Projected Financial Statement

For

SLASH COMPANY

Group no.1

Felipe, Jean Carla M.

Delos Reyes, Ella Nicole L.
Ramos, Clouie Carl
Villanueva, Vince Paolo
Fraga, Hervie L.
 Problem
Before the end of 2015, the president of SLASH Company had instructed the Vice President for
Finance to prepare 2016 projected financial statements based on their most recent planning
workshop. Based on the results of the planning workshop, the following assumptions were
prepared for the 2016 projected financial statements.

A. Sales are expected to increase by 10% in 2016 from 2015 sales level. The sales from
2015 was 25,000,000 Php.

B. The following financial statement accounts are expected to vary with sales based on the
2015 financial statements:

Cost of Sales 75.00%

Cash 1.80%
Trade and accounts receivable 4.50%
Inventories 8.75%
Other current assets 2.00%
Trade accounts payable 7.55%

Variable operating expense is 8.5% sales. Depreciation expense is 10% of the gross
beginning balance of property, plant and equipment. As of December 31, 2015, the
gross balance of the PPE is 12,000,000 Php. For January 2016, 3,000,000 Php worth of
new PPE will be acquired. It is the policy of the company that the PPE would be acquired
in the first half of the year will be depreciated for one full year

C. The beginning balance of Loan Payable is 2,500,000 Php and it is expected an additional
loan on 2016 for 200,000 Php. No loan is yet to mature on 2016. Interest for 2016 will
be 250,000 Php

D. Capital stock and retained earnings were valued at 4,500,000 Php and 2,500,000 Php
respectively on 2016 with no transaction relating to the capital stock

E. Income tax rate is 30% of the income before taxes. 75% of the income tax expense will
be paid in 2016 while the balance will be paid on 2017

F. Cash dividends of 500,000 Php will be paid for 2016

 PROJECTED FINANCIAL STATEMENT
     
SLASH COMPANY
PROJECTED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDING DECEMBER 31, 2016
     
Sales Php 27,500,000.00  
Less: Cost of Sales Php 20,625,000.00  
Gross Profit   Php 6,875,000.00
Less: Operating Expense    
Variable Expense Php 2,337,500.00  
Depreciation Expense Php 1,500,000.00  
Interest Expense Php 250,000.00 Php 4,087,500.00
Net Income Before Tax   Php 2,787,500.00
Less: Tax (75% of 30%) Php 627,187.50  
Net Income After Tax   Php 2, 160,312.50
     
SLASH COMPANY
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDING DECEMBER 31, 2016
     
ASSET
Current Asset    
Cash Php 495,000.00  
Trade Accounts Receivable Php 1,237,500.00  
Inventories Php 2,406,250.00  
Other Current Assets Php 550,000.00  
Total Current Asset   Php 4,688,750.00
Non-Current Assets    
Property, Plant & Equipment Php 13,800,000.00  
Total Non-Current Asset   Php 13,800,000.00
Total Assets   Php 18,488,750.00
     
LIABILITIES AND OWNER'S EQUITY
Current Liabilities    
Trade Accounts Payable Php 2,076,250.00  
Income Taxes Payable Php 188,156.25  
Loans Payable Php 2,700,000.00
Total Liabilities    Php 4,964,406.25

Stock Holder's Equity    

Capital Stock Php 4,500,000.00  
Less: Dividends (Php 500,000.00)  
 Retained Earnings Php 2,500,000.00  
Total Equity   Php 6,500,000.00
Total Liabilities and Owner's Equity   Php 11,464,406.25
External Financing Needed Php 7, 024,343.75

Conclusion:
The Vice President for finance after solving and taking into consideration the projections

mentioned above was able to come up with the company’s financial projection for 2016. After

computing the Vice President for Finance arrived to a conclusion:

There are NO excess funds needed by the Slash Company.

This is because the value of the company’s assets (PHP 18,488,750.00 )

is equal to the value of the company’s liability and equity ( PHP 18,488,750.00 ).

The balance of the components signifies that the company is in a stable position and is ready to

continue with their operations.

With this the VP for Finance can recommend to the board that their company can venture out

into new projects that can get them more income.

The company is in good position, and in the best position to succeed even more.
This is how the cost of sales was computed:

COST OF SALE
Cost of sales percentage in 2016 = 75%
75% X 27,500,000
Projected cost of sales in 2017 =

Projected cost of sales in 2017 = Php 20,625,000

The operating expenses were computed as follows:

Variable (8.5% x sales of 27,500,000) 2,337,500

Fixed ( Depreciation Expense ) 15,00,000
Total Operating Expense Php 3,837,500

Depreciation expense is 10% of the beginning balance of gross PPE of P26 million and the new
acquisition of PPE worth P5 million.

This is how the following balance sheet accounts were computed:

CASH
Cash as a percentage of sales in 2016 = 110%
Projected cash in 2017 = 110% x 25,000,000
Projected cash in 2017 = 27,500,000

ACCOUNTS RECEIVABLE
Accounts Receivable as a % of Sales in 4.50%
2015 =
Projected Accounts Receivable in 2017 = 4.50% X 27,500,000

Projected Accounts Receivable in 2017 = 1,237,500

INVENTORIES
Inventories as a % of sales in 2016 = 8.75%
 Projected Inventories in 2017 = 8.75% X 27,500,000

Projected Inventories in 2017 = 2,406,250

OTHER CURRENT ASSETS

Other Currents Assets as a % of sales in 2%
2016 =

Projected other Current Assets in 2017 = 2% X 27,500,000

Projected other Current Assets in 2017 = 550,000

LIABILITIES AND EQUITY

EFN = Change in Total Assets – (Change in Total Liabilities + Total Change in Stockholder’s Equity)

TRADES ACCOUNTS PAYABLE

Accounts Payable as a % of Sales in 2016 = 7.55%
Projected Accounts Payable in 2017 = 7.55% X 27,500,000
Projected Accounts Payable in 2017 = 2,076,250

INCOME TAXES PAYABLE

Accounts Payable as a % of Sales in 2016 = 7.55%
Projected Accounts Payable in 2017 = 7.55% X 27,500,000
Projected Accounts Payable in 2017 = 2,076,250

NET INCOME BEFORE TAX

Net Income before Tax Gross Profit - Operating Expense
Php 2,787,500.00 6,875,000 - 4,087,500

TAX 30%
Less: Tax 30% Net Income before Tax X 30%
Php 836,250.00 2,787,500.00 X 30%

NET INCOME AFTER TAX

Net Income After Tax Net Income before Tax - Less Tax (30%)
Php 1,951,250 Php 2,787,500.00 - Php 836,250.00

PROPERTY PLANT AND EQUIPMENT

201 Net Income before Tax - Less Tax (30%)
Php 1,951,250 Php 2,787,500.00 - Php 836,250.00