Scribd
Upload
112 views1 page

Activity 2 Finma

The first document provides budgeting information for Apparell, Inc including a budgeted income statement, sales budget, expense budget, and inventories. It asks to prepare a budgeted income statement and budgeted cost of goods sold. The second document provides financial information for a company and asks to calculate the additional capital needed to support a 20% increase in sales using the AFN formula. The third document provides financial information for two companies, including EBIT, interest expense, preferred dividends, and tax rate for the first company, and sales, profit margin, asset turnover, and liabilities for the second company. It asks to calculate the degree of financial leverage

Uploaded by

Diomela Biongan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
112 views1 page

Activity 2 Finma

The first document provides budgeting information for Apparell, Inc including a budgeted income statement, sales budget, expense budget, and inventories. It asks to prepare a budgeted income statement and budgeted cost of goods sold. The second document provides financial information for a company and asks to calculate the additional capital needed to support a 20% increase in sales using the AFN formula. The third document provides financial information for two companies, including EBIT, interest expense, preferred dividends, and tax rate for the first company, and sales, profit margin, asset turnover, and liabilities for the second company. It asks to calculate the degree of financial leverage

Uploaded by

Diomela Biongan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Activity 2 _ FinMa

Budgeting

1. Apparell, Inc with P10 million of par stock outstanding plans to budget earnings of 6%, before income tax, on this
stock.

The Marketing Department budget sales at 6 million. The budget director approves the sales budget and expenses as follows:
Marketing 15% of sales
Administrative 5% of sales
Finance cost 1% of sales

Labor is expected to be 50% of the total manufacturing costs, materials issued for the budgeted production will cost
P1,250,000; therefore any savings in manufacturing cost will have to be in factory overhead.
Inventories are as follows: Jan 1 Dec 31
Finished Goods 400,000 500,000
WIP 50,000 150,000
Raw materials 250,000 200,000

Required: Prepare the following


1. Budgeted income statement
2. Budgeted Cost of Goods Sold

AFN
1. A company recently reported sales of P200 million, and net income equal to P10 million. The company has P140
million in total assets. Over the next year, the company is forecasting a 20 percent increase in sales. Since the company is at full
capacity, its assets must increase in proportion to sales. The company also estimates that if sales increase 20 percent,
spontaneous liabilities will increase by P6 million. If the company’s sales increase, its profit margin will remain at its current
level. The company’s dividend payout ratio is 30 percent. Based on the AFN formula, how much additional capital must the
company raise in order to support the 20 percent increase in sales?

Leverage
1. A firm has EBIT of P375,000, interest expense of P75,000, preferred dividends of P6,000 and
a tax rate of 40 percent. The firm's degree of financial leverage at a base EBIT level of P375,000
is ________.

2. Jose Company has P4 million in yearly sales. The firm earns 3.5% on each peso of sales and turns over its assets 2.5
times a year. It has P100,000 in current liabilities and P300,000 in long-term liabilities.

Required:
1. What is ROE?
2. What will be the new ROE if total assets turnover goes up to 3. Assume that asset base remains the same,
and profit margin stays the same as do current and long-term liabilities?

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy