Cardif Company is operating business in the field of construction in the western part of England. The company is planning to start operations in the Middle East. This requires the management of the company to pay more attention to debt control and its impact on other balance sheet components and financial profile of the company. Presented below are information derived from the company records in year (z) : 

- FA = $ 14,000,000 

CA = $ 24,000,000 

CL = $ 6,000,000 

NI = $ 1,400,000 

Expected stock issue in year (z1) amounted to $ 4,000,000 

LTL = $ 18,000,000 

EQ = ? 

The expansion policy of the company is highly built around the premises that the growth of NWC = 20%, increase of FA = 14% and depreciation rate 12% for the new FA as compared to 10% of old FA, the DPR = 0.33 

Required: Based on the EFM, provide a comprehensive recap on the company profile on new debts and structure of the new balance sheet. To what extent the designed policy could change the financial scene of the company. What would be the case if the company increase its DPR by 42 percentage?

Answer rating: 100% (QA)

Answer 1 Based on the EFM the new debts of the company would be 4000... View the full answer