1). Complete the budget projections for years 2021-2024 using the following information
Revenue increases 5% annually
Expense increases 2½% annually
For Depreciation and Interest expenses assume the Acutal 2020 figure as the base for the budget and forecast.
2). Answer the question below the forecast.
1). Largo Global Income Statement of December 31, 2020 (millions)
ACTUAL BUDGET FORECAST
2020 2021 2022 2023 2024
Sales (net sales) $2,013
Cost of goods sold 1400
Gross profit 613 0 0 0 0
Selling, general, and administrative expenses 125
Earnings before Interest, taxes, depreciation, and amortization (EBITDA) 488 0 0 0 0
Depreciation and amortization 174
Earning before interest and taxes (EBIT) Operating income (loss) 314 0 0 0 0
Interest expense 141
Earnings before taxes (EBT) 173 0 0 0 0
Taxes (34%) 59
Net earnings (loss)/Net Income $114 0 0 0 0 2). Based on the changes suggested throughout the 5 projects, is Largo Global in a better financial position?
Sample Solution