Fundamentals of Financial Management, Third Edition

SOLVED NUMERICAL PROBLEMS

1. P epare a proforma income statement if the sales in the current year amounting to Rs 6,00,000 are to move up in the next year by 10%. The cost of goods and the operating cost account for 60% and 10% respectively of the sale value. The interest payment during the current year is Rs 50,000. But, for increased sales, additional debt will be required and that will raise the interest payment to Rs 60,000. The tax rate is expected to remain unaltered at 30%.

   Solution

   Income Statement

   Items	Current year’s actuals Rs	Projected figures for next year Rs
   Revenue from sales	6,00,000	6,60,000
   Less cost of goods	3,60,000	3,96,000
   Margin of contribution	2,40,000	2,64,000
   Less operating cost	60,000