Chapter 17 Financial Planning and Forecasting
|
|
- Anastasia Manning
- 6 years ago
- Views:
Transcription
1 Chapter 17 Financial Planning and Forecasting Companies base their operating plans on forecasted financial statements. The company must first forecast sales for the next few years. Then determine the assets required to meet the sales targets. Next comes forecasting the financial requirements necessary. Forecasting financial requirements involves: 1. Project the asset requirements for the coming period 2. Project the liabilities and equities that will be generated under normal operating conditions during the same period 3. subtract the projected liabilities and equity from the required assets to estimate the additional funds needed (AFN) to support the level of forecasted operations. Projected Balance Sheet Method Steps: 1. Forecast income statement 2. Forecast balance sheet 3. Determine how to raise the additional funds needed 4. Financing feedbacks Example: NWC 2005 sales were $2 billion, and the marketing department is forecasting a 25% increase for Assume that the company was operating at full capacity with respect to all assets in Assume that a) Each type of asset, as well as payables, accruals, and costs, and depreciation, grows at the same rate as sales b) The dividend payout ratio is held constant at 30% c) External funds needed are financed 50 percent by notes payable and 50 percent by long-term debt (no new common stock will be issued) d) All debt carries an interest rate of 8%
2 Actual 2005 and Projected 2006 Income Statement ( millions of dollars) Actual 2005 Forecast basis 2006Forecast Sales Costs except deprec. Depreciation $2, (1,800.00) (.00) 1.25 x 2003 Sales.90 x 2004 Sales.05 x 2004 Sales EBIT Interest Expense $.00 (16.00) EBT Taxes (40%) $ (33.60) Net Income $ Dividends (30%) Addition to R.E. $ $ Balance Sheet ( millions of dollars) Forecasted balance sheet items are a percent of forecasted sales 2006 sales forecasted to be $2,500. Assets 2005 Forecast basis st Pass Cash and securities $ x FS* Accounts receivable Inventories Total current assets 500 Net fixed assets * FS Total assets 1,000 Liabilities and equity Accounts payables & accruals Notes payable Total current liabilities 200 Long-term debt Common stock 500 Retained earnings x FS +$46** AFN nd Pass Total liabilities and equity 1,000 *FS2006 forecasted sales **increase in retained earnings from the first pass income statement.
3 What are the additional funds needed (AFN)? Forecasted total assets $ Forecasted total claims $ Forecast AFN $ How AFN will be raised? No new common stock will be issued, any external funds needed will be raised as debt, 50% notes payable, and 50% L-T debt. Additional notes payable Additional long-term debt This additional financing will add to interest expense 8 % which will lower net income and the addition to retained earnings The AFN Formula A* L* AFN S S M S1 RR S S 0 0 Example: Carter Corporation s sales are expected to increase from $5 million in 2005 to $6 million in 2006, or by 20 percent. Its assets totaled $3 million at the end of Carter is at full capacity. At the end of 2005, current liabilities are $1 million, consisting of $250,000 of accounts payable, $500,000 of notes payable, and $250,000 of accrued liabilities. The after-tax profit margin is forecasted to be 5 percent, and the forecasted retention ratio is 30 percent. What is AFN for the upcoming year?
4 Other Considerations in Forecasting 1. excess capacity. Can we always assume % capacity utilization? What if asset use is less than % of capacity? Let s assume that in fixed assets in 2003 were being utilized to only 90% of capacity. Actual sales $2,000 Full capacity sales $2,222 % capacity at which 90% FA were operated T arg et FA Sales Actual FA Full capacity sales $500 $2, % Forecasted balance sheet items are a percent of forecasted sales 2006 sales forecasted to be $2,500. Assets 2005 Forecast basis st Pass Cash and securities $ x FS* Accounts receivable Inventories Total current assets 500 Net fixed assets * FS Total assets 1,000 Liabilities and equity Accounts payables & accruals Notes payable Total current liabilities 200 Long-term debt Common stock 500 Retained earnings x FS +$46** AFN nd Pass Total liabilities and equity 1,000 *FS2006 forecasted sales **increase in retained earnings from the first pass income statement.
5 2. economies of scale -- variable cost of good sold ratio may change with the size of the firm 3. lumpy assets -- not all assets can be acquired in small increments, but must obtained in large discrete amounts. A small increase in sales can require significant increase in plant and equipment
CHAPTER 12 Financial Planning and Forecasting Financial Statements
12-1 CHAPTER 12 Financial Planning and Forecasting Financial Statements Financial planning Additional Funds Needed (AFN) formula Pro forma financial statements Sales forecasts Percent of sales method Financial
More informationFinancial Planning Process
Financial Planning Process 1. Forecast financial statements under alternative operating plans. 2. Determine amount of capital needed to support the plan. 3. Forecast the funds that will be generated internally
More informationCHAPTER 17 FINANCIAL PLANNING AND FORECASTING
CHAPTER 17 FINANCIAL PLANNING AND FORECASTING Multiple Choice: Conceptual Easy: Percent of sales method (Difficulty: E = Easy, M = Medium, and T = Tough) Answer: e Diff: E 1. The percent of sales method
More informationForecasting for Financial Planning
Forecasting for Financial Planning 1 Learning Objectives The importance of forecasting to business success. The financial forecasting process. Preparation of pro forma financial statements. The importance
More informationFinancing Feedbacks FORECASTING FINANCIAL STATEMENTS WITH FINANCING FEEDBACKS AND ALTERNATIVE SOURCES OF FUNDS
W E B E X T E N S I O N9A Financing Feedbacks In Chapter 9, we forecasted financial statements under the assumption that the firm s interest expense can be estimated as the product of the prior year s
More informationWeek-2. Dr. Ahmed. Strategic Plan
FINC 5880 Dr. Ahmed Week-2 Name Strategic Plan Financial Plan Projected Financial Statements Additional Funds Needed (AFN, EFN, DFN) Internal and External Funding Evaluation and Control Sales Forecast
More informationGraded Project. Financial Management
Graded Project Financial Management OBJECTIVE 1 PURPOSE 1 SCORING GUIDELINES 11 Contents iii Financial Management OBJECTIVE Demonstrate the ability to perform financial calculations and analysis related
More informationDUKE UNIVERSITY Duke Center for International Development (DCID) Sanford Institute for Public Policy. Fall Executive Education Program
DUKE UNIVERSITY Duke Center for International Development (DCID) Sanford Institute for Public Policy Fall 2007 Executive Education Program Constructing Financial Statements for Cash Flow Valuation (CFV)
More informationTaxes. Financial Statements: Things to Keep in Mind. Cash Flow and Taxes. BUSI 7110/7116 Yost
Cash Flow and Taxes Financial Statements: Things to Keep in Mind Backward vs. Forward Looking Book Values vs. Market Values Accounting Numbers vs. Cash Flows Tax Deductible vs. Taxable Notes to Financial
More informationAdvanced Valuation Methods. Analyzing Historical Performance. Financial Analysis
1 Advanced Valuation Methods Analyzing Historical Performance Financial Analysis Goal Assess performance of a firm in the context of shareholder value versus competitive advantage Productivity of employed
More informationFI3300: CORPORATE FINANCE. Problem Set 1 Chapters 1-5
FI3300: CORPORATE FINANCE Problem Set 1 Chapters 1-5 1. The goal of the firm is to. a. maximize profit b. minimize risk c. promote social good d. maximize shareholder wealth 2. Which of the following would
More informationCh. 3 Financial Statements, Cash Flows and Taxes. The Balance Sheet. Balance Sheet Model of the Firm
Ch. 3 Financial Statements, Cash Flows and Taxes Topics Key financial statements Balance Sheet Income Statement Cashflow Statement Accounting profits vs. cash flow Taxes The Balance Sheet Definition Financial
More informationDUKE UNIVERSITY Duke Center for International Development (DCID) Sanford Institute for Public Policy. Fall Executive Education Program
DUKE UNIVERSITY Duke Center for International Development (DCID) Sanford Institute for Public Policy Fall 2007 Executive Education Program Constructing Financial Statements for Cash Flow Valuation (CFV)
More informationACCOUNTING FOR FINANCIAL MANAGEMENT. Financial Statements
ACCOUNTING FOR FINANCIAL MANAGEMENT Financial Statements Balance Sheet Income Statement Statement of Cash Flows Statement of Stockholders Equity www.sec.gov Financial Statements Keep in mind: Backward
More informationBusiness 2019, Fall 2004
Business 2019, Fall 2004 Assignment 1 Suggested Answers 1. Financial Statements and Cash Flows Answer the following questions using Table 1 and the following information: Operating cash flow in 2002 is
More informationBusiness Assignment 2 Solutions. 1. Consider the balance sheets and income statements for Sunrise, Inc. depicted in Table 1 and Table 2.
