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You have performed the common sizing and horizontal analysis to the financial statements of X Co. You have selectively considered the current (Yearo) parameters, as
You have performed the common sizing and horizontal analysis to the financial statements of X Co. You have selectively considered the current (Yearo) parameters, as mentioned in the table below. Based on the values, you have calculated the Yearl ratios and growth rates. Year 0 Year 1 The growth rate in Sales revenues (y-o- NA 6% Gross Profit Margin 34% 35% SG&A expense/Sales revenue 20% 25% Depreciation NetPPEt-1 10% 10% Net Working capital turnover 4 5 Net PPE turnover 2.5 3.5 Corporate Tax rate 25% 25% Given: Net Working Capital Turnover: Sales revenue Net Working capital Net PPE Turnover: Sales revenue/Net PPE Depreciation Net PPE: Depreciation/ Beginning period Net PPE Sales revenue for X Co. at Year 0 = $195 million. The growth rate of 5% at Year 1 denotes growth from Year 0 to Year 1 for Sales Revenue. There are no debt and interest payments. Beginning period Net PPE for Year 0 is $85 million. Project Sales revenue, Net Profit, Gross Profit, EBIT, Net PPE and Net Working capital values for Year 1. [5]
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