ABC Company statement of financial

position as at 31.12.2017
$
Assets
Current Assets
Cash 50,000.00
Accounts Recivable 175,000.00
Inventory 126,000.00
Total Current Assets 351,000.00
Property Plant and Equipment
Equipment 480,000.00
Less:Accumulated Depreciation 90,000.00 390,000.00
Total Property Plant and Equipment 390,000.00
Total Assets 741,000.00
Liabilities and Shareholder Funds
Current Liabilities
Accounts Payable 156,000.00
Short-term Notes Payable 12,000.00
Total Current Liabilities 168,000.00
Longterm Liabilities
Long-term Notes Payable 200,000.00
Total Longterm Liabilities 200,000.00
Total Liabilities 368,000.00
Shareholder's Equity
Common Stock 235,000.00
Retained Earnings 138,000.00 Solved
Shareholder's Equity 373,000.00
Total Liabilities and Shareholder Equity 741,000.00
ABC sales budget for the
period ending 31.03.2018
Month Dec-17 Jan-18 Feb-18 Mar-18
Sale in units 10,000.00 10,500.00 11,025.00 11,576.00
Selling price per unit 25.00 25.00 25.00
Total Sales Revenue 262,500.00 275,625.00 289,400.00
Q1 2018 Apr-18
33,101.00 12,154.80
25.00
827,525.00
ABC Purchases budget for the period ending
31.03.2018
Month Dec-17 Jan-18 Feb-18
Expected sales in units 10,000.00 10,500.00 11,025.00
Add desired ending finished goods inventory 8,820.00 9,260.80
Total required inventory 19,320.00 20,285.80
Deduct begining finished goods inventory 8,400.00 8,820.00
Units to be produced 10,920.00 11,465.80
Purchase price 15.00 15.00
Total Purchase cost 163,800.00 171,987.00

Cost of goods sold 496,515.00

Inventory 31.03.2018 145,857.60
 Mar-18 Q1 2018 Apr-18
11,576.00 33,101.00 12,154.80
9,723.84 9,723.84
21,299.84 42,824.84
9,260.80 8,400.00
12,039.04 34,424.84
15.00 15.00
180,585.60 516,372.60
ABC selling expenses
budget for the period
ending 31.03.2018
Month Rate Jan-18 Feb-18 Mar-18 Q1 2018
Total Sales Revenue 262,500.00 275,625.00 289,400.00 827,525.00
Variable expenses
Sales Rep Comms 12.5% 12.50% 32,812.50 34,453.13 36,175.00 103,440.63
Fixed expenses
Sales Manager Salary 3,500.00 4,000.00 4,000.00 11,500.00
Total selling Expenses 36,312.50 38,453.13 40,175.00 114,940.63
ABC general and admin
expenses budget for the
period ending 31.03.2018
Month Rate Jan-18 Feb-18 Mar-18 Q1 2018
Adminstrative Salaries 8,000.00 8,000.00 8,000.00 24,000.00
Depreciation 5,000.00 5,000.00 5,000.00 15,000.00
Monthly interest expense 0.90% 1,800.00 1,800.00 1,800.00 5,400.00
Total selling Expenses 14,800.00 14,800.00 14,800.00 44,400.00
ABC Cash Receipts budget for
Q1 2018
Month Jan-18 Feb-18 Mar-18 Q1 2018
Cash Receipts 253,750.00 266,437.50 279,757.50 799,945.00
Mar 31 Account receivables 202,580.00
ABC Cash Payments budget for
Q1 2018
Month Jan-18 Feb-18 Mar-18 Q1 2018
Cash Payments - Purchases 156,000.00 163,800.00 171,987.00 491,787.00
Mar 31 Account Payables 180,585.60
ABC Cash budget for Q1 2018
Month Jan-18 Feb-18 Mar-18
Opening Cash Balance 50,000.00 84,517.50 50,000.00
Cash Receipts 253,750.00 266,437.50 279,757.50
Total Cash Available 303,750.00 350,955.00 329,757.50
Cash Paid out
Cash paid for Purchases 156,000.00 163,800.00 171,987.00
Selling Expenses 36,312.50 38,453.13 40,175.00
General And Administrative expenses 14,800.00 14,800.00 14,800.00
Dividends Paid 100,000.00
Purchase of Equipment 55,000.00
Total cash paid out - 207,112.50 - 317,053.13 - 281,962.00
Net cash inflow/Outflow 96,637.50 33,901.88 47,795.50
Borrowing/ Short term Notes payable 16,098.13 2,204.50 18,302.63
Repayment 12,120.00
Closing cash Balance 84,517.50 50,000.00 50,000.00

