Assume that X Ltd has found a consistent relationship among the following accounts as a percentage of
Question:
Assume that X Ltd has found a consistent relationship among the following accounts as a percentage of sales.
i. Current assets – 65%
ii. Net fixed assets – 25%
iii. Accounts payable – 10%
iv. Other current liabilities – 12%
v. Net profit after taxes – 5%.
The company’s sales for year 1 (2014) were sh.10,000,000 and are expected to grow at 10% every year. The balance sheet as at 31st December 2014 is given below:-
Sh.’000’ | Sh.’000’ | ||
Fixed assets | 2,500 | Ordinary capital | 2,000 |
Current assets | 6,500 | Retained earnings | 2,600 |
Long term loan | 1,000 | ||
Current liabilities | |||
Accounts payable | 1,000 | ||
Notes payable | 1,200 | ||
Other current liabilities | 1,200 | ||
9,000 | 9,000 |
Required:
i. Determine X Ltd’s financial requirements
ii. Prepare a proforma balance sheet as at 31. 12. 2019.
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella