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Financial Analysis & Forecasting Prepared by Matt H.

Evans, CPA, CMA, CFM

Purpose of Spreadsheet: Revised: 11/22/2002 active


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To illustrate concepts related to financial analysis and forecasting. Wksh5
The financial analysis uses a combination of ratios and industry averages to Wksh7
evaluate the financial performance of the company. Trend line graphs are also Wksh9
generated, comparing the company's performance with the industry averages. Wksh11
Finally, the historical information is used to prepare a set of pro forma Wksh13
financial statements using both linear and non-linear functions. Wksh15

Required Inputs:

You will need to collect financial statements for several reporting periods. If you
want to benchmark the performance against the industry, then you will also need
to collect industry averages. The spreadsheet is setup to capture five reporting
periods (annual, quarterly, monthly). All input fields are highlighted in yellow.
For best results, SEC Filings are suggested since these reports provide more
detail than published financial statements.

Note: A small red triangle in the upper right corner of a cell indicates that a comment has
been inserted. Point your mouse over the cell and the comment will appear.

If a cell appears in red, this indicates a warning concerning a calculation.

Worksheets:

This spreadsheet consists of the following worksheets, divided into three sections:

A) Input Worksheets for financial analysis using historical data:

Worksheet Title Purpose


2 General Input Enter general information here - used on several worksheets.
3 Balance Sheet Enter comparative balances sheets for up to five periods.
4 Income Statement Enter comparative income statements for up to five periods.
5 Cash Flow Statement Enter comparative cash flow statements for up to five periods.

Caution: If you enter less than five years of historical information, certain worksheet
formulas may have to be revised.

B) Output Worksheets for evaluating financial performance:


6 Key Financial Data Calculates key financial information for further analysis.
7 Ratio Analysis Calculates a series of ratios for further analysis.
8 Benchmark Analysis Compare ratio analysis to industry averages.
9 Horizontal Analysis Horizontal analysis with corresponding trend lines.
10 Vertical Analysis Common size financials in percentages and graphs.

C) Pro Forma / Forecasted Financials for Budgeting:

11 Pro Forma - Simple Set of pro forma financials using simple assumptions
12 Pro Forma - Regression Set of pro forma financials using linear trending
13 Pro Forma - Exponential Set of pro forma financials using exponential smoothing
14 Scenario Analysis Example of Scenario Analysis and Goal Seek Analysis
15 Budget Analysis Preliminary budget analysis
16 Final Budgets Set of budgets per various assumptions and forecasts.

Note: Some additional worksheets (Answer Reports 1 & 2) may appear in the spreadsheet
due to the running of Solver.
Macros:

No macros have been used in this spreadsheet to give everyone some assurance that no viruses
are contained in the spreadsheet. However, you are free to add your own macros to save time.
Tools > Macro > Record New Macro

Excel Functions:

This spreadsheet uses certain financial functions (such as =TREND) which might not be
found in your version of Microsoft Excel. To take full advantage of financial and statistical
functions, you should install the Add On package titled: Analysis TookPak. Go to the main
tool bar, select Tools => Add-Ins => check the Analysis TookPak option, insert your
Excel CD and install the Analysis ToolPak. Also, you might want to install the Solver
Add-in since this is useful for solving special forecasting issues (such as finding the
optimal exponential factor).

Compatibility:

This spreadsheet was created with Microsoft Excel 2000. Older versions of Excel (such as 97)
may not be compatible with this spreadsheet.

Corrections:
With any “attempt” to build an Excel Model, I can easily make some mistakes.
So if you have suggestions to make the model better, drop me an email
and I’ll be glad to improve the financial model. My email address is: matt@exinfm.com
CPA, CMA, CFM

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sed on several worksheets.


s for up to five periods.
ents for up to five periods.
ments for up to five periods.

certain worksheet

n for further analysis.


ther analysis.

ding trend lines.


ages and graphs.

mple assumptions
near trending
xponential smoothing
Goal Seek Analysis

ptions and forecasts.


General Input Panel Home
The following general information should be entered: Wksh3
Note: Sample data has been entered in the input cells to help you get started. Wksh5
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2-1 Name of Company => X Y Z Corporation USA Wksh9
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2-2 Reporting Periods => Annual (Annual, Semi-annual, Quarterly or Monthly) Wksh13
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2-3 Number of Days in Reporting Period are 365

What reporting periods will be entered?

