The management of Hearth and Home provides you with the following projections of net sales (in...

 

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The management of Hearth and Home provides you with the following projections of net sales (in 000's) for the next three years: 20Y4 - $4,070; 20Y5 - $4,680; 20Y6 - $5,538. How would you characterize the assumptions used in making these projections? Conservative - projected sales growth is below historical levels Plausible - projected sales growth is at historical levels Plausible - projected sales growth is slightly above historical levels, but achievable Aggressive projected sales growth is considerably above historical levels ASSETS Current assets Cash Accounts receivable Inventory Other current assets Total current assets Fixed assets Trademarks and goodwill TOTAL ASSETS LIABILITIES AND OWNERS' EQUITY Current liabilities Current portion-LTD Notes payable Accounts payable Accrued expenses Other current liabilities Total current liabilities Long-term debt Other noncurrent liabilities Balance Sheets (in $000s) As At June 30: Working investment $ Owners' equity TOTAL LIABILITIES AND OWNERS' EQUITY $ $ 20Y3 66 376 547 107 1,096 313 107 1,516 67 101 244 69 46 527 330 20 639 1,516 610 $ $ 20Y2 123 303 461 70 957 $ 257 $ 1,285 71 67 5 204 64 28 368 397 19 501 496 20Y1 100 240 417 117 874 $ 245 71 $ 1,190 67 0 148 57 47 319 464 $ 1,285 $ 1,190 18 389 452 Sales Cost of goods sold Gross profit Interest expense Depreciation expense Operating expense Profit before taxes Taxes Net profit after taxes Dividends Earnings retained Income Statements (in $000s) Years Ended June 30: $ $ 20Y3 3,570 2,467 1,103 36 60 586 421 188 233 95 $ $ 138 $ 20Y2 3,000 2,093 907 33 52 477 345 149 196 84 112 $ $ $ 20Y1 2,500 1,773 727 36 50 371 270 108 162 65 97 The management of Hearth and Home provides you with the following projections of net sales (in 000's) for the next three years: 20Y4 - $4,070; 20Y5 - $4,680; 20Y6 - $5,538. How would you characterize the assumptions used in making these projections? Conservative - projected sales growth is below historical levels Plausible - projected sales growth is at historical levels Plausible - projected sales growth is slightly above historical levels, but achievable Aggressive projected sales growth is considerably above historical levels ASSETS Current assets Cash Accounts receivable Inventory Other current assets Total current assets Fixed assets Trademarks and goodwill TOTAL ASSETS LIABILITIES AND OWNERS' EQUITY Current liabilities Current portion-LTD Notes payable Accounts payable Accrued expenses Other current liabilities Total current liabilities Long-term debt Other noncurrent liabilities Balance Sheets (in $000s) As At June 30: Working investment $ Owners' equity TOTAL LIABILITIES AND OWNERS' EQUITY $ $ 20Y3 66 376 547 107 1,096 313 107 1,516 67 101 244 69 46 527 330 20 639 1,516 610 $ $ 20Y2 123 303 461 70 957 $ 257 $ 1,285 71 67 5 204 64 28 368 397 19 501 496 20Y1 100 240 417 117 874 $ 245 71 $ 1,190 67 0 148 57 47 319 464 $ 1,285 $ 1,190 18 389 452 Sales Cost of goods sold Gross profit Interest expense Depreciation expense Operating expense Profit before taxes Taxes Net profit after taxes Dividends Earnings retained Income Statements (in $000s) Years Ended June 30: $ $ 20Y3 3,570 2,467 1,103 36 60 586 421 188 233 95 $ $ 138 $ 20Y2 3,000 2,093 907 33 52 477 345 149 196 84 112 $ $ $ 20Y1 2,500 1,773 727 36 50 371 270 108 162 65 97

Answer rating: 100% (QA)

Correct option is a Conservative projected sales growth is be... View the full answer