The X company is offering services.At the starting point,all capital is USD 500.000
linear depreciation will be 15%.In the first year of operation,sales amounted to USD 2 million, with direct costs of services sold representing 65% of sales, and
of materials needed for services rendered accounted for 15% of variable costs.The liabilities will be settled within 20 days.
extending customer payment terms by two weeks will increase interest in services by 15%. At the same time, due to significant competition among suppliers and subcontractors, it is possible to reduce the cost of services sold to 60%. To implement the strategy,you need to purchase additional fixed assets worth USD 400.000.The purchase will be financed with a 3-year investment loan of USD
payable at the end of the year. In addition, dividends are planned to be paid to owners in the amount of USD 80,000.The analysis also shows that at the end of year 2 some assets will be redundant.Therefore,at the end of this year.it is planned to sell part of the primary fixed assets with a book value of USD 80,000.for a market price of USD 85.000.Financial Director has established that starting second year the company will require the fix cash resources available at the level of USD 150 000 by the end of year. The company has been granted secured overdraft in the amount of USD 180 000 with 8% interest rate paid for used capital.
In the third year, compared to the second year,it is planned to 1 Increasing turnover by 10% 2)Increase in overheads expenses by 5% 3) Extension of payment deadlines for accounts payables to 28 days 4) Dividend payment of USD 100,000 5) Investment purchase - CAPEX at the beginning of the year for USD 100.000.The planned depreciation on this asset is to be 20% per annum.
In the fourth year,compared to the third year,it is planned to: 1Increasing turnover by 5% 2 Increase in overheads expenses by 5% 3) Payment of dividends of USD 100.000
Other parameters remain unchanged in relation to the third and fourth year.Based on the above data, please prepare the planned balance sheet, profit and loss account and cash flow statement for subsequent projection years. Please specify if the plans submitted are financially viable.
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