The management of Kosoko traders wants to establish the
amount of financial needs for the next two years.The
December 2016 is as
follows:
Shs.‘000’
Net fixed assets 124,800
Stock 38,400
Debtors 28,800
Cash 7,200
TotalAssets 199,200
Financedby:
Ordinary share capital 84,000
12%long-term debt 20,000
Trade creditors 36,000
Accrued expenses 24,000
TOTAL 199,200
For the year ended 31st December,2016sales amounted to sh.
240,000,000.The firm projects that the sales will increase by15%
in 2017and 20% in 2018.
After tax profit on sales has been 11% but the management is
pessimistic about future operating costs and use an
after-tax profit on sales rate of 8%per annum by 2018.The firm
intends to maintain it's dividend pay out ratio 80%.Assets are
expected to vary with sales,while trade creditors and accrued
expenses form the spontaneous sources of financing.Any external financing will be effected through the use of commercial paper.calculate amount of external financing.
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