Income Statement of Apollo Tools Pvt. Ltd. Forecast for the Next Financial Period The following is the income statement of Apollo Tools Pvt. Ltd. for two years, 2005–06 and 2006–07.
The company is planning to implement a modernisation programme costing Rs 4,00,000 as a result of which variable cost is expected to drop during FY 2007–08 by 10% and the sales are expected to grow by 12%.
1. Prepare a proforma income statement for FY 2007–08 based on per cent-to-sales method.
2. Do you feel that the company will need external financing for the modernisation programme?
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