Question

Project the Tax amount for the FY2020 using the tax % average calculated

You are an intern with an equity research organization. You have been given the task to project the values of certain income statement and balance sheet items for the next year (FY2020) for ABC Ltd (Your current time=0 is FY ending 2019). You have collected information about the historical income statement and balance sheet items. The historical information is provided in Table 1.

Table 1

PARTICULARS (All values in INR crores)	FY2019	FY2018	FY2017	FY2016
Sales Revenue	17273.00	15463.00	14789.00	13636.00
EBITDA	12213.00	9385.00	10237.00	Not given
Depreciation expense	1811.00	745.00	645.00	Not given
EBIT	10402.00	8640.00	9592.00	Not given
Interest	0.00	0.00	0.00	Not given
EBT	10402.00	8640.00	9592.00	Not given
Tax	2600.50	2160.00	2398.00	Not given
Net Profit	7801.50	6480.00	7194.00	Not given
Net PPE	17032.00	14522.00	13064.00	12813.00

Net PPE: Net Property Plant and equipment (Balance sheet item)

Answer 1

ARTICULARS (All values in INR crores)	FY2020	FY2019	FY2018	FY2017	FY2016		2020	2019	2018	2017	Basis of Projection	Remarks for Estimation & Assumption
Sales Revenue	20,528.96	17,273.00	15,463.00	14,789.00	13,636.00		18.85%	11.71%	4.56%	8.46%	Change in Sales compared to last year	Sales estimated at same growth rate was in 2019
EBITDA	16,568.92	12,213.00	9,385.00	10,237.00	Not given		80.71%	70.71%	60.69%	69.22%	Percentage of EBITDA to Sales	EBITDA estimated @ 80.71% as 10% growth rate notice in last year
Depreciation expense	3,276.96	1,811.00	745.00	645.00	Not given		19.24%	12.47%	5.70%	5.03%	Percentage of Dep. to PPE of last year	Depreciation estimated @ 19.24% of last year PPE
EBIT	13,291.97	10,402.00	8,640.00	9,592.00	Not given			20.39%	-9.92%		EBITDA - Depreciation expenses
Interest	-	-	-	-	Not given							Assumed not borrowing in 2020. So no interest expenses
EBT	13,291.97	10,402.00	8,640.00	9,592.00	Not given						EBIT - Interest
Tax	3,322.99	2,600.50	2,160.00	2,398.00	Not given		25%	25%	25%	25%	Tax = EBT * 25%	Tax rate as same in all year @ 25%.
Net Profit	9,968.98	7,801.50	6,480.00	7,194.00	Not given						EBT - Tax
Net PPE	20,000.00	17,032.00	14,522.00	13,064.00	12,813.00		99.00%	98.60%	93.91%	88.34%	Percentage of PPE(Net) to Sales	Estimated at 99% of sales but restricted to 20,000