Business 2019 Assignment 2 Solutions 1. Consider the balance sheets and income statements for Sunrise, Inc. depicted in Table 1 and Table 2. (a) For year 2000, calculate Sunrise s cash flow from assets,
More informationChapter 8: Fundamentals of Capital Budgeting
Chapter 8: Fundamentals of Capital Budgeting - 1 Chapter 8: Fundamentals of Capital Budgeting Note: Read the chapter then look at the following. Fundamental question: How do we determine the cash flows
More informationChapter 16. Financial Forecasting. Use of forecasted information. Managers use pro forma, or projected, statements in several ways.
Chapter 16 Financial Forecasting Use of forecasted information Managers use pro forma, or projected, statements in several ways. First, by looking at projected statements, managers can assess whether the
More informationCMA 2010 Support Package
CMA 2010 Support Package Ratio Definitions CMA EXAM RATIO DEFINITIONS Abbreviations EBIT = Earnings before interest and taxes EBITDA = Earnings before interest, taxes, depreciation and amortization EBT
More informationBreak-even even & Leverage Analysis
Break-even even & Leverage Analysis Timothy R. Mayes, Ph.D. FIN 330: Chapter 12 1 Types of Costs Essentially, there are two types of costs that a business faces: Variable costs which vary proportionally
More information2013/2014. Tick true or false: 1. "Risk aversion" implies that investors require higher expected returns on riskier than on less risky securities.
Question One: Tick true or false: 1. "Risk aversion" implies that investors require higher expected returns on riskier than on less risky securities. 2. Diversification will normally reduce the riskiness
More informationBOND VALUATION. YTM Of An n-year Zero-Coupon Bond
BOND VALUATION BOND VALUATIONS BOND: A security sold by governments and corporations to raise money from investors today in exchange for promised future payments 1. ZERO COUPON BONDS ZERO COUPON BONDS:
More informationWeek-1 FINC What is Finance? Corporate Finance. Forms of Business Sole Proprietorship Partnership Corporations Limited Liability Companies
Dr. Ahmed FINC 5000 Week-1 Name What is Finance? Corporate Finance Forms of Business Sole Proprietorship Partnership Corporations Limited Liability Companies Finance Money & Markets Investments Managerial
More informationDividend Decisions. LOS 1 : Introduction 1.1
1.1 Dividend Decisions LOS 1 : Introduction Note: Total Earnings mean Earnings available to equity share holders Income Statement Sales Less: Variable cost Contribution Less: Fixed cost excluding Dep.
More informationCASH FLOW CALCULATION: THE IMPORTANCE OF WORKING CAPITAL
CASH FLOW CALCULATION: THE IMPORTANCE OF WORKING CAPITAL Lesson 6 Castellanza, 25 th October 2017 LESSON6 -SUMMARY Financial statements a brief review Financial statements and cash flows The cash source
More informationWeek-1 BUSN What is Finance? Corporate Finance. Forms of Business Sole Proprietorship Partnership Corporations Limited Liability Companies
Dr. Ahmed BUSN 5200 Week-1 Name What is Finance? Corporate Finance Forms of Business Sole Proprietorship Partnership Corporations Limited Liability Companies Finance Money & Markets Investments Managerial
More informationThe Wine Bar Transactions 1-10
Economics /Management 4 Financial Accounting Step-by-Step Accrual Accounting: The Wine Bar Transactions 1-10 Updated 04/20/16 Balance Sheet Cash Receivables Inventory Pre Paid Expenses Customer Advances
More informationBusiness 2019, Fall 2003
Business 2019, Fall 2003 Assignment 1 Suggested Answers 1. Financial Statements and Cash Flows Answer the following questions using Table 2 and the following information: Bed Rock s cash flow from assets
More informationChapter 2. Data for Financial Decision Making
Chapter 2 Data for Financial Decision Making Data for Financial Decision Making Introductory concepts the need for good data Financial accounting data Financial ratios Managerial accounting data Other
More informationBusiness 5039, Fall 2004
Business 5039, Fall 4 Assignment 3 Suggested Answers 1. Financial Planning Using the financial statements for Rosengarten, Inc., in Table 1, answer the following questions. a) 10 points) Construct Rosengarten
More informationAdvanced Corporate Finance. 2. Financial Planning, from Accounting to Free Cash Flows
Advanced Corporate Finance 2. Financial Planning, from Accounting to Free Cash Flows 2 Exercices Sessions 1. Start the week 8 (6 th of November) 2. 3 groups => alphabetical order A => E : Group 1 Friday
More informationCHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS
CHAPTER 2 ANALYSIS OF FINANCIAL STATEMENTS 1 Learning Outcomes LO.1 Describe the basic financial information that is produced by corporations and explain how the firm s stakeholders use such information.
