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The balance sheet of Deepak Cables Limited on December 31, 20X0 is shown below:
The sales of the firm for the year ending on December 31, 20X0 were 1,000. Its profit margin on sales was 6 percent and its dividend payout ratio was 50 percent. The tax rate was 60 percent. Deepak Cables expects its sales to increase by 30 percent in the year 20X1. The ratio of assets to sales and spontaneous current liabilities to sales would remain unchanged. Likewise the profit margin ratio, the tax rate, and the dividend payout ratio would remain unchanged. Required: 1. Estimate the external funds requirement for the year 20X1. 2. Prepare the following statements, assuming that the external funds requirement would be raised equally from term loans and short-term bank borrowings
: (i) projected balance sheet and
(ii) projected profit and loss account.
