Determine the amount of external finance

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FINANCIAL MANAGEMENT ASSIGNMENT -

The following is the balance sheet of XYZ Ltd as at 31st December 2002:

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Additional Information -

1. The sales for year 2002 amounted to Sh.500,000. The sales will increase by 15% during year 2003 and 10% during year 2004.

2. The after tax return on sales is 12% which shall be maintained in future.

3. The company's dividend payout ratio is 80%. This will be maintained during forecasting period.

4. Any additional financing from external sources will be affected through the issue of commercial paper by company.

Required -

a) Determine the amount of external finance for 2 years upto 31st December 2004.

b) Prepare a proforma balance as at 31 December 2004.

Reference no: EM132166976

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