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# Business Finance - Assessment - Research Paper Example

## Extract of sample Business Finance - Assessment

Sales growth for this is forecasted to be 14.109% using the geometric mean method. Since the increase in Assets was not large enough therefore no extra funding was required and hence no new debt was raised or no new stocks will be issued. All the funding required will be done through retained earnings the company has from previous years.
...
120197.63

72787

Total stock
27242

27242
Retained earning
7374.77

35666
Total share hold. Eq.
34616.77

62908
Liability + equity
154814.4

135695

2007

2006
Current Assets
27756.956
14.109%
24329
Non current Assets
127057.46
14.09%
111366
Total Assets
154814.4
14.109%
135695

Clarifying points
It is assumed that assets are increasing at the same rate as that of sales
Total Assets are increasing by the amount 191194
Retained earnings 35666. Therefore the increase in assets will be funded by retained earnings.
Still after the funding a large amount of retained earning is still left and hence would be used to pay off some long term debts.
Div. payout ratio is assumed to constant and is equal to 41%, it means retained earnings will be 59% (calculated from Balance sheet figures)
The variation is put in other liabilities to balance both the sides of balance sheets.
Current Debt to Equity Ratio is = Total debt / Total equity = 3.1722 for 2007 as compared to 1.15 for last year
Current ratio = current asset / current liabilities = 1.1409 for 2007 as compared to 1.217 for last year
ROA = N. Income / Total Assets = 8.07% for 2007 as compared to 6.39% for last year
Debt to Asset ratio = Total Debt / Total Assets = 77.63% for 2007 as compared to 53.64% for 2006
Times Interest earned = Earning before interest and taxes / Interest payment = 30.121 as compared to 8 % for last year.
Summary
Sales growth for this is forecasted to be 14.109% using the geometric mean method. Since the increase in Assets was not large enough therefore no extra funding was required and hence no new debt was raised or no new stocks will be issued. All the funding required will be done through retained earnings the company has from previous years.

## Summary

The assignment required to analyze the financial statements of a company preferably which is growing and is not a financial institution. The chosen company is Procter and Gamble. The data under analysis is from years 2006 to 2002.the consolidated balance sheet and the statement of earnings is given in appendix for year 2006.
Author : schummdarby
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