Prepare the operating forecasts for 2020 and 2021 using the 2019 percent of sales method. (Fill in the blanks). Plug Debt to balance the forecasts.

Questions:

1. Calculate the Current and Debt to Equity Ratios for 2020 (2 marks)
2. What is an implication of preparing the forecasts using the top-down method? (1 mark)

Actual 2019 1,000,000 Industry Market share 20% FCT 2020 1,500,000 20% Forecast 300,000 FCT 2021 1,750,000 20% Forecast 350,000 % of sales 105,000 122,500 Sales Material Labour Factory Overhead COGS Gross Profit Selling Corporate Overhead Operating Profit (op) Taxes (% of OP) Net Income 25.00% 35.00% 20.00% 80.00% 20.00% 5.00% 10.00% 5.00% 25.00% 3.75% 200,000 50,000 - 70,000 40,000 160,000 40,000 - 10,000 20,000 10,000 2,500 7,500 Cash Accounts Receivable Inventory Fixed assets Total % sales 5.00% 20.00% 10.00% 100.00% 10,000 40,000 20,000 200,000 270,000 10.00% Plug to Balance Fixed Accounts Payable Debt Common Stock Opening RE Net Income Total 20,000 120,000 120,000 2,500 7,500 270,000 120,000 10,000 120000 21,250