More informationFEEDBACK TUTORIAL LETTER
FEEDBACK TUTORIAL LETTER 2 nd SEMESTER 2017 ASSIGNMENT 1 MANAGERIAL FINANCE 4B MAF412S 1 Assignment 1 QUESTION 1 COMPANY A & B a) Co. A Co. B Net Operating Income 5,000,000 5,000,000 Less: interest -1,500,000
More informationIntercorporate Investments
Intercorporate Investments Investments in Financial Assets - Held to maturity - Trading - Available for sale - Designated fair value Investments in Associates - Equity method Joint Ventures - Proportional
More informationChapter 14. Short-Term Financial Planning
Chapter 14 Short-Term Financial Planning Learning Objectives Use the percent of sales method to forecast the financing requirements of a firm. Describe the limitations of the percent of sales forecast
More informationSolution Manual for Corporate Finance 10th Edition by Ross
Solution Manual for Corporate Finance 10th Edition by Ross Link download full: https://testbankservice.com/download/solution-manualfor-corporate-finance-10th-edition-by-ross Test Bank for Corporate Finance
More informationCHAPTER 2: THE BASIC FINANCIAL STATEMENTS. Instructor s Manual Problem Set
CHAPTER 2: THE BASIC FINANCIAL STATEMENTS Solutions can be found in the accompanying Excel files. Note that if you wish to see all of the formulas at once, you may use the CTRL+` (Control plus grave accent)
More informationFinancial Statements, Taxes and Cash Flow
Financial Statements, Taxes and Cash Flow Faculty of Business Administration Lakehead University Spring 2003 May 5, 2003 2.1 The Balance Sheet 2.2 The Income Statement 2.3 Cash Flow 2.4 Taxes 2.5 Capital
More informationCertificate Variable Rates
Certificate Variable Rates INTRODUCTION Certificate Variable Rates let you configure variable rate codes and assign them to certificate accounts, much like group variable rates for loans. A change to a
More informationChapter 5. Financial Planning
Chapter 5 Financial Planning Financial Planning Introductory concepts the role of planning Specific-item forecasting Forecasts that relate to sales The percentage-of-sales method illustrated Interpreting
More informationChapter 4. Funds-Flow Analysis and Forecasting. Overview of the Lecture. September The Statement of Cash Flows. Pro Forma Financial Statements
Chapter 4 Funds-Flow Analysis and Forecasting September 2004 Overview of the Lecture The Statement of Cash Flows Pro Forma Financial Statements 2 The Statement of Cash Flows The statement of cash flows
More informationValuation and Tax Policy
Valuation and Tax Policy Lakehead University Winter 2005 Formula Approach for Valuing Companies Let EBIT t Earnings before interest and taxes at time t T Corporate tax rate I t Firm s investments at time
More informationFREDERICK OWUSU PREMPEH
EXCEL PROFESSIONAL INSTITUTE 3.3 ADVANCED FINANCIAL MANAGEMENT LECTURES SLIDES FREDERICK OWUSU PREMPEH EXCEL PROFESSIONAL INSTITUTE Lecture 9 Valuation and the use of free cash flows The free cash flow
More informationACTY 7292 Financial Statement Analysis Final Exam Semester 1, 2015
Faculty of Creative Industries & Business Department of Accounting and Finance Bachelor of Business ACTY 7292 Financial Statement Analysis Final Exam Date: Wednesday 1 st July 2015 Start time: 8.30AM 11.40AM
More informationINTRODUCING THE INCOME STATEMENT
EXECUTIVE EDUCATION INTRODUCING THE INCOME STATEMENT ARJEN MULDER EXPLANATION OF THE TOPIC This video will familiarise you with the concept of an income statement, by showing: 1. What is the purpose of
