The Owl Corporation is planning for 20x2. The firm expects to have the following

Question

The Owl Corporation is planning for 20x2. The firm expects to have the following finandial result in 20x1 ($000) INCOME STATEMENT Revenue COGS Gross Margin Expenses EBIT Interest EBT Income tax Net Income $45,647 15,110 $30,537 13,294 $17,243 1,087 16,156 5,655 $10,501 100.0 33.1 66.9 29.1 37.8 2.4 35.4 12.4 23.0 BALANCE SHEET Assets Liabilities & Equity 1,31 Accts. Pay. 6,340 Accruals 2,518 Cash Accts. Rec. Inventory Curr. Assets Fixed Assets Gross 1,390 812 10,176 Crr. Liab. s 2,202 Capital 21,228 1,658 22,886 25,088 $29,679 Debt Accum. Dep. (1476 Equity $14,912 $25,088 Total Assets Management has made the following planning assumptions Total L & E Income Statement * Revenue will grow by 10%, The cost ratio will improve to 40% of revenues. * Expenses will be held to 48% of revenues. Balance Sheet . The year end cash balance will be $1.5 million. The ACP will improve to 40 days from the current 50. . Inventory turnover will improve to 8X from 6X Trade payables will contirue to be paid in 45 days New capital spending will be $6 million. Newly purchased assets will be depreciated over 10 years using the straight line method taking a full year's depreciation in the first year. The company's annual payroll will be $14.5 million at the end ot 20X2. . No dividends or new stock sales are plarned

Explanation / Answer

Income Statement ($000) Balance Sheet ($000) 20X2 Amount Amount Amount % Assets Liabilities & equity Revenue 50212 100% CoGS 20085 40% Cash 1500 A/c Payable 7390 Gross margin 30127 60% Expense 24102 48% A/c Rec. 7925 Accruals 282 EBIT 6025 12% Interest 2335 5% Inventory 3357 Current liab EBT 3690 7% other 2005 Inc Tac 1292 3% Curr.aseets Capital Net Income 2399 5% Debt 21228 Fixed assets Equity 1658 Gross 35679 2399 Accuml. Dep. -17511 18168 Total Assets 32956 Total L&E 32956

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