Ahmed Niaz 180762 BSAF 5B

QUIZ 3
Name: Ahmed Niaz
Roll No.: 180762
Class: BSAF 5B
 Sales expected to be increased by 25% in 2014
 Current operating capacity: 70%
 Dividend Ratio 40% and Profit Margin 5%

Forecasted Balance Sheet

Assets: Last Expected Change Liabilities & Last Expected Change

Year (25%) Equity Year
Current assets: Current liabilities:
Cash & Cash 870 1087.5 217.5 Account 610 762.5 152.5
equivalents Payable
Account 660 825 165 Non-Current Liabilities
Receivables
Inventory 780 975 195 Debentures 300 336.78 36.78

Total 2310 2887.5 Equity:

Current
Liabilities
Non-Current assets: Capital Stock 2800 3143.22 343.22
Net Plant & 2900 2900 - Retained 1500 1545 45
Equipment Earnings
Total 5210 5787.5 5210 5787.5

(W1) Expected Sales

Sales in 2013 = 1,200,000 x 1.25 = 1,500,000
Change in Sales = 1500000-1200000 = 300000 (300)

1200
Full Capacity Sales = 0.7 = 1714.28
 Ahmed Niaz 180762 BSAF 5B

(W2) Forecasted retained earnings

2014
Opening retained earnings 1500
Add: Net profit (Expected sales x profit margin) 75
Less: Dividend (40%) 30
Closing retained earnings 1545

(W3) Additional Fund required

AFN = Forecasted assets – Forecasted current liabilities – forecasted retained
earnings
= 5787.5 – 762.5 – 1545 = 3480
Existing Fund Available = 300 +2800 = 3100
Total AFN = 3480 – 3100 = 380

(W4) Forecasted Additional Fund raised

300
Debt to total fund = 2800+300 = 0.096

Debentures (3480 x 0.096) = 336.78

Common Stock (3480 – 336.78) = 3143.22