Question

QUESTION 5 Next year, JuliJuli Sdn Bhd is planning for a major sales increase of 40%. Sales are currently RM30,000,000 and it is forecast that next year's sales will be RM42,000,000. Current assets are expected to increase in direct proportion with increase in sales. Similarly, account payable and accrued expenses are also expected proportionately es per the increase in sales. Fixed assets on the other hand will increase by RM1,000,000; and long term debt expected to remain constant. The net profit margin on ples in5 Required Fill in following table and project the firm's needs for discretionary cing Projected Level (RM in mill) Item Present Level (RM in mill) 30 Percent of Sales Item Sales Net Income Current assets Net fixed assets Total Assets 42 14 Current assets Net fixed assets Total Assets 20 Accounts payable 2 Accrued expenses Total Current Liabilities Long-term debt Total Liabilities Accounts payable Accrued expenses Total Current Liabilities Long-term debt Total Liabilities Common stock Retained eamings3 Common Equity ll Total L + 1-20 Common stock Retained earnings Common Equity Projected Sources of Financing Discretionary Financing Needs (DFN) Total financing needs- Total assets Projected RE-Present RE+Projected Net Incoce-Common Dividend -Present RE + Projected Net Income-(50% x Projected NI)

Answer 1

	Item	Present Level(RM million)	Percent of sales		Projected Level(RM million)
	Sales	30	100.00%		42
	Net Income	1.5	5.00%		2.10	(5% of 42)
	Current asset	14	46.67%	Current asset	19.60	(46.67% of 42)
	Fixed asset	6	20.00%	Fixed asset	7.00	(6+1)
	Total Assets	20	66.67%	Total Assets	70.7
	Accounts Payable	2	6.67%	Accounts Payable	2.80	(6.67% of 42)
	Accrued expenses	3	10.00%	Accrued expenses	4.20	(10% of 42)
	Total current liabilities	5	16.67%	Total current liabilities	7.00
	Long term Debt	4	13.33%	Long term Debt	4	(remains constant)
	Total Liabilities	9	30.00%	Total Liabilities	11.00
	Common Stock	8	26.67%	Common Stock	8
	Retained earnings	3	10.00%	*Retained earnings	4.05
	Common Equity	11	36.67%	Common Equity	12.05
	Total Liabilities+Equity	20	66.67%
				Projected Source of Financing
				Discretionary Financing Need	47.65	(70.7-20)-(11-9)-(12.05-11)