2-4 Most Current Period 2009 (1999, July 1998, 6/30/97, etc.)
2-5 Previous Period 2008 (1999, July 1998, 6/30/97, etc.)
2-6 2nd Previous Period 2007 (1999, July 1998, 6/30/97, etc.)
2-7 3rd Previous Period 2006 (1999, July 1998, 6/30/97, etc.)
2-8 4th Previous Period 2005 (1999, July 1998, 6/30/97, etc.)

2-9 Number of historical periods to be analyzed 2

How are the amounts expressed in the financial statements?


(such as: in millions of dollars, thousands of Canadian dollars, etc.)
2-10 RUPEES
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Balance Sheet for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
Cash and Cash Equivalents 990 950 901 998 870
Short Term Marketable Securities 10 15 12 6 11
Accounts Receivable 1,020 1,550 1,830 2,250 3,040
Inventory 1,005 1,360 1,650 1,900 2,060
Other Current Assets 870 1,150 1,370 1,650 1,530
Total Current Assets 3,895 5,025 5,763 6,804 7,511

Fixed Assets 14,006 17,605 21,826 26,950 28,100


Accumulated Depreciation (1,280) (1,700) (2,100) (2,550) (3,010)
Net Fixed Assets 12,726 15,905 19,726 24,400 25,090
Longterm Investments 360 320 120 590 905
Investments in Other Companies 65 0 0 250 412
Intangibles and Other Assets 100 110 105 135 195
Total Non Current Assets 13,251 16,335 19,951 25,375 26,602
Total Assets 17,146 21,360 25,714 32,179 34,113

Accounts Payable 2,050 3,150 3,290 3,870 4,800


Short Term Borrowings 1,200 1,830 2,580 3,100 3,550
Short Term Portion of LT Debt 12 15 25 30 36
Other Current Liabilities 1,050 1,250 1,480 1,590 1,301
Total Current Liabilities 4,312 6,245 7,375 8,590 9,687

Longterm Debt / Borrowings 1,160 1,750 2,600 3,600 3,950


Other Longterm Liabilities 650 750 701 890 995
Total Non Current Liabilities 1,810 2,500 3,301 4,490 4,945
Total Liabilities 6,122 8,745 10,676 13,080 14,632

Prepared by Matt H. Evans 02/15/2010 Page 7


Balance Sheet for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
Preferred Equity 0 0 0 0 0
Common Equity 2,044 2,005 2,069 2,090 2,120
Additional Paid in Capital 5,013 4,900 5,159 5,626 5,628
Retained Earnings 5,097 7,050 9,840 15,050 20,005
Adj for Foreign Currency Transl 275 120 (550) (2,147) (6,722)
Treasury Stock (1,405) (1,460) (1,480) (1,520) (1,550)
Total Shareholder Equity 11,024 12,615 15,038 19,099 19,481

Total Liabilities & Equity 17,146 21,360 25,714 32,179 34,113

Check: Assets = Liab + Equity ? 0 0 0 0 0


Comment => Balances Balances Balances Balances Balances

NonDepreciable Fixed Assets 0 0 0 0 0


Deferred Taxes 112 101 90 98 109
Goodwill Write Off 0 0 0 0 0
No of Common Shares o/s 1,320 1,290 1,302 1,345 1,322
Par Value of Common Stock $10.00 $10.00 $10.00 $10.00 $10.00
No of Preferred Shares o/s 0 0 0 0 0
Par Value of Preferred Stock
Market Price of Common Stock $22.65 $28.90 $37.05 $33.60 $29.40
Market Price of Preferred Stock $0.00 $0.00 $0.00 $0.00 $0.00
Preferred Dividends in Arrears 0 0 0 0 0
Liquidating value of Preferred Stk 0 0 0 0 0
Book Value per Share $8.35 $9.78 $11.55 $14.20 $14.74
Dividends per Common Share $1.01 $1.49 $1.89 $1.75 $1.76

Prepared by Matt H. Evans 02/15/2010 Page 8


Balance Sheet for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
Dividend Payout Ratio 45.47% 38.61% 39.44% 29.76% 30.24%
Cash Dividends to Preferred Stock 0 0 0 0 0
Cash Dividends to Common Stock 1,330 1,918 2,461 2,354 2,329
Total Dividends Paid 1,330 1,918 2,461 2,354 2,329

