[管理学]Analysis for Financial Management Chap003.ppt

Financial Forecasting CHAPTER 3 Introduction From the past (Chapters 1 and 2) to the future. Financial forecasting planning Budgeting Chapter describes techniques that are part of planning. Pro Forma Statements Pro forma = as if Much of the language of business forecasting is financial. Many of the measures used to evaluate plans are financial. Key issue is determining whether a plan is financially feasible. Implications for current environment. Bottom up detailed plans vs. top down bird’s eye view plans. Pro forma financial statements are forecasted financial statements. Can stem from broad outlines or detailed sub-plans. Future need for external funding, external financing required (EFR). Percent of Sales Forecast future sales, and tie other items in income statement and balance sheet to the sales forecast. Works for variable costs, most current assets and current liabilities. Not generally true for fixed assets. Steps Examine historical data to ascertain the extent to which percent-of-sales ratios stay constant over time. Forecast sales. Do sensitivity analysis to see how financial statements respond to different percent-of-sales parameters. Suburban National Bank RE Supplies, Inc. is a wholesaler of plumbing and electrical supplies. RE has been a customer of the bank for many years. Average deposits have been $30K. Short-term renewable loan has been $50K, with a 5-year maturity. Increase in Loan In late 2008, RE asks that the loan amount for 2009 be increased to $500K. RE explains that because of growth, AP has gone up and cash balances have gone down. Suppliers are threatening to go to COD. Why $500K? Pay off most insistent creditors and rebuild cash balances. Build a Pro Forma Not enough quantitative justification. Build a pro forma. Start with history, Table 3-1. Look at the ratios, Table 3-2. What’s happened to cash/sales AP/sales earnings/sales TABLE 3-1 (Continued) Questions re Next 3 Slides By how much are sales forecasted to increase? How has an unf