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A company is looking back at its forecast process for 2018 Fill in the blanks


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What elements of the forecast would you review if the company was not operating at full capacity and you want to ensure that its ratios did not change in 2018? This process is considered a post-mortem review to improve the forecast process for future years. (5 marks)

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FILL IN THE BLAN KS FACTS Use % of Sales
New Co. Method Financial Statements: Actual 2017 % Forecast 2013
Sales 500,000 100.0% 350,000
Cost of Goods Sold - 200,000 -40.0%
Other Fixed Costs - 150,000 -30.0%
Taxes - 50,000 -10.0%
Net Earnings 100,000 20.0%
Cash 25,000 5.0%
Accounts Receivable 50,000 10.0%
Inventorv 25,000 5.0%
Fixed Assets 250,000 50.0% Total 350,000 Not Applicable
Accounts Payable 50,000 10.0%
Long—term Debt 100,000
Common Stock 100,000 Same 100,000
Retained Earnings 100,000 Total 350,000 Not Applicable
Debt to Assets Target 28.6%
Debt to Equity Target 50.0%
Current Ratio (excludes cash) Target 1.50
ROE 50.0%
Note: 8 marks
1. No dividends are paid
2 marks State two issues about the impact of sales growth to the company in the forecast.
1

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