Hyper Drive Co is an early stage growth company and they need to plan for their capital requirements for the upcoming year. What working capital increases and PP&E investments should they be prepared for given the following given the revenue projections they have? Show work and please state any assumptions made. Current Year: Revenue: $350 million COGS: $195 million Working Capital: $80 million PP& E: $500 million Next Year: Sales Forecast Projects: $500 million in Revenue COGS will remain the same as a % of sales, as will Asset Turn.
| Fig. in mlns. | Current Yr | Forecast | Inc.% | |
| Revenue | 350 | 500 | (500-350)/350= | 42.86% |
| Less: COGS | 195 | 278.57 | ||
| Earnings | 155 | 221.43 | ||
| NWC | 80 | 114.29 | ||
| PP&E | 500 | 714.29 | ||
| 580 | 828.57 | |||
| ATO | 0.6034 | 0.6034 | ||
| Working capital & PPE increase with sales=Increase in sales % | ||||
| ie. (500-350)/350= 42.86% | ||||
| Increase in Working capital=80*0.4286= $ 34.29 | ||||
| Increase in PP&E =500*0.4286= $ 214.30 | ||||
Hyper Drive Co is an early stage growth company and they need to plan for their...