Prepared by Matt H. Evans 02/15/2010 Page 9


Income Statement for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
Net Sales 12,060 16,700 21,170 24,700 27,400
Other Operating Revenues 16 19 26 37 48
Total Revenues 12,076 16,719 21,196 24,737 27,448
Cost of Goods Sold (4,950) (7,050) (8,233) (9,050) (10,150)
Other Operating Expenses (11) (13) (17) (22) (28)
Total Direct Expenses (4,961) (7,063) (8,250) (9,072) (10,178)
Selling, General & Administrative (3,300) (3,880) (4,637) (5,670) (7,120)
Operating Income 3,815 5,776 8,309 9,995 10,150

Interest Expenses (117) (122) (216) (282) (304)


Foreign Exchange (Loss) Gain 0 0 0 0 0
Associated Company (Loss) Gain 0 0 (22) 0 0
Other NonOperating (Loss) Gain 0 17 0 0 0
Income Tax Expense (790) (1,005) (2,050) (2,105) (2,660)
Reserve Charges 0 0 0 0 0
Income Before Extra Ord Items 2,908 4,666 6,021 7,608 7,186

Extra Ordinary Items (Loss) Gain 0 0 0 0 0


Tax Effects of Extraordinary Items 0 0 0 0 0
Minority Interests 17 302 219 303 515
Net Income 2,925 4,968 6,240 7,911 7,701

Primary EPS $2.22 $3.85 $4.79 $5.88 $5.83


Earnings Before Int & Taxes 3,832 6,095 8,506 10,298 10,665
Depreciation & Amortization (310) (420) (400) (450) (460)
Research & Devel Expenses 0 0 0 0 0
Capitalized Interest Expense (16) (19) (33) (39) (30)
Interest Income 4 6 11 19 27

Prepared by Matt H. Evans 02/15/2010 Page 10


Income Statement for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
Total Non Operating Expenses (907) (1,110) (2,288) (2,387) (2,964)
Total Extra Ordinary Items 17 302 219 303 515
Tax Rate 21.36% 17.78% 25.33% 21.67% 27.02%

Prepared by Matt H. Evans 02/15/2010 Page 11


Cash Flow Statement for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009

Net Income 2,925 4,968 6,240 7,911 7,701


Depreciation and Amortization 310 420 400 450 460
(Increase) Decrease Defer Taxes (2) 11 11 (8) (11)
(Gain) Loss on Sale of Assets (55) 0 45 0 0
(Increase) Decrease Current Assets (162) (1,130) (738) (1,041) (707)
Increase (Decrease) Current Liab 206 1,933 1,130 1,215 1,097
Cash Flow from Operations 3,222 6,202 7,088 8,527 8,540

Capital Expenditures (1,455) (2,750) (3,880) (5,220) (4,108)


Acquisition in Other Co's (135) 0 0 0 0
Proceeds from Sales of Assets 112 35 0 150 182
Purchases of Investments (712) (1,979) (1,801) (2,314) (2,609)
Sale of Investments 162 129 330 221 50
Other Investment Activities 33 (166) 61 (12) 0
Cash Provided (Used) from Investmts (1,995) (4,731) (5,290) (7,175) (6,485)

Proceeds from Borrowings 1,070 1,044 1,460 1,880 1,105


Payments on Borrowings (1,112) (650) (898) (801) (961)
Dividends Paid to Shareholders (1,330) (1,918) (2,461) (2,354) (2,329)
Proceeds from Minority Interest 5 12 7 7 8
Issue Stock / Exercise Options 195 1 45 13 6
Purchase / Retire Common Stock 0 0 0 0 0
Other Financing Activities (75) 0 0 0 (12)
Cash Provided (Used) from Financing (1,247) (1,511) (1,847) (1,255) (2,183)

Increase (Decrease) to Cash (20) (40) (49) 97 (128)

Prepared by Matt H. Evans 02/15/2010 Page 12


Cash Flow Statement for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
Beginning Cash Balance 1,010 990 950 901 998
Ending Cash Balance 990 950 901 998 870
Check: Should agree to Balance Sheet 0 0 0 0 0
Comment => Balances Balances Balances Balances Balances

