Pro Forma Income Statement and Balance Sheet Essay

Pro Forma Income Statement and Balance Sheet - Essay Example This is done by dividing the balance for these accounts by sales revenue for 2013. The Balance Sheet accounts, which generally vary closely with Sales are cash, inventory, accounts payable, and accounts receivable. Fixed Assets are also often tied closely to Sales, unless there is excess capacity. On the Income Statement, costs are expressed as a percentage of Sales. Since we are assuming that all costs remain at a fixed percentage of Sales, net Income can be expressed as a percentage of sales indicating the profit margin. Taxes are expressed as a percentage of taxable income to determine the tax rate. The next step is constructing the Partial Pro-forma Financial Statements. The first step involves determining the forecast sales level for the company. One plus the forecasted growth rate in Sales multiplied by the sales for the year 2013 yields the sales forecast for 2014. The following formula explains this step. To obtain the growth rate, we compare the sales level of 2013 to the sales level of 2011 and 2012. There was a 1.6% drop in sales from 2011 to 2012. In 2013, the drop in sales was 3.1%. the average drop in sales for the two year period was 2.35%. therefore, the forecasted sales level for 2014 will be; After determining the sales forecast, the income statement and balance sheet accounts that vary directly with Sales are determined by multiplying the percentages by the Sales forecast. The accounts that do not vary directly with Sales are transferred to the Partial Pro-Forma Financial Statements without adjustments. The last step of constructing the pro forma financial statements is determining the external finance needed. External finance needed is the difference between partial pro-forma total assets and partial pro-forma total liabilities and owners equity. The amount for Garmin Ltd is 4887221-4879603 = 7618. Firms can choose to raise the external finance needed by

Closure of Business Essay Example | Topics and Well Written Essays - 1500 words

Closure of Business - Essay Example The promotion of the welfare of the working class is a recognized policy but an employee’s tenure is not a perpetual right intended to destroy or oppress the employer. The employer, therefore, has the prerogative to exercise in good faith the right to close the operation of the business, either totally or partially. The employer cannot be compelled to continue to operate its business but must nevertheless comply with legal processes before it can implement the cessation of its business or reduction of its operations. To manifest good faith, the employer must define the criteria in an objective and fair manner on who will be retained and who will be let go through the redundancy plan and thereafter, notify the employees affected in writing. It is not enough though to notify the employees, the issue must be explained to them individually. It is further required for the employer to consult and listen to the suggestions of the employees to forestall termination. And, if other alte rnatives or options are available then the same must be explored as opposed to the implementation of redundancy or termination phase.There are two options presented by Sally thus it shall be discussed separately.The first scenario is to close the shop completely due to losses. The lack of business transaction validates the severance of employment. Since it is within the discretion of Sally to cease business operation, she cannot be compelled to continue operating at a loss due to misplacing sympathy to the employees.... It is not enough though to notify the employees, the issue must be explained to them individually. It is further required for the employer to consult and listen to the suggestions of the employees to forestall termination. And, if other alternatives or options are available then the same must be explored as opposed to the implementation of redundancy or termination phase. There are two options presented by Sally thus it shall be discussed separately. The first scenario is to close the shop completely due to losses. The lack of business transaction validates the severance of employment. Since it is within the discretion of Sally to cease business operation, she cannot be compelled to continue operating at a loss due to misplace sympathy to the employees. However, she must pay redundancy payment to the dismissed employees who have rendered continuous service at least two years reckoned at the date of the dismissal. If an alternative work offer is made to the employee that is of similar conditions, pay, status and other benefits to the employee’s present position, he is free to accept or reject the offer. However, if it is shown that the offer is unreasonably rejected the employees can no longer demand redundancy pay and worse consequence of such refusal shall exempt the employer from paying the same. Applying the foregoing standard, Greg shall not be entitled to redundancy payment as he can be re-assigned to Sally’s other business offices pursuant to his contract. If the offer to be re-assigned is refused by Greg, he cannot make a claim for redundancy payment. Nevertheless, Greg can fight the re-assignment on ground that it is a diminution of his present status not to mention that his salary is substantially reduced. In all