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You-are-the-boss Inc. has appointed you as their financial consultant .

The compan y requires you to advise them on the following: 1. Interview all the business heads, the finance team and get a sense of what ki nd of business projections they are looking at for the next three years 2. The company has a conservative management and wants to control the debt level s such that all unused cash has to first be applied towards repayment of short term debt. The ca sh has to be maintained at a minimum level as defined by the management. 3. The company at present has long term debt for which it has a systematic plan of repayment. 4. The company wants to maintain a dividend policy of 15% of the profits made du ring the current year, but the growth in the dividend should not be more than 20% of the dividend declared last year. 5. After having spoken with the finance honchos of the company, you have decided that the company should maintain a cash balance of Rs 55 Crores in the first projected ye ar, 65 crores in the second projected year and 90 crores in the third projected year. These projectio ns are based on the kind of working capital workings that you have done.

You have worked out a financial plan for the company after a running a simulatio n program based on the feedback that the various personnel provided you with. Projection recommendations for the next three years: (All amounts that are not p ercentage numbers are in crores)

Projected Year 1 Projected Year 2 Projected Year 3 Sales growth that can be projected over the previous year numbers 9.0% 11.5% 13.0% Cost of goods as a % of Sales 60.0% 57.6% 54.8% Selling, General Administration Expense as a % of sales 25.0% 27.0% 29.0% Capital Expenditure plan:

Plant & Machinery 78.0 125.0 145.0 Furniture 62.0 90.4 108.5 Loan repayment schedule

45.0 45.0 45.0

Depreciation as per Income Tax norms:

Plant & Machinery 7% depreciation block

Furnitiure is a 15% depreciation block

Projected Year 1 Projected Year 2 Projected Year 3 Short Term Debt repayment to take effect subject to the company maintaining a minimum cash level

Minimum level cash to be maintained 54.6 59.5 62.8

Other Net Expenses as a % of sales 2.5% 2.8% 3.0%

Interest Expense On Short term Debt (on average outstanding of current year and previous year) 9.5% 9.5% 9.5% On Long term Debt (on average outstanding for two years) 7.0% 7.0% 7.0% Interest Income NIL NIL NIL Income Tax provision 25.0% 28.5% 30.0%

Accounts Receivable level to be maintained as days COGS 30.0 days 45.0 days 45.0 days Inventory level to be maintained in days cost of sales 28.5 days

32.4 days 35.1 days Accounts Payable level to be maintained as days COGS 30.0 days 40.0days 45.0days Other current assets ( as a % of sales) 1.2% 1.8% 2.0% Deferred Income Taxes NIL NIL NIL Other Current Liabilities NIL NIL NIL

Income Statement and Balance Sheet for the financial year just completed Income Statement: Amount in Rupees crores

Amount Sales Revenue

1334.50 COGS

667.00 Gross operating margin


S G & A

373.30 Depreciation

75.20 Other Income Net (Income)/Exp

(8.20) EBIT


Interest Income

0.0 Interest Expense

23.70 Pre-Tax Income

203.50 Tax

72.60 Net Income

130.90 Dividends

40.10 Addition to Retained earnings


Balance Sheet : Amount in Rupees crores

Amount Cash & Marketable securities

28.40 Accounts Receivable

120.10 Inventories

116.80 Other current assets

97.50 Total Current Assets

362.80 Fixed Assets:

Gross Fixed Assets 913.10

Less: Accumulated Depreciation 427.90 485.20

Other Non-current assets

56.30 Total Non-Current Assets

541.50 Total Assets


Accounts Payable

80.50 Short term debt

110.30 Other Current Liabilities

11.30 Total Current Liabilities


Long term Debt

218.10 Differed Income Taxes

12.70 Other Non-current liabilities

94.50 Total Liabilities


Paid-in Capital

44.80 Retained Earnings

332.10 Total Shareholders Equity

376.90 Total Shareholder s Equity and Liabilities


Fixed Assets details for the current year

Plant & machinery gross

520.0 Accumulated Depreciation

244.4 Net



393.1 Accumulated Depreciation

183.5 Net