《基础金融》（英文版）CHAPTER 4 Financial Planning and Forecasting Financial Statements

4-1 CHAPTER 4 Financial Planning and Forecasting Financial Statements Plans: strategic, operating, and financial Pro forma financial statements SAles forecasts PErcent of sales method Additional Funds Needed (AFN formula Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 1 Copyright © 2002 by Harcourt, Inc. All rights reserved. CHAPTER 4 Financial Planning and Forecasting Financial Statements ◼Plans: strategic, operating, and financial ◼Pro forma financial statements ⚫Sales forecasts ⚫Percent of sales method ◼Additional Funds Needed (AFN) formula

4-2 Pro Forma Financial statements Three important uses: FOrecast the amount of external financing that will be required O Evaluate the impact that changes in the operating plan have on the value of the firm Set appropriate targets for compensation plans Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 2 Copyright © 2002 by Harcourt, Inc. All rights reserved. Pro Forma Financial Statements ◼Three important uses: ⚫Forecast the amount of external financing that will be required ⚫Evaluate the impact that changes in the operating plan have on the value of the firm ⚫Set appropriate targets for compensation plans

4-3 Steps in Financial Forecasting ■ Forecast sales Project the assets needed to support sales Project internally generated funds Project outside funds needed Decide how to raise funds See effects of plan on ratios and stock price Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 3 Copyright © 2002 by Harcourt, Inc. All rights reserved. Steps in Financial Forecasting ◼Forecast sales ◼Project the assets needed to support sales ◼Project internally generated funds ◼Project outside funds needed ◼Decide how to raise funds ◼See effects of plan on ratios and stock price

4-4 2001 Balance sheet (Millions of s) Cash& sec. 20 Accts pay. accruals $100 Accounts rec 240 Notes payable 00 Inventories 240 Total cL $200 Total Ca s 500 L-T debt 100 Common stk 500 Net fixed Retained assets 500 earnings 200 Total assets $1,000 Total claims $1,000 Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 4 Copyright © 2002 by Harcourt, Inc. All rights reserved. 2001 Balance Sheet (Millions of $) Cash & sec. $ 20 Accts. pay. & accruals $ 100 Accounts rec. 240 Notes payable 100 Inventories 240 Total CL $ 200 Total CA $ 500 L-T debt 100 Common stk 500 Net fixed assets Retained earnings 200 Total assets $1,000 Total claims $1,000 500

4-5 2001 Income Statement Millions of s) Sales $2,00000 Less: COGS(60%) 1200.00 SGA coSts 700.00 EBIT $10000 Interest 16.00 EBT $84.00 Taxes(40%) 33.60 Net income $5040 Dividends( 30% $1512 Add'n to rE $3528 Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 5 Copyright © 2002 by Harcourt, Inc. All rights reserved. 2001 Income Statement (Millions of $) Sales $2,000.00 Less: COGS (60%) 1,200.00 SGA costs 700.00 EBIT $ 100.00 Interest 16.00 EBT $ 84.00 Taxes (40%) 33.60 Net income $ 50.40 Dividends (30%) $15.12 Add’n to RE $35.28

4-6 Key Ratios NWC Indust Condition BEP 10.00% 20.00% Poor Profit Margin 2.52% 4.00% ROE 7.20% 15.60% DSO 43.20 days 32.00 days Inv turnover 8.33X 11.00x FA turnover 4.00x 5.00x TA turnover 200x 2.50x Debt/ assets 30.00% 36.00% Good TIE 6.25x 940X Poor Current ratio 2. 50x 3.00X Payout ratio 30.00% 30.00% O. K Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 6 Copyright © 2002 by Harcourt, Inc. All rights reserved. NWC Industry Condition BEP 10.00% 20.00% Poor Profit Margin 2.52% 4.00% “ ROE 7.20% 15.60% “ DSO 43.20 days 32.00 days “ Inv. turnover 8.33x 11.00x “ F.A. turnover 4.00x 5.00x “ T.A. turnover 2.00x 2.50x “ Debt/ assets 30.00% 36.00% Good TIE 6.25x 9.40x Poor Current ratio 2.50x 3.00x “ Payout ratio 30.00% 30.00% O.K. Key Ratios

4-7 Key Ratios (Continued) nWc nd. Cond Net oper. prof. margin after taxes 3.00% 5.00% Poor (NOPAT/Sales) Oper. capital requirement 4500%35.00%Poor (Net oper. capital/sales) Return on invested capital 667%14.00%Poor (NOPAT/Net oper. capital) Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 7 Copyright © 2002 by Harcourt, Inc. All rights reserved. Key Ratios (Continued) NWC Ind. Cond. Net oper. prof. margin after taxes 3.00% 5.00% Poor (NOPAT/Sales) Oper. capital requirement 45.00% 35.00% Poor (Net oper. capital/Sales) Return on invested capital 6.67% 14.00% Poor (NOPAT/Net oper. capital)

4-8 AFN (Additional Funds Needed) Key Assumptions Operating at full capacity in 2001 Each type of asset grows proportionally with sales Payables and accruals grow proportionally with sales 2001 profit margin(2.52%)and payout (30%)will be maintained Sales are expected to increase by $500 million.(%AS= 25%) Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 8 Copyright © 2002 by Harcourt, Inc. All rights reserved. AFN (Additional Funds Needed): Key Assumptions ◼Operating at full capacity in 2001. ◼ Each type of asset grows proportionally with sales. ◼ Payables and accruals grow proportionally with sales. ◼ 2001 profit margin (2.52%) and payout (30%) will be maintained. ◼ Sales are expected to increase by $500 million. (%S = 25%)

4-9 Assets Assets=0.5 sales 1.250 △ Assets= 1,000 (A*s0)△saes 05($500) $250. Sales 0 2,0002,500 A*/S=$1,000/$2,000=0.5=$1,250/$2,500 Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 9 Copyright © 2002 by Harcourt, Inc. All rights reserved. Assets Sales 0 1,000 2,000 1,250 2,500 A*/S0 = $1,000/$2,000 = 0.5 = $1,250/$2,500.  Assets = (A*/S0 )Sales = 0.5($500) = $250. Assets = 0.5 sales

4-10 Assets must increase by $250 million. What is the afn based on the afn equation? AFN=(A*SOAS-(L/SOAS-M(S1)(1-d ($1,000/$2000)($500) -($100/$2000)($500) 00252($2500(1-03) $180.9 million Copy right C 2002 by Harcourt, Inc. All rights reserved

4 - 10 Copyright © 2002 by Harcourt, Inc. All rights reserved. Assets must increase by $250 million. What is the AFN, based on the AFN equation? AFN = (A*/S0 )S - (L*/S0 )S - M(S1 )(1 - d) = ($1,000/$2,000)($500) - ($100/$2,000)($500) - 0.0252($2,500)(1 - 0.3) = $180.9 million