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In 2013, the management committee of Packard Industries Inc. is considering investing $800,000 to purchase machinery and equipment to increase the productivity of its plant. In 2012, the company's revenue was $2,800,000, goods purchased from suppliers totalled $600,000, and the profit for the year was $280,000. The company's 2012 statement of financial position is as follows: (in S) Aucts Non-current assets Cment assets Inventories Trade receivables Cash and cash equivalents Total current assets Total assets Equity and abilities Equity Share capital Retained earnings Total equity Long-term borrowings Comment liabilities Trade and other payables Short-term borrowings Packard Industries Inc. Statement of Financial Position As at December 31, 2012 Total current liabilities Total liabilities Total equity and liabilities 1,000,000 300,000 20,000 720,000 1.720,000 200,000 700,000 900,000 500,000 170,000 150,000 320,000 820,000 1,720,000 In 2013, management expects revenue to increase by 10%. With cutbacks in different segments of their business activities, ROR is expected to improve to 12%. Cost of sales as a percentage of revenue is expected to improve and decline to 20%. Management also expects improvements in the working capital accounts. The company's objective is to lower trade receivables to $370,000, with inventory levels expected to reach $280,000. Questions 1. Calculate the company's return on total assets for 2012: 2. How much cash will be provided by internal operations in 2013? How much will be provided by each of the following? Retained earnings = $ Inventories = $ Trade receivables = $ 3. How much will management have to raise from external activities (shareholders and lenders) to proceed with an $800,000 investment in non- current assets? $

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