Business Administration 1220E Chapter Notes - Chapter 1: Income Statement, Interest Expense, Negative Number

• School: Western University
• Department: Business Administration
• Course: Business Administration 1220E
• Professor: Barbara Bruce

Document Summary

To examine the adaptability of the company to changes in market policies. To forecast any needs of the business (cash, debt, etc) *three sister accounts (a/r, a/p, inv) need to be estimated using days, then the. If there are weird fluctuations, can use the same days to assume worst case scenario. Income statement: projected order : cogs (same % trend, gross income (sales - cogs, beginning inv (ending inv. of previous year, ending inv. (same days trend, purchases (cogs + ending - beg. inv) *balance sheet = almost everything is same dollar (except for linear trends, then it would be same $ trend) Other expenses: same % if under operating exp. The ending inventory on last year"s statement is the beginning invt. on the current statement. Ending inventory = (projected cogs / 365) x # days of turnover inventory. Balancing account: *always the bank loan as the plug.