MNC Limited company's financial statements for FY 2024-25 are provided: Income Statement (₹ in Cr.) Sales revenues 7500 Costs and expenses 7300…

(i) External Funding Requirement in case of 65% capacity utilization With only 65% Utilization, growth by 40% can be achieved without any corresponding increase in Fixed Assets (65*1.4 times = 91%) External Funding Requirement through Long Term Debt (₹ in Crore) Expected Sales Revenue (7500 x 1.4) 10500 Costs and Expenses (7300 x 1.4) 10220 Income before taxes 280 Taxes (30%) 84 Net Income 196 Dividend Payout@25% of 196 49 Retained Earnings/ Internal Sources of Funds 147 Additional Funds Required (2000 – 1500)*0.4 200 Balance to be met from Long Term Debt 53 (ii) External Funding Requirement in case of 95% capacity utilization With only 95% Utilization, growth by 40% can be achieved by corresponding increase in Fixed Assets of 1320Crore (95%*1.4 times = 1.33 times of existing Fixed Assets of 4000Crore). Projected Fixed Assets increase to 5320 Crore. External Funding Requirement through Long Term Debt (₹ in Crore) Expected Sales Revenue (7500 x 1.4) 10500 Costs and Expenses (7300 x 1.4) 10220 Income before taxes 280 Taxes (30%) 84 Net Income 196 Dividend Payout@25% of 196 49 Retained Earnings/ Internal Sources of Funds 147 Additional Funds Required (8120 – 2100 – 2000 – 2500) 1520 Balance to be met from Long Term Debt 1373 Alternative Solution (i) Computation of EFR if company is operating at 65% capacity usage of Fixed Assets. Full Capacity Sales = Actual Sales / % of capacity at which fixed assets were operated = 7500 crore / 0.65 = 11538.4615 Crore Actual Fixed Asset Ratio should be = 4000 Crore /11538.4615 Crore = 0.3467 Revised Fixed Assets = 10,500 x 0.3467 = 3640.35 crore Proforma Income Statement ₹in Crore Sales Revenue 10,500 Less: Cost and Expenses 10,220 Income Before Tax 280 Tax @ 30% 84 Profit after Tax 196 Less: Dividend Paid 49 Retained Earning 147 Proforma Balance Sheet ₹in Crore ₹in Crore Equity 2000.00 Fixed Assets 3640.35 Retained Earnings 147.00 Current Assets 2800.00 Long Term Debt (Bal. Figure) 2193.35 Current Liabilities 2100.00 6440.35 6440.35 EFR = 2193.35 Crore -2500 Crore = 306.65 Crore Alternatively, it can also be computed using the Formula as follows: = [(F 0 / S 0 ) x Revised Sales - F 0 ] + [(C A - C L ) / S] × AS - Net Profit (1 – d) = (3640.35 - 4000) + [(2000 - 1500) / 7500] × 3000 - (196 - 49) = -359.65 + 200 – 147 = -306.65 Crore (ii) Computation of EFR if company is operating at 95% capacity usage of Fixed Assets. Full Capacity Sales = Actual Sales / % of capacity at which fixed assets were operated = 7500 crore / 0.95 = 7894.7368 Crore Actual Fixed Asset Ratio should be = 4000 Crore / 7894.7368 Crore = 0.5067 Revised Fixed Assets = 10,500 x 0.5067 = 5320.35 crore Proforma Income Statement ₹in Crore Sales Revenue 10,500 Less: Cost and Expenses 10,220 Income Before Tax 280 Tax @ 30% 84 Profit after Tax 196 Less: Dividend Paid 49 Retained Earning 147 Proforma Balance Sheet ₹in Crore ₹in Crore Equity 2000.00 Fixed Assets 5320.35 Retained Earnings 147.00 Current Assets 2800.00 Long Term Debt (Bal. Figure) 3873.35 Current Liabilities 2100.00 8120.35 8120.35 EFR = 3873.35 Crore -2500 Crore = 1373.35 Crore Alternatively, it can also be computed using the Formula as follows: = [(F 0 / S 0 ) x Revised Sales - F 0 ] + [(C A - C L ) / S] × ΔS - Net Profit (1 – d)