Question

Aiello Corporation anticipates that sales in 2018 will grow by 5%. The company reports the following...

Aiello Corporation anticipates that sales in 2018 will grow by 5%. The company reports the following in its December 2017 financial statements:

Sales

$114,620

Property plant and equipment, Dec. 31, 2017

$28,160

Property plant and equipment, Dec. 31, 2016

$26,470

2017 Depreciation expense / Property plant and equipment, Dec. 31, 2016

8.5%

2017 Capital expenditures / 2017 Sales

2.6%

Forecast the company’s 2018 Sales, depreciation expense, and cash outflow to acquire new Property, plant, and equipment.

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Answer #1

1. 2018 Sales: $120351

2018 Sales = 2017 Sales x 1.05 = $114620 x 1.05 = $120351

2. 2018 Depreciation expense: $2394

Depreciation expense/$28160 = 8.5%

Depreciation expense = 8.5% x $28160 = $2393.6

3. 2018 Cash outflow to acquire new property, plant, and equipment: $3129

Capital expenditures/Sales = 2.6%

2018 Capital expenditures = 2.6% x $120351 = $3129.126

Note: In the absence of specific instructions regarding rounding off, amounts have been rounded off to the nearest whole dollar. Kindly round off as required.

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