The firm expects its sales to increase by 20% in 2022. All the asset and current liabilities
Question:
The firm expects its sales to increase by 20% in 2022. All the asset and current liabilities vary with sales. The COGS and the operating cost are by 20% from its sales. The interest expenses are increasing by RM200,000, while depreciation expense will increase by RM200,000 in next year. Tax rate will remain the same. The firm decides to suspend the dividend to its shareholders in the next year. The firm will remain its inventories and fixed assets.
The following information data pertain to Juju Company.
Required:
a. Construct the proforma for income statement and balance sheet. [You may answer in the provided sheet as above]
b. Propose either the firm should borrow from the bank.
c. Evaluate either the projected financial statement for 2021 is better plan compared to 2020 in terms of liquidity, profitability and expenses and efficiency of the firm.
Expert Answer:
Juju Company Income Statement For the Year Ended 31 Dec 2022 2020 2021 Sales 20000000 24000000 Less CGS 8000000 4800000 Gross Profit 12000000 19200000 ... View the full answer
