating income margin: Operating Income / Sales = 5%

Debtor collection period: (Trade debtors / Sales) * 360/1 = 30 days

Creditors payment period: (Trade creditors / Purchases) * 360/1 = 60 days

Stock turnover days: (Stock / Cost of Sales)* 360/1 = 90 days

Gruwa also provides you with the following budget information for the period 1 March 2019 to 28 February 2020:

Sales: $14,000,000

Opening stock 1 March 2019: $800,000

Closing stock 28 February 2020: $500,000

Cost of sales: $4,200,000

Operational expenses: $ 8,000,000

Debtor collection: cash = nil, 30 days = 50% and 60 days = 50%

Creditor payment: cash = nil, 30 days = 25%, 60 days = 25%, and 90 days = 50%.

Use the information above to complete the table and comment on the realism of the budgeted figures of Gruwa by considering the historical figures and the fact that the business is operating in a very competitive market.

Please show all your workings.

	Historical figure	Budgeted figure	Comments with reasons
Example: Sales	12,000,000	14,000,000	Unrealistic. Huge growth if market is competitive.
Cost of sales
Gross profit
Operational expenses
Operating profit
Stock turnover period