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Financial Planning and Control 2023S

Unit 2 Financial projectionSource: 2018 Business Management 3A Resub Assignment: Question 2

REQUIRED

Prepare the Pro Forma Statement of Financial Position as at 31 December 2018 from the information provided below.

INFORMATION

The financial position of Surfers Limited as at 31 December 2017 is reflected below:

STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017

RASSETS Non-current assets1 800 000Property, plant & equipment at carrying value1 500 000Fixed deposits300 000 Current assets5 400 000Inventory3 400 000Accounts receivable2 000 000Cash and cash equivalents0Total assetsR7 200 000 EQUITY AND LIABILITIES Equity4 700 000Ordinary share capital (150 000 shares)3 600 000Retained earnings1 100 000 Non-current liabilities700 000Long term loan700 000 Current liabilities1 800 000Accounts payable1 700 000Bank overdraft100 000Total equity and liabilitiesR7 200 000

Additional information

The following must be taken into account to prepare the Statement of Financial Position as at 31 December 2018:

• Sales are forecast at R20 000 000, with a net profit margin of 10% expected. Forty percent (40%) of the sales are expected to be on credit.

• Accounts receivable are expected to equal 30% of credit sales.

• All purchases of inventories are expected to be on credit and are estimated to total R16 000 000. Ten percent (10%) of this amount is expected to be owed on 31 December 2018.

• Equipment costing R3 000 000 is expected to be purchased on 01 July 2018. An old vehicle with a carrying value of R50 000 is expected to be sold on 31 August 2018. Total depreciation for 2018 is expected to be R500 000

• A further R100 000 is expected to be invested in fixed deposit for 2 years on 30 June 2018.

• The loan balance is expected to be reduced by R100 000.

• The directors are expected to recommend a final dividend of R1 200 000, payable during 2019.

• A favourable bank balance of 1% of sales is desired.

• Ordinary share capital is expected to remain unchanged.

• The amount of long-term external funding required must be calculated.

Unit 2 Financial projectionSource: 17 April 2017 Assignment: Question 2

REQUIRED

Use the following financial data to prepare the Pro Forma Statement of Financial Position as at 31 December 2018.

INFORMATION

Topform Ltd has provided the following financial data needed to prepare the Pro Forma Financial Position as at 31 December 2018.

• Sales for the 2017 totalled R1 000 000. Sales for 2018 are estimated to be R1 500 000.

• The business maintains a cash balance of R50 000.

• Inventories, Accounts receivable and Accounts payable for 2018 will represent the same percentage of sales as for 2017.

• Vehicles costing R500 000 will be purchased during 2018. Equipment with a cost price of R50 000 and Accumulated depreciation of R30 000 is expected to be sold for R25 000 at the end of June 2018. Total depreciation for 2018 is expected to amount to R140 000.

• 25 000 shares at R10 each are expected to be issued during July 2018.

• The business predicts a 14% net profit (after tax) margin. The tax rate of the company is 30%. Ten percent (10%) of the company tax for 2018 is expected to be outstanding (owing) at 31 December 2018.

• A final dividend of 90 cents per share is expected to be declared at 31 December 2018 and it is payable during 2019.

• The balance of the existing loan is expected to be reduced by 30% by means of monthly repayments.

• The amount of external funding (non-current liabilities) must be determined.

Topform Ltd

Statement of Financial position as at 31 December 2017

RASSETS Non-current assets1 000 000Fixed / tangible assets1 000 000 Current assets900 000Inventory600 000Accounts receivable250 000Cash and cash equivalents50 000Total assetsR1 900 000 EQUITY AND LIABILITIES Equity1 400 000Ordinary share capital (150 000 shares)1 200 000Retained earnings200 000 Non-current liabilities300 000Long term loan300 000 Current liabilities200 000Accounts payable200 000Total equity and liabilitiesR1 900 000

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