Rondo Company-Financial Plans

Introduction Preparing a six- division monetary plan for the rondo Compevery begins with an ideal gross sales forecast. After analyzing rondels recent sales history from 2003 though 2005, sales and net income had grown course of study everywhere year between 8 and 10%. The race between sales and the various types of assets was important when calculating this six-year financial forecast. Key Assumptions Based on Rondos yearbook company gain of 5% to 10%, Rondo give continue to stay fresh their level of growth in sales oer the coterminous six-years, but volition have to sweep up slap-up to keep it up due to a fall in a bank loan beginning in 2008 of $2,500,000. Rondo will continue to operate at all-inclusive skill over the next six-years as assets grow proportionally with sales. Payables and accruals will grow proportionally with sales. Sales argon project to gain from $50,000,000 in 2005, to almost $80,000,000 in 2011, an increase of 60%. AFN (Additional capital Needed) Based on the six-year forecast, additional funds of $2,500,000 will be needed in 2008, and a 100% increase in 2009 of $5,000,000. AFN will continue to increase by 10% or $5,500,000 in 2010 and 18% or $6,500,000 in 2011. Since sales atomic number 18 projected to increase by a little over 7 % over the next six-years, the AFN changes dramatically because more assets would be required to finance additional sales.

Reasons and factors for this include: -Excess capacity lowers AFN. -Economies of alveolar plate lead to less-than-proportional asset increases. -Lumpy assets lead to large biennial AFN re quirements, recurring excess capacity. So a! s CFO of Rondo, I would pay sour all debts, steal back whatsoever stock and buy short-term investments to increase cash flow. out-of-pocket to Rondos steady genuine Ratio in the 1.9% - 3.0% range, the company should not have any problems covering its current liabilities. Rondos... If you want to aspire a abundant essay, order it on our website: OrderCustomPaper.com

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