Reference no: EM131804283

Problem - Use the following information for the forecasting related questions

Year (Most recent in far right column.)	2009	2010
BALANCE SHEET DATA
Cash	4,200	4,500
Marketable Securities	9,000	10,000
Accounts Receivable	5,000	5,500
Inventories	1,900	2,100
CURRENT ASSETS	20,100	22,100
Long Term Investments	10,000	14,000
Property, Plant & Equipment - at cost	46,000	52,000
Accumulated Depreciation	-1,600	-4,820
TOTAL ASSETS	74,500	83,280
Accounts Payable	4,100	3,750
Short Term Debt	6,784	5,000
CURRENT LIABILITIES	10,884	8,750
Long Term Debt	24,200	21,000
TOTAL LIABILITIES	35,084	29,750
Common Stock + Paid in Capital	20,000	27,000
Retained Earnings	19,416	26,530
SHAREHOLDERS' EQUITY	39,416	53,530
TOTAL LIABILITIES AND EQUITIES	74,500	83,280

 

INCOME STATEMENT DATA
Revenues	91,000	110,000
Cost of Goods Sold	-40,950	-60,500
Gross Profit	50,050	49,500
Selling, General and Admin. Expense	-13,650	-22,000
Depreciation Expense	-3,100	-3,220
Operating Profit	28,966	24,280
Interest Income	390	760
Interest Expense	-3,200	-3,068
Income before Tax	26,156	21,972
Income Tax Expense	-6,539	-8,789
NET INCOME (computed)	19,617	13,183

Additional information

There was no Marketable securities, PP&E, or investments sold.

Assume the common stock and paid in capital will stay same for the coming year

Use average numbers for the denominator for the calculation of turnover ratios

The forecasting techiques to be used are as follows:

• Sales is based on the past growth rate
• Turnover ratio-Cash, A/R, Inventories, A/P (Use purchase forecasted)
• Change/Sales-Marketable Securities, PP&E, Investment, Short-term and Long-term Debts
• Proportion to Sales-COGS, Gross Profit, SGA
• Depreciation expense is based on the Depreciation/beginning PP&E
• Interest Income or Interest Expense can be forecasted based on the interest rates form the beginning intrest bearing assets and liabilities

Q1. Calculate the Sale growth rate to be used forecast

Q2. What would be the turnover ratios to be used for the forecasts of A/R, Cash, Inventories, and A/P?

A/R:

Cash:

Inventories

A/P

Q3. Forecast Sales and COGS for the year 2011.

Sales:

COGS