Danilo ltd has established a linear relationship between its sales revenue and the balance sheet items as
Question:
Danilo ltd has established a linear relationship between its sales revenue and the balance sheet items as follows:
Balance Sheet as at 31 December, 2023.
2023 Ksh 000 | % of sales | |
Property, Plant & Equipment | 382,500 | 30% |
Current assets | 318,750 | |
Current liabilities | 280,500 | |
Long-term debt | 200,000 | |
Share Capital | 212,000 | |
Retained earnings | 8,750 |
Profit after tax represents 6% of sales every year. Corporation tax rate is 30%.
The company forecasts that sales will grow at a rate of 12% p.a for four years. Property, plant and equipment; current assets and current liabilities are to maintain their relationship with sales as per the 2023 figures.
The long term debt will be settled in the year 2026.
Required:
Calculate the external financing or surplus at the end of the year 2027.
Accounting Business Reporting For Decision Making
ISBN: 9780730302414
4th Edition
Authors: Jacqueline Birt, Keryn Chalmers, Albie Brooks, Suzanne Byrne, Judy Oliver