Numericals Forecasting

1. Following is the summarized balance sheet of Progressive Ltd. as on 31st March, 2005

Liabilities Rs. lakhs Assets Rs. lakhs

Share Capital 800000 Fixed Assets 448000
Reserves 1184000 Inventories 1152000
Bank overdraft 576000 Debtors 1600000
Trade Creditors 640000
3200000 3200000

Trade creditors are equal to last month’s purchases and debtors are equal to last two
months’ sales. For half the year ending 31-3-2005, sales amounted to Rs. 5042000 and
gross profit was earned at a uniform rate was Rs. 1008000.
The following estimates and information are available:
a. With effect from 1-4-2005, goods purchased will cost 25% higher and sales price will
be increased by 20%.
b. Sales and purchases are spread evenly throughout the year.
c. Credit terms for sales and purchases will remain unchanged.
d. Value of closing stock of 30-9-2005 is expected to be 10% higher than on 31-3-2005.
e. All expenses will be paid within the month in which they accrue and are estimated at
Rs. 64000 per month.
f. No fixed assets are expected to be purchased or sold during the period.

You are required to prepare Proforma balance sheet for Progressive Ltd. for the half year
ended 30-9-2005.
2. The balance sheet of Anubhav Ltd. as on 31st March 2005 is as follows:

Liabilities Rs. lakhs Assets Rs. lakhs

Share Capital 200 Fixed Assets 500
Reserves 140 Inventories 300
Long term loans 360 Receivables 240
Short term loans 200 Cash and Bank 60
Payables 120
Provisions 80
 1100 1100

Sales for the year were Rs. 600 lakhs and for the year ending March 2006 sales were
increase by 20%. The profit margin and dividend payout ratio are expected to be 4% and
50% respectively.
You are required to
1. Quantify the EFR

3. Black Berry has an equity capital of 12 million, total debt of 8 million and sales last year
were 30 million:

It has a target asset to sales ratio of 0.667, a target net profit margin of 0.04, a target D/E ratio of
0.667 and a target earnings retention rate of 0.75. In a steady state what is its sustainable growth
rate? RK 19.3

Sustainable Growth Rate = b (NP/S) (1 + D/E) / (A/S) – [b (NP/S) (1 + D/E)]

 4. Calculate the internal growth rate of Company A and B:

Company A Company B
Earnings per Share 5 6
Dividend per Share 3 3.5
Net Income 65 70
Total Assets 140 155

Internal Growth Rate = ROA * b / 1 - (ROA * b)

ROA = Return on Assets = PAT/ Total Assets

b = Retention ratio

Answer    
ROA 0.46 0.45
B 0.40 0.42
IGR 0.23 0.23

5. The following information are available for Rainbow Ltd:

A/S = 0.8 ΔS = Rs.60 lakhs L/S = 0.5

M = 0.04 S1 = Rs. 500 lakhs D = 0.6

There will no change in level of investment and no repayment of term loan in the next year.
Estimate the external funds requirement.

EFR = (A/S – L/S) ΔS - MS1 (1 – D).

Profit & Loss for the year ended and Balance sheet of Deepam Silks
for years 1 and 2
  Year 1 Year 2
Revenue from Operations 600 720
Expenses    
Material expenses 300 344
Employee Benefit expenses 150 172
Finance costs 10 12
Depreciation and amortisation expenses 30 40
Other expenses 86 100
Total Expenses 576 668
Profit before exceptional items and other
income 24 52
Exceptional items 10 8
Profit before extraordianry items and tax 34 60
Extraordinary items    
Profit before tax 34 60
Tax expense 14 26
Profit/ Loss for the period 20 34
Dividends 12 15
Retained earnings 8 19
     
Equity and Liabilities    
Shareholders' Funds    
Share Capital (Par Value Rs.10) 120 120
Reserves & Surplus 150 169
     
Non-current liabilities    
Long term borrowings 35 58
Deferred Tax liabilities    
Long-term provisions 5 11
     
Current liabilities & Provisions    
Short tern borrowings 20 22
Trade creditors 125 130
Other current liabilities 5 5
Short term provisions 40 45
  500 560
Assets    
Non current assets    
Fixed assets 240 270
Non current investments 7 8
Long term loans and advances 20 18
     
Current assets    
Current investments 3 2
Inventories 125 144
Trade Receivables 80 90
Cash and cash equivalents 5 6
Short term loans and advances 20 22
Total 500 560