More informationExamples = + = + = = = =
Examples = + = + = = = = Calculation of ratios an example Formula Year 1 Year 2 Year 3 Year 4 Year 5 Comments Adjusted Profit/Loss for the Period excl. Minorities 33.0 37.4 36.8 62.3 79.4 Adjusted
More informationChapter 3: Accounting and Finance
FIN 301 Class Notes Chapter 3: Accounting and Finance INTRODUCTION Accounting Function: Gathering, processing, and reporting data. End result is a set of four financial statements 1- Balance sheet 2-Income
More informationSolutions to End-of-Chapter Problems
Financial Management Principles and Applications 13th Edition Titman SOLUTIONS MANUAL Full download at: https://testbankreal.com/download/financial-management-principles-andapplications-13th-edition-titman-solutions-manual/
More informationUNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data)
CONSOLIDATED STATEMENTS OF INCOME (Millions, except per share data) Three Months Nine Months Ended September 30 Ended September 30 2012 2011 2012 2011 Revenue Services $748.0 $876.3 $2,386.7 $2,519.3 Technology
More informationAnalysis write-up at: GOOGLE INC. (GOOG) #2 SUSTAINABLE REVENUE GROWTH
GOOGLE INC. (GOOG) NOMINAL REVENUE 35.00% 3 25.00% 2 15.00% 1 5.00% #1 REAL REVENUE PRICE ADJUSTED REVENUE 29.7% 28.3% 23.8% 6.7% #4 OPERATING EXPENSE CONTROL NOI$ GP$ NOI% GP% CORE OPER EXP% 8 $30,000,000
More informationFinance and Accounting elective / SBWL Controlling Wintersemester 2012/ 2013 Exam Value-based Management Feb. 21, 2013 EXAM
TECHNISCHE UNIVERSITÄT MÜNCHEN Fakultät für Wirtschaftswissenschaften Lehrstuhl für Betriebswirtschaftslehre - Controlling Prof. Dr. Gunther Friedl Finance and Accounting elective / SBWL Controlling Wintersemester
More informationWorking with Financial Statements
Working with Financial Statements Lakehead University September 2005 Overview of the Lecture 3.2 Standardizes Financial Statements 3.3 Ratio Analysis 3.4 Dupont Identity 3.5 Using Financial Statement Information
More informationWorking with Financial Statements
Working with Financial Statements Lakehead University September 2005 Overview of the Lecture 3.2 Standardizes Financial Statements 3.3 Ratio Analysis 3.4 Dupont Identity 3.5 Using Financial Statement Information
More informationGleim CMA Review Updates to Part Edition, 1st Printing March 2015
Page 1 of 5 Gleim CMA Review Updates to Part 2 2015 Edition, 1st Printing March 2015 NOTE: Text that should be deleted is displayed with a line through it. New text is shown with a blue background. Study
More informationReturn on Invested Capital CHAPTER
Return on Invested Capital 8 CHAPTER Return on Invested Capital Importance of Joint Analysis Joint analysis is where one measure is assessed relative to another Return on invested capital (ROI) is an important
More informationEngineering Economy Chapter 4 More Interest Formulas
Engineering Economy Chapter 4 More Interest Formulas 1. Uniform Series Factors Used to Move Money Find F, Given A (i.e., F/A) Find A, Given F (i.e., A/F) Find P, Given A (i.e., P/A) Find A, Given P (i.e.,
More informationMBA 8230 Spring 2005
Georgia State University Department of Finance MBA 8230 Spring 2005 MBA 8230 Applications in Corporate Finance Take-Home Assignment Instructors: Richard Fendler, Charles Hodges, Alfred Mettler, Lalitha