Target cash Balance 50,000.00

ABC Company budgeted income statement
for the period ended 31.03.2018
$
Revenues
Net Sales Revenue 827,525.00
Cost of goods sold 496,515.00
Gross Profit 331,010.00
Operating expenses
Selling expenses 114,941.00
General And Administrative expenses 44,400.00
Total Operating expenses 159,341.00
Operating Income 171,669.00
Income tax expense 60,084.15
Net Income 111,584.85
ABC Company budgeted retained
earnings statement for the period
ended 31.03.2018
$
Retained earnings 01.01.2018 138,000.00
Add:Net Income 111,584.85
249,584.85
Less:Dividend paid 100,000.00
Retained earnings 31.03.2018 149,584.85
ABC Company budgeted balance sheet
statement as at 31.03.2018
$
Assets
Current Assets
Cash 50,000.00
Accounts Recivable 202,580.00
Inventory 145,857.60
Total Current Assets 398,437.60
Property Plant and Equipment
Equipment 535,000.00
Less:Accumulated Depreciation 105,000.00 430,000.00
Total Property Plant and Equipment 430,000.00
Total Assets 828,437.60
Liabilities and Shareholder Funds
Current Liabilities
Accounts Payable 180,585.60
Short-term Notes Payable 18,302.63
Income Tax payable 60,084.15
Total Current Liabilities 258,972.38
Longterm Liabilities
Long-term Notes Payable 200,000.00
Total Longterm Liabilities 200,000.00
Total Liabilities 458,972.38
Shareholder's Equity
Common Stock 235,000.00
Retained Earnings 149,584.85
Shareholder's Equity 384,584.85
Total Liabilities and Shareholder Equity 843,557.23

- 15,119.63
 Project 1 Project 2 Project 3
Purchase Price 80,000 175,000 22,700
Required Rate of Return 6% 8% 12%
Time Period 3 years 5 years 2 years
Cash Flows – Year 1 48,000 85,000 13,000
Cash Flows – Year 2 36,000 74,000 13,000
Cash Flows – Year 3 22,000 38,000 0
Cash Flows – Year 4 0 26,800 0
Cash Flows – Year 5 0 19,000 0

Project 1
Year Cash flow Pvif Factor 6% Present value
1 48,000.00 0.94 45,283.02
2 36,000.00 0.89 32,039.87
3 22,000.00 0.84 18,471.62
4 - 0.79 -
5 - 0.75 -
Total Present value 95,794.51
Initial Outlay - 80,000.00
Net present value 15,794.51

Project 2
Year Cash flow Pvif Factor 8% Present value
1 85,000.00 0.93 78,703.70
2 74,000.00 0.86 63,443.07
3 38,000.00 0.79 30,165.63
4 26,800.00 0.74 19,698.80
5 19,000.00 0.68 12,931.08
Total Present value 204,942.28
Initial Outlay - 175,000.00
Net present value 29,942.28

Project 3
Year Cash flow Pvif Factor 12% Present value
1 13,000.00 0.93 12,037.04
2 13,000.00 0.86 11,145.40
3 - 0.79 -
4 - 0.74 -
5 - 0.68 -
Total Present value 23,182.44
Initial Outlay - 22,700.00
Net present value 482.44

Ranking Rank
Project 2 1 Project 2 is ranked first in that it provides the highest Npv in 5 years
Project 1 2 Project 1 is ranked second in that it provides the second highest Npv in 5 years
Project 3 3 Project 3 is ranked third in that it provides the least Npv in 5 years
st Npv in 5 years
cond highest Npv in 5 years
Npv in 5 years
Current Ratio Mar-18 Dec-17
Current Assets 398,437.60 351,000.00
Current Liabilities 258972.375 168,000.00
Current Ratio 1.54 2.09

Account Receivable turnover Mar-18 Dec-17

Net credit sales 827,525.00
Average Receivables 188,790.00
Account Receivable turnover 4.38
Days in receivables period 83.27

Account Payable turnover Mar-18 Dec-17

Net credit sales 159,341.00
Average Receivables 410,000.00
Account Payable turnover 0.39
Days in payables period 939.18

Gross Profit Margin Ratio Mar-18

Gross profit 331,010.00
Net sales revenue 827,525.00
Gross Profit Margin Ratio 40%

Net profit Margin Ratio Mar-18

Gross profit 111,584.85
Net sales revenue 827,525.00
Net profit Margin Ratio 13%

Interest coverage ratio Mar-18

Earnings before interest and tax 166,269.00
Interest Expense 5,400.00
Interest coverage ratio 30.79

Return on Equity Mar-18

Net Income 111,584.85
Average shareholder funds 378,792.43
Return on Equity 29%

Debt to equity Ratio Mar-18

Total Liabilities 458,972.38
Shareholder equity 384,584.85
Debt to equity Ratio 1.19

Assets Turnover ratio Mar-18

Net Sales 827,525.00
Average Total Assets 784,718.80
Assets Turnover ratio 105%
Comments

The current ratio weakened in the period

The company projects inefficiency in collection of receivables

The company projects inefficiency in collection of receivables

The gross profit ratio was sufficient to cater for overheads

The net profit margin ratio was below 20% average

The company's are sufficient enough to repay its debts.

The company is able to generate sufficient income to its shareholders

The debt to equity ratio is well below 2 presenting a strong leveraged company

The company is efficient in deploying its assets to generate revenue.