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Essay / Research Paper Abstract
This 3 page paper uses a case study provided by the student to show of income statement projection can be made. The existing income statement is used for a fictitious company using forecasting to project revenues and then using ratios to assess the level of the different costs. The bibliography cites 2 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEshangproj.rtf
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Unformatted sample text from the term paper:
the past figures to project forward using the least squares regression, this looks to form a line between the past data points on a graph, which are the earnings in
this case, and then projects forward for what it is likely to be at future dates (Curwin and Slater, 2001). As an alternative the student may choose to increase earnings
by a set amount each year. We will calculate the costs as a proportion of revenues, based on the last year, for this cost of goods are assumed to
remain at 60%, sales and admin costs at 15%. We do not have the deprecation schedule so will use the forecast function for this and assume not more investments are
made. Under other payments we will assume there are no others, as we are not told of any. We will assume interest rate payments will remain the same, they
are likely to decrease, but this is a prudent measure, as we known that they will not increase and prudence is important in calculating financial values (Elliott and Elliott, 2007).
Taxes are assumed to b 15% of the net income, this is based on the past years, and rounds it to the nearest whole percentage. It is assumed that there
are no extraordinary items and that the shares outstanding remain the same. This gives us the following Income Statements (000s) Shang-wa Electronics 31/12/2005 31/12/2006 31/12/2007 31/12/2008 31/12/2009
Sales 129,041.20 154,983.27 176,799.43 201,431.62 224,166.53 Cost of sales 77424.718 92989.963 106079.66 120858.97 134499.92 Gross profit 51,616.48 61,993.31 70,719.77 80,572.65 89,666.61
Operating expenses: Selling, general and administrative 19,356.18 23,247.49 26,519.91 30,214.74 33,624.98 Research and development
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