Prepared by Matt H. Evans 02/15/2010 Page 13


Key Financial Data for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
EBITDA :
Income before ExtraOrd Items 2,908 4,666 6,021 7,608 7,186
Interest Expense 117 122 216 282 304
Capitalized Interest Expense 16 19 33 39 30
Income Tax Expense 790 1,005 2,050 2,105 2,660
Reserve Charges 0 0 0 0 0
Depreciation and Amortization 310 420 400 450 460
EBITDA 4,141 6,232 8,720 10,484 10,640

EBITDA Margin 34% 37% 41% 42% 39%

Free Cash Flow:


Operating Cash Flow 3,222 6,202 7,088 8,527 8,540
Investment Cash Flows (1,995) (4,731) (5,290) (7,175) (6,485)
Preferred Dividends Paid (fixed) 0 0 0 0 0
Redemption of Fixed Obligations (1,112) (650) (898) (801) (961)
Other Critical Outlays (35) (45) (42) (30) (25)
Free Cash Flow 80 776 858 521 1,069

Working Capital:
Current Assets 3,895 5,025 5,763 6,804 7,511
Current Liabilities 4,312 6,245 7,375 8,590 9,687
Working Capital (417) (1,220) (1,612) (1,786) (2,176)

Liquid Capital:
Cash and Cash Equivalents 990 950 901 998 870
Marketable Securities 10 15 12 6 11
Accounts Receivable 1,020 1,550 1,830 2,250 3,040
Notes Receivable 0 0 0 0 0
Total Current Liabilities (4,312) (6,245) (7,375) (8,590) (9,687)
Long Term Debt (1,160) (1,750) (2,600) (3,600) (3,950)
Preferred Equity 0 0 0 0 0
Liquid Capital (3,452) (5,480) (7,232) (8,936) (9,716)

The following valuation indicators are very simple and basic; they are used as quick, rough estmates.

Market Capitalization:
Market Cap - Common Stk $29,898 $37,281 $48,239 $45,192 $38,867
Market Cap - Preferred Stk $0.00 $0.00 $0.00 $0.00 $0.00
Total Market Capitalization $29,898 $37,281 $48,239 $45,192 $38,867

Present Value:
Normalized Cash Flow Weight %'s 5.00% 10.00% 15.00% 30.00% 40.00%
Key Financial Data for
X Y Z Corporation USA
RUPEES
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2005 2006 2007 2008 2009
Normalized Cash Flow 794
Number of Future Periods 15
Required Rate of Return 11.00%
Present Value of Free Cash Flow $5,711
Present Value of Selling Price $315,000 <= estimated selling price $65,836
Present Value of Business $71,547

Revenue Multiplier:
Recent Gross Revenues 27,448
Average Competitive Rev Multiplier 3.14
Value based on Revenue Multiple $86,187

Capitalization of Earnings:
Normalized Net Income Weights % 5.00% 5.00% 25.00% 30.00% 35.00%
Normalized Net Income 6,681
Capitalization Rate 12.00%
Nominal Growth Rate 3.50%
Net Capitalization Rate 8.50%
Value based on Earnings $78,605

Operating Leverage 1.31 1.49 1.21 0.14

Financial Leverage 1.46 0.61 1.12 (0.65)

Total Leverage 1.92 0.91 1.36 (0.09)

Check Totals 0.00 1.92 0.91 1.36 (0.09)


Ratio Analysis for
X Y Z Corporation USA

Annual Annual Annual Annual Annual


Period Period Period Period Period
Title of Ratio 2005 2006 2007 2008 2009

Acid Test Ratio 0.47 0.40 0.37 0.38 0.40

Current Ratio 0.90 0.80 0.78 0.79 0.78

Operating Cash Flow to Net Income 1.10 1.25 1.14 1.08 1.11

Liquidity Index:
Cash - Days Removed 0 0 0 0 0
Cash Balance 990 950 901 998 870
Cash Balance Total 0 0 0 0 0
Marketable Sec - Days Removed 11 12 16 15 14
Marketable Securities Balance 10 15 12 6 11
Marketable Securities Total 110 180 192 90 154
Receivables - Days Removed 34 30 31 32 36
Receivable Balance 1,020 1,550 1,830 2,250 3,040
Receivable Balance Total 34,257 46,158 56,217 72,213 110,751
Inventory - Days Removed 79 61 67 72 71
Inventory Balance 1,005 1,360 1,650 1,900 2,060
Inventory Balance Total 79,745 83,261 110,092 136,018 146,676
Other - Days Removed 16 22 26 21 19
Other Current Assets Balance 870 1,150 1,370 1,650 1,530
Other Current Assets Total 13,920 25,300 35,620 34,650 29,070
Liquidity Index (Days) 33 31 35 36 38