More informationFI3300: CORPORATE FINANCE. Problem Set 2 Chapters 1-5
FI3300: CORPORATE FINANCE Problem Set 2 Chapters 1-5 1. What are the two things corporations can do with net income? a. buy bonds and stocks is the most common b. pay dividends or reinvest it in the company
More informationBusiness 2019, Spring 2003
Business 2019, Spring 2003 Assignment 1 Suggested Answers 1. Financial Statements and Cash Flow Answer the following questions using Table 1. Bed Rock s tax rate in 2002 was 34%. (a) (6 points) Complete
More informationChapter 2 Financial Statement and Cash Flow Analysis
Chapter 2 Financial Statement and Cash Flow Analysis MULTIPLE CHOICE 1. Which of the following items can be found on an income statement? a. Accounts receivable b. Long-term debt c. Sales d. Inventory
More informationINTRODUCTION TO CORPORATE FINANCE
INTRODUCTION TO CORPORATE FINANCE Lesson 1&2 Castellanza, 20 th &27 th September 2017 SUMMARY Introduction to Introduction to Financial Statement Balance Sheet and Income Statement reclassification 2 CORPORATE
More informationUnderstanding Financial Management: A Practical Guide Problems and Answers
Understanding Financial Management: A Practical Guide Problems and Answers Chapter 3 Interpreting Financial Ratios 3.2 Liquidity Ratios 1. Ink Inc. has had a stable current ratio over the past three years
More informationDisclaimer: This resource package is for studying purposes only EDUCATION
Disclaimer: This resource package is for studying purposes only EDUCATION Chapter 6: Valuing stocks Bond Cash Flows, Prices, and Yields - Maturity date: Final payment date - Term: Time remaining until
More informationRocco Sabino MBA, CPA
Rocco Sabino MBA, CPA Rocco.Sabino@Stonybrook.edu Agenda: I. Understanding Financial Information Ø Financial Statements q Income Statement It s all about earning income How does Human Resource (HR) affect
More informationCHAPTER 6 MAKING CAPITAL INVESTMENT DECISIONS
CHAPTER 6 MAKING CAPITAL INVESTMENT DECISIONS Answers to Concepts Review and Critical Thinking Questions 1. In this context, an opportunity cost refers to the value of an asset or other input that will
More informationChapter 3 Analysis of Financial Statements. Ratio Analysis Please refer to the attached financial statements, and industry average ratios
Chapter 3 Analysis of Financial Statements Ratio Analysis Please refer to the attached financial statements, and industry average ratios In this chapter, we will cover Liquidity ratios Asset management
More informationIntroduction to Accounting 1
DELTA UNIVERSITY FOR SCIENCE & TECHNOLOGY Introduction to Accounting 1 Section 7 Mr. Omar Ahmed Hashish 11/30/2017. Adjusting the Accounts (Continue) Unearned Revenues: - They are those types of revenues
More informationFI3300 Corporation Finance
Consider the Income Statement FI3300 Corporation Finance Spring Semester 2010 Dr. Isabel Tkatch Assistant Professor of Finance Illustration Company, Income Statement For the Year ending December 31, 2006
More informationCHAPTER 3. Analysis of Financial Statements
CHAPTER 3 Analysis of Financial Statements 1 Topics in Chapter Ratio analysis Du Pont system Effects of improving ratios Limitations of ratio analysis Qualitative factors 2 Determinants of Intrinsic Value:
More informationTest Company Ltd._V.1 Sample Town. Financial Statement. For the business year ended 31 December KENDRIS Ltd.
