Prepare A Financial Forecast

 

 

You are the new financial manager of Northern Chemicals Ltd, a Kitale producer of specialized
chemicals for use in fruit orchards. Yo are in the process of preparing a financial forecast for 2022. The
company’s sales revenue for 2021 was $ 2 billion, and the marketing department is forecasting a 25%
increase for 2022. You think that the company was operating at full capacity in 2021 but you are not
sure about this. The interest rate on debt is 8%. The 2021 financial statements are shown below.
2021 Balance Sheet (in millions) % of Sales
Cash and Securities $20 1%
Accounts Receivable $240 12%
Inventories $240 12%
Total Current Assets $500
Net Fixed Assets $500 25%
Total Assets $1,000
Accounts Payable and Accruals $100 5%
Notes Payable $100
Total Current Liabilities $200
Long Term Debt $100
Common Stock $500
Retained Earnings $200
Total Liabilities and Equity $1,000
2021 Income Statement (in millions) % of Sales
Sales $2,000
Variable Costs $1,200 60%
Fixed Costs $700 35%
EBIT $100
Interest $16
EBT $84
Taxes(40%) $33.60
Net Income $50.40
Dividends(30%) $15.12
Additions to Retained Earnings $35.28
Required:
a) Prepare a financial forecast for 2022 assuming that the company was operating at full capacity
in 2021. (10 marks)
b) Assuming that in 2021, fixed assets had been operated at only 75% of capacity and that sales is
expected to increase to $3,000 million and not $2,500 million in 2022, calculate the fixed assets
requirement for 2022. Show all the workings. (10 marks)

 

Sample Solution

who, what, when, and where, sequencing with the terms first, next, then and last. Students were asked to caption one of the four major events from the book using their prior knowledge and anchor chart.

The state standards addressed in this learning segment are K.RL.KID.2 With prompting and support, orally retell familiar stories, including key details and K.W.TTP.3 With prompting and support, use a combination of drawing, dictating, and/or writing to narrate a single event. Students should be able to describe characters, events, and setting, using key details in their explanation of events.

The students in my classroom demonstrated proficiency when retelling the events of a story or book. Most students could complete a verbal retell of the events at an independent level, but some students struggled when trying to differentiate the events in the middle of the book (next and then) and needed some prompting from the teacher. When asked to retell the events of a story, students were asked to relay key details such as who, what, when and where. Students were able to retell the story with most of the details required, but it seemed that many students struggled to relay “when” an event occurred. When asked to retell the story presented in the learning segment, students were required to use sequencing terms, vocabulary presented, and key details from the text. When students became stumped or needed help, they received one-on-one support from the teacher during small-group work. In this learning segment, please note that Focus Student 1 falls below expectation (student with a 504 Plan), Focus Student 2 meets expectation, and Focus Student 3 exceeded expectation.

When asked to retell the events of the story from beginning to end (sequencing), the majority (89%) of students were able to do so without prompting from the teacher. There were the fewest number of struggling students in completing this aspect of the task; I believe this is due to the fact that we discussed the terms “first, next, then and last” in great detail before Lesson 2. Only two students were unable to sequence events using the terms first, next, then and last correctly. The largest number of students mastered this aspect of retelling a story, which can arguably be one of the most important factors of a retell. All 3 of my focus students were able to use correct sequencing terms when discussing the text.

When asked to use vocabulary from the text, most (79%) students were able to do so. Students exhibited basic understanding of vocabulary terms but struggled to explain how to apply their knowledge of sequencing to a new text. Students were generally able to define and explain how we find “who, where, when, and what” from the book, but about 1/3 of the class struggled with how to determine “when” an event occurred, as mentioned previously. When students were asked “when” something occurred in the book, they often became confused. This was a common error that occurred during the students’ retells of the story.

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