Please help i am very much confused to have this question. O No 5 Hassan textile anticipates reaching a sales level of Rs. 6 million in oneThe company expects earnings after taxesyear.during the next year to equalRs.400,000. During the past several years, the company has been paying Rs.50,000 individends to its stockholders. The company expects to continue this policy for atleast the next year. The actual balance sheet and income statement for Hassan textile during 2018follow.Hassan textile Ltd. Balance Sheet as of December 2018Accounts payableNotes payableCashRs. 200,000Rs. 600,000Account Receivables400,000500,000Long-term debtStockholders' equityTotal liabilities and equityInventories1,200,000200,000Fixed Assets, net500,0001,000,000Total AssetsRs. 2,300,000Rs. 2,300,000Hassan textile Ltd. Income Statement for the Year ending December2018Rs. 4,000,000Rs. 3,700,000Rs. 300,000SalesExpenses, including interest and taxesEarnings after taxesa. Using the percentage of sales method, calculate the additional financing Hassan textilesLtd. will need over the next year at the Rs. 6 million sales level. Show the pro formabalance sheet for the company as of December 31, 2019, assuming that a sales level ofRs. 6 million is reached. Assume that the additional financing needed is obtained in theform of additional notes payable.b. If the Hassan textile's banker requires the company to maintain a current ratio equal to1.6 or greater, what is the maximum amount of additional financing that can be in theform of bank borrowings (notes payable)? What other potential sources of financing areavailable to the company?

Statement of financial position is a part of financial statements which aims at showing the book…

a. Using the percentage of sales method, calculate the additional financing Hassan textiles Ltd. will need over the next year at the Rs. 6 million sales level. Show the pro forma balance sheet for the company as of December 31, 2019, assuming that a sales level of Rs. 6 million is reached. Assume that the additional financing needed is obtained in the form of additional notes payable. b. If the Hassan textile's banker requires the company to maintain a current ratio equal to 1.6 or greater, what is the maximum amount of additional financing that can be in the form of bank borrowings (notes payable)? What other potential sources of financing are available to the company?

a. Using the percentage of sales method, calculate the additional financing Hassan textiles Ltd. will need over the next year at the Rs. 6 million sales level. Show the pro forma balance sheet for the company as of December 31, 2019, assuming that a sales level of Rs. 6 million is reached. Assume that the additional financing needed is obtained in the form of additional notes payable. b. If the Hassan textile's banker requires the company to maintain a current ratio equal to 1.6 or greater, what is the maximum amount of additional financing that can be in the form of bank borrowings (notes payable)? What other potential sources of financing are available to the company?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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