Test Company Ltd._V.1 Sample Town Financial Statement For the business year ended 31 December 2015 KENDRIS Ltd. Place, DD/MM/YYYY Test company Ltd_V.1 Sample Street P. O. Box 5000 Sample Town Financial
More informationProfessional Designation Ratios: Formulas & Definitions Used in Credit Risk Assessment
Professional Designation Ratios: Formulas & Definitions Used in Credit Risk Assessment Profitability Ratios Measure management's ability to control expenses and to earn a return on the resources committed
More informationANALYZE REFRIGERATOR TOOLING INVESTMENT LIVIA MODEL AT PT LG ELECTRONICS INDONESIA. Apit Supriyadi 1 ; Mini Wijaya 2 ; Tedy Fardiansyah 3 ABSTRACT
ANALYZE REFRIGERATOR TOOLING INVESTMENT LIVIA MODEL AT PT LG ELECTRONICS INDONESIA Apit Supriyadi 1 ; Mini Wijaya 2 ; Tedy Fardiansyah 3 ABSTRACT For a large firm like PT LG Electronics Indonesia (LGEIN),
More informationCapital Budgeting, Part II
Capital Budgeting, Part II Lakehead University Fall 2004 Making Capital Investment Decisions 1. Project Cash Flows 2. Incremental Cash Flows 3. Basic Capital Budgeting 4. Capital Cost Allowance 5. The
More informationUNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data)
CONSOLIDATED STATEMENTS OF INCOME (Millions, except per share data) Revenue Services $592.6 $596.5 $2,328.2 $2,406.3 Technology 152.2 125.2 413.6 414.4 744.8 721.7 2,741.8 2,820.7 Costs and expenses Cost
More informationRatio Analysis Part II
Chapter-04 Ratio Analysis Part II Ex: 1.1 Profitability Ratios Profitable Ratios are a class of financial metrics that are used to assess a business's ability to generate earnings as compared to its expenses
More informationCA - FINAL SECURITY VALUATION. FCA, CFA L3 Candidate
CA - FINAL SECURITY VALUATION FCA, CFA L3 Candidate 2.1 Security Valuation Study Session 2 LOS 1 : Introduction Note: Total Earnings mean Earnings available to equity share holders Income Statement
More informationChapter 7. Funds Analysis, Cash- Flow Analysis, and Financial Planning
Chapter 7 Funds Analysis, Cash- Flow Analysis, and Financial Planning 7-1 Pearson Education Limited 2004 Fundamentals of Financial Management, 12/e Created by: Gregory A. Kuhlemeyer, Ph.D. Carroll College,
More informationBusiness 2019, Spring 2003
Business 2019, Spring 2003 Assignment 1 Due Monday, May 12, 2003, 5:00pm (beginning of class) Can be done in groups of at most FOUR 1. Financial Statements and Cash Flow Answer the following questions
More informationConsolidated Balance Sheets
Consolidated Balance Sheets March 31, 2008 and 2009 ASSETS 2008 2009 2009 Current assets Cash and cash equivalents... 1,628,547 2,444,280 $ 24,883 Time deposits... 134,773 45,178 460 Marketable securities...
More informationPowerPoint. to accompany. Chapter 9. Valuing Shares
PowerPoint to accompany Chapter 9 Valuing Shares 9.1 Share Basics Ordinary share: a share of ownership in the corporation, which gives its owner rights to vote on the election of directors, mergers or
More informationFAQ: Financial Statements
Question 1: What is the correct order in which financial reports must be created? Answer 1: The income statement is created first, then the owners' equity statement, and finally the balance sheet. This
More informationChapter 8 Working Capital Management
Chapter 8 Working Capital Management Long & Short Term Assets & Liabilities Current Assets: Cash Marketable Securities Prepayments Accounts Receivable Inventory Fixed Assets: Investments Plant & Machinery
More informationLecture 4. Interpreting and using financial statements for valuation II. Financial ratio analysis
Lecture 4 Interpreting and using financial statements for valuation II Financial ratio analysis Agenda Use of financial ratios ROE decomposition Growth, risk, and, cash flow 2 What are financial ratios
More informationINTER CA MAY Note: All questions are compulsory. Question 1 (6 marks) Question 2 (8 Marks)
(50 Marks) Note: All questions are compulsory. INTER CA MAY 2018 Sub: Financial Management Topics Capital Structure, Cost of Capital, Capital Budgeting, estimation of working capital, receivables management,
More informationExamples of assets that would not be recognized:
Near-Term Financial Resources Overview Information about spending and resources available for spending Report amount available for spending in the next period Near-term would be a specific period of time,
