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Finance & Accounting
Pages 3 (753 words)
This report is about forecasts of the financial performance of a soft drink company, which will start its operations from January 2013.The forecast relates to the company’s income statement,balance sheet and a monthly cash flow
The report also explains further information that needs to be reviewed to make the findings more meaningful. This performance analysis can be used by the management, the shareholders or the potential investors to identify with the performance of the company and in particular assess its strengths and weaknesses. Assumptions The following information is available for preparation of the marginal costing cost statement ?/Unit Direct materials 0.04 Direct labour 0.15 0.19 Selling price 0.5 The fixed production overheads include depreciation amounts to ?3,000 per month. For the first month, the sales are forecasted to be 1000 units and 1,200 units will be produced. A fixed selling cost of ?1,500 per month and a variable selling cost of ?0.02 per unit will be budgeted. There are no opening stocks. Discussion The company is projected to maintain a current ratio of 1.66 (53,800/32,433), which is a very healthy liquidity level and which will ensure that the company is able to service its short-term liabilities using short-term assets without difficulties. This also means that the company’s financial position will be strong and it will be hard for it to be declared bankrupt whatsoever. The company is expected to generate a shareholder’s equity of 42,248, a part of which will come from paid in capital and the other part will be raised from the sale of new stock. ...
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