Z Score:
1.2 x (working capital / total assets) (0.03) (0.07) (0.08) (0.07) (0.08)
1.4 x (retained earn / total assets) 0.42 0.46 0.54 0.65 0.82
3.3 x (EBIT / total assets) 0.74 0.94 1.09 1.06 1.03
.6 x (market value equity / b.v. debt) 15.46 12.78 11.13 7.53 5.90
.999 x (sales / total assets) 0.70 0.78 0.82 0.77 0.80
Z Score 17.29 14.90 13.51 9.94 8.48

Receivable Turnover:
Credit Sales 11,520 15,750 20,080 23,200 26,500
Average Receivable Balance 1,060 1,285 1,690 2,040 2,645
Receivable Turnover 10.9 12.3 11.9 11.4 10.0

Days Required to Collect A/R 34 30 31 32 36

Inventory Turnover:
Average Inventory Balance 1,046 1,183 1,505 1,775 1,980
Inventory Turnover 4.6 6.0 5.5 5.1 5.1

Days in Inventory 79 61 67 72 71

Total Asset Turnover 0.7 0.8 0.8 0.8 0.8


Ratio Analysis for
X Y Z Corporation USA

Annual Annual Annual Annual Annual


Period Period Period Period Period
Title of Ratio 2005 2006 2007 2008 2009

Operating Assets Ratio 0.97 0.98 0.99 0.97 0.96

Gross Profit Margin 59% 58% 61% 63% 63%

Operating Margin 32% 35% 39% 40% 37%

Net Profit Margin 24% 30% 29% 32% 28%

Direct Cost to Operating Revenues 41% 42% 39% 37% 37%

Capitalization Rate / Asset Return:


Net Operating Income 3,000 4,749 6,204 7,829 7,408
Total Investments / Operating Assets 16,621 20,930 25,489 31,204 32,601
Capitalization Rate / Return 18.05% 22.69% 24.34% 25.09% 22.72%

Return on Shareholder Equity 24% 33% 35% 33% 26%

Debt to Total Assets 0.36 0.41 0.42 0.41 0.43

Debt to Common Equity 0.50 0.63 0.63 0.57 0.53

Times Interest Earned 33 50 39 37 35

Price to Earnings (P/E) 10.2 7.5 7.7 5.7 5.0

Price to Book Value 2.7 3.0 3.2 2.4 2.0

Stock Yield 4.45% 5.14% 5.10% 5.21% 5.99%


Home Wksh2 Benchmark Analysis for
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Wksh7 active You need to collect benchmark data on the respective industry for the subject company.
Wksh9 Wksh10 Enter the benchmark data in the appropriate input cells. This information is used to
Wksh11 Wksh12 generate trend line graphs in this worksheet. If you do not have any benchmark data,
Wksh13 Wksh14 then fill in the highlighted yellow cell with numeric zero "0". The "industry" line will be null
Wksh15 Wksh16 in the graph and show only the company specific ratio trend.