More informationCh02 Solutions Manual pdf Ch02 Show.pdf
Ch02 Solutions Manual 2015-10-07.pdf Ch02 Show.pdf Chapter 2 Financial Statements, Cash Flow, and Taxes ANSWERS TO END-OF-CHAPTER QUESTIONS 2-1 a. The annual report is a report issued annually by a corporation
More informationCHAPTER 10 The Financial Plan: Projecting Financial Requirements
Part 3 Developing the New Venture Business Plan CHAPTER 10 The Financial Plan: Projecting Financial Requirements Longenecker Moore Petty Palich 2008 Cengage Learning. All rights reserved. PowerPoint Presentation
More informationFraport AG Frankfurt Airport Services Worldwide Consolidated Income Statement * million
Consolidated Income Statement * 2007 2008 Change in % Revenue 2.329,0 2.101,6-9,8 Change in work-in-process 0,5 0,4-20,0 Other internal work capitalized 24,6 33,8 37,4 Other operating income 71,7 66,1-7,8
More informationEconomic Value Added (EVA)
Economic Value Added (EVA), 2018 Definition Features and problems Computation Economic Value Added (EVA) EVA is promoted by a consulting firm Stern Steward & Co., which was established in 1982 and pioneered
More informationFinancial Statements and Taxes
Financial Statements and Taxes RWJR, Chapter 2 September 2004 Outline of the Lecture 2.1 The Balance Sheet 2.2 The Income Statement 2.3 Cash Flow 2.4 Taxes 2.5 Capital Cost Allowance 2 2.1 The Balance
More informationModule 3 Exhibits and Key Terms. Table of Contents. 1 Principles of Accounting Adjustments for Financial Reporting
Table of Contents Exhibit 14: Cash basis and accrual basis of accounting compared... 2 Exhibit 15: Summary fiscal year ending by Month... 2 Exhibit 16: Two classes and four types of adjusting entries...
More informationPrincipal Rate Time 100
Commercial mathematics 1 Compound Interest 2 Introduction In the previous classes, you have learnt about simple interest and other related terms. You have also solved many problems on simple interest.
More informationChapter 2 Review of Accounting
Chapter 2 Review of Accounting Discussion Questions 2-1. Discuss some financial variables that affect the price-earnings ratio. The price-earnings ratio will be influenced by the earnings and sales growth
More informationCh_02_Financial_Statements_Cash_Flow_and_Taxes
Ch_02_Financial_Statements_Cash_Flow_and_Taxes 1 The annual report contains four basic financial statements: the income statement, balance sheet, statement of cash flows, and statement of stockholders'
More informationCHAPTER 2 FINANCIAL STATEMENTS, TAXES, AND CASH FLOWS
CHAPTER 2 FINANCIAL STATEMENTS, TAXES, AND CASH FLOWS Learning Objectives LO1 The difference between accounting value (or book value) and market value. LO2 The difference between accounting income and
More informationThe Key to Your Success in Three Easy Steps!
The Key to Your Success in Three Easy Steps! 1. Take a Sample Test to assess your knowledge. 2. Review your personalized Study Plan to see where you need more work. 3. Use the Study Plan exercises and
More informationENGINEERING FIRM #2 SUSTAINABLE REVENUE GROWTH PRICE ADJ REV SUSTAINABLE REV NOMINAL REV
25.00% 22.50% 2 17.50% 15.00% 12.50% 1 7.50% 5.00% 2.50% 2 15.00% 1 5.00% #1 REAL REVENUE NOMINAL REVENUE PRICE ADJUSTED REVENUE $2,500,000 () () #4 OPERATING EXPENSE CONTROL NOI$ GP$ NOI% GP% CORE OPER
More informationChapter 10: Making Capital Investment Decisions. Faculty of Business Administration Lakehead University Spring 2003 May 21, 2003
Chapter 10: Making Capital Investment Decisions Faculty of Business Administration Lakehead University Spring 2003 May 21, 2003 Outline 10.1 Project Cash Flows: A First Look 10.2 Incremental Cash Flows
More informationChapter 2 Review of Accounting
Chapter 2 Review of Accounting Discussion Questions 2-1. Discuss some financial variables that affect the price-earnings ratio. The price-earnings ratio will be influenced by the earnings and sales growth
More informationCHAPTER 3. Topics in Chapter. Analysis of Financial Statements
CHAPTER 3 Analysis of Financial Statements 1 Topics in Chapter Ratio analysis DuPont equation Effects of improving ratios Limitations of ratio analysis Qualitative factors 2 Determinants of Intrinsic Value:
More information