As a senior financial analyst at Wemma Capital, you have been tasked by the chief investment manager to develop a financial model for a new startup company that plans to manufacture and sell electric bikes components in the country.The following information is provided:1. The company is expected to produce 1,000,000 units annually.2. The unit selling price is expected to be Sh.18.50 in 2024.3. The unit selling price is expected to increase by 5% annually over the next five years period.4. The cost of goods sold (percentage of revenue) is 42.0%.5. The salaries and benefits expense (percentage of revenue) is 17.0%.6. The annual rent and overhead expense are Sh. 500,000.7. Depreciation and amortisation (percentage of property, plant and equipment) is 25.0%.8. Interest rate (percentage of debt) is 10.0%.9. The applicable tax rate is 30.0%.10. The accounts receivable (Days) is 30.11. The inventory (Days) is 14.12. The accounts payable (Days) is 30. 13. Capital expenditures in year 0 is Sh.15,000,000. It will be funded by debt issuance of Sh.5,000,000 and equity of Sh.10,000,000.Required:Using Excel:(a) Prepare the following financial statements: (i) Statement of profit or loss for the five-year period. (8 marks) (ii) Statement of financial position for the five-year period. (6 marks) (iii) Cash flow statement for the company for the five-year period. (6 marks)(b) Undertake ratio analysis and compute the following financial ratios for the five years: (i) Profitability ratios- Return on Assets(ROA) ratio, Return on Equity (ROE) ratio and Net Profit Margin Ratio. (5 marks) (ii) Liquidity ratios – Current Ratio and Quick Ratio. (5 marks)
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