Annual Annual Annual


Period Period Period
Ref Description 2005 2006 2007

8-1 Acid Test Ratio - Industry 0.51 0.52 0.50


7-1 Acid Test Ratio - Company 0.47 0.40 0.37

8-2 Current Ratio - Industry 1.12 1.10 1.05


7-2 Current Ratio - Company 0.90 0.80 0.78

8-3 Receivable Turnover - Industry 8.50 8.70 8.40


7-21 Receivable Turnover - Company 10.87 12.26 11.88

8-4 Days to Collect A/R - Industry 41 39 40


7-22 Days to Collect A/R - Company 34 30 31

8-5 Inventory Turnover - Industry 4.40 4.45 4.20


7-25 Inventory Turnover - Company 4.60 5.96 5.47

8-6 Days in Inventory - Industry 86 88 81


7-26 Days in Inventory - Company 79 61 67

8-7 Asset Turnover - Industry 1.60 1.55 1.62


7-27 Asset Turnover - Company 0.70 0.78 0.82

8-8 Gross Profit Margin - Industry 55.00% 52.00% 60.00%


7-29 Gross Profit Margin - Company 58.96% 57.78% 61.11%

8-10 Net Profit Margin - Industry 20.00% 23.00% 22.00%


7-31 Net Profit Margin - Company 24.22% 29.71% 29.44%

8-11 Return on Total Assets - Industry 38.00% 36.00% 37.00%


8-12 Return on Total Assets - Company 30.00% 25.80% 26.51%

8-13 Return on Equity - Industry 26.00% 22.00% 24.00%


8-14 Return on Equity - Company 23.93% 33.44% 35.28%

8-15 Debt to Equity - Industry 35% 38% 31%


7-38 Debt to Equity - Company 50% 63% 63%
8-16 Times Interest Earned - Industry 40 38 36
7-39 Times Interest Earned - Company 33 50 39

We added the following two ratios to assess if the Company has excessive growth:
4-13 Provision for Taxes (790) (1,005) (2,050)
8-17 Trading Ratio - Company 1.24 1.37 1.52
8-18 Trading Ratio - Industry 1.26 1.28 1.31

8-19 Net Sales to Net Worth - Company 1.18 1.44 1.63


8-20 Net Sales to Net Worth - Industry 1.22 1.20 1.19

Source for Benchmark Data: Almanac of Business and Industrial Financial Ratios by Leo Troy, Prentice Ha

Graphs appear below for each of the above comparisons:

Acid Ratio Comparison


0.60
0.50
0.40 Acid Test Ratio -
Industry
Ratio

0.30
Acid Test Ratio -
0.20 Company

0.10
0.00
2005 2006 2007 2008 2009
Periods

Current Ratio Comparison


1.20
1.00
0.80 Current Ratio -
Industry
Ratio

0.60
Current Ratio -
0.40 Company

0.20
0.00
2005 2006 2007 2008 2009
Periods
Current Ratio -

R
0.40 Company

0.20
0.00
2005 2006 2007 2008 2009
Periods

Receivable Turnover Comparison


14.00
12.00
10.00 Receivable
Turnover Rate

Turnover -
8.00 Industry
6.00 Receivable
Turnover -
4.00 Company
2.00
0.00
2005 2006 2007 2008 2009
Periods

Receivable Collection Comparison


45
40
Days to Collect A/R

35
30 Days to Collect
25 A/R - Industry
20 Days to Collect
15 A/R - Company
10
5
0
2005 2006 2007 2008 2009
Periods

Inventory Turnover Comparison


7.00
6.00
5.00
Turnover Rate

Inventory
4.00 Turnover -
3.00 Industry
Inventory
2.00 Turnover -
1.00 Company

0.00
7.00
6.00
5.00

Turnover Rate
Inventory
4.00 Turnover -
3.00 Industry
Inventory
2.00 Turnover -
1.00 Company

0.00
2005 2006 2007 2008 2009
Periods

Inventory Days Comparison


100
Days Held in Inventory

80

60 Days in Inventory
- Industry
Days in Inventory
40
- Company
20

0
2005 2006 2007 2008 2009
Periods

Asset Turnover Comparison


1.80
1.60
1.40
Turnover Rate

1.20 Asset Turnover -


1.00 Industry
0.80 Asset Turnover -
0.60 Company
0.40
0.20
0.00
2005 2006 2007 2008 2009
Periods

Gross Profit Margin


70.00%
60.00%
Margin

50.00%
Gross Profit
Gross Profit Margin
70.00%
60.00%

Gross Profit Margin


50.00%
Gross Profit
40.00% Margin - Industry
30.00% Gross Profit
Margin -
20.00% Company
10.00%
0.00%
2005 2006 2007 2008 2009
Periods

Net Profit Margin


35.00%
30.00%
Net Profit Margin

25.00%
Net Profit Margin
20.00% - Industry
15.00% Net Profit Margin
- Company
10.00%
5.00%
0.00%
2005 2006 2007 2008 2009
Periods

Return on Total Assets


40.00%
35.00%
Return on Total Assets

30.00%
25.00% Return on Total
Assets - Industry
20.00%
Return on Total
15.00% Assets -
10.00% Company
5.00%
0.00%
05

06

07

08

09
20

20

20

20

20

Periods
Assets - Industry
20.00%

Return on Tota
Return on Total
15.00% Assets -
10.00% Company
5.00%
0.00%

05

06

07

08

09
20

20

20

20

20
Periods

Return on Equity Comparison


40.00%
Return on Common Equity

35.00%
30.00%
25.00% Return on Total
Assets - Industry
20.00%
Return on Total
15.00% Assets -
10.00% Company
5.00%
0.00%
05

06

07

08

09
20

20

20

20

20
Periods

Debt to Equity Comparison


70%
60%
Debt to Equity Ratio

50%
Debt to Equity -
40% Industry
30% Debt to Equity -
Company
20%
10%
0%
2005 2006 2007 2008 2009
Periods

Times Interest Earned


60
es Interest Earned

50
40 Times Interest
Earned - Industry
30
Times Interest
20 Earned -
Company
10
Times Interest Earned
60

Times Interest Earned


50
40 Times Interest
Earned - Industry
30
Times Interest
20 Earned -
Company
10
0
2005 2006 2007 2008 2009
Periods

Trading Ratio Comparison


3.00

2.50

2.00
Trading Ratio -
Industry
Ratio

1.50
Trading Ratio -
1.00 Company

0.50

0.00
2005 2006 2007 2008 2009
Periods

Sales to Worth Comparison


3.00

2.50

2.00
Net Sales to Net
Worth - Industry
Ratio

1.50
Net Sales to Net
Worth -
1.00
Company
0.50

0.00
2005 2006 2007 2008 2009
Periods
Worth -
1.00
Company
0.50

0.00
2005 2006 2007 2008 2009
Periods
ubject company.

nchmark data,
y" line will be null

Annual Annual
Period Period
2008 2009

0.49 0.48
0.38 0.40

1.08 1.07
0.79 0.78

8.20 8.30
11.37 10.02

41 41
32 36

4.30 4.38
5.10 5.13

89 82
72 71

1.68 1.69
0.77 0.80

62.00% 63.00%
63.36% 62.96%

19.00% 20.00%
31.98% 28.06%

34.00% 36.00%
27.33% 23.23%

19.00% 20.00%
33.42% 25.89%

34% 32%
57% 53%
39 43
37 35

(2,105) (2,660)
1.44 1.49
1.30 1.27

1.45 1.63
1.22 1.20

cial Ratios by Leo Troy, Prentice Hall

Acid Test Ratio -


ndustry
Acid Test Ratio -
Company

Current Ratio -
Industry
Current Ratio -
Company
Current Ratio -
Company

son

ceivable
rnover -
dustry
ceivable
rnover -
mpany

09

ison

s to Collect
- Industry
s to Collect
- Company

son

entory
nover -
ustry
entory
nover -
mpany
entory
nover -
ustry
entory
nover -
mpany

009

ays in Inventory
ndustry
ays in Inventory
Company

Asset Turnover -
ndustry
Asset Turnover -
Company

ss Profit
ss Profit
gin - Industry
ss Profit
gin -
mpany

et Profit Margin
ndustry
et Profit Margin
Company

eturn on Total
ssets - Industry
eturn on Total
ssets -
ompany
ssets - Industry
eturn on Total
ssets -
ompany

on

eturn on Total
sets - Industry
eturn on Total
sets -
ompany

Debt to Equity -
Industry
Debt to Equity -
Company

mes Interest
rned - Industry
mes Interest
rned -
mpany
mes Interest
rned - Industry
mes Interest
rned -
mpany

Trading Ratio -
Industry
Trading Ratio -
Company

et Sales to Net
Worth - Industry
et Sales to Net
Worth -
ompany
Worth -
ompany
Horizontal Analysis for
X Y Z Corporation USA

Horizontal Analysis expresses change between periods as percentages for each account in
the financial statements. The basic formula for horizontal analysis is:
% change = (most recent period - previous period) / previous period

Annual Annual Annual Annual Annual


Period Period Period Period Period
Description 2005 2006 2007 2008 2009

Growth in Net Sales 32.50% 38.47% 26.77% 16.67% 10.93%

Cost of Goods Sold 29.00% 42.42% 16.78% 9.92% 12.15%

Growth in Gross Profits 2.90% -1.99% 5.76% 3.68% -0.64%

Growth in Interest Expense 16.50% 4.27% 77.05% 30.56% 7.80%


Growth in Income Tax Expense 12.90% 27.22% 103.98% 2.68% 26.37%

Growth in Non Operating Expenses 3.80% 22.38% 106.13% 4.33% 24.17%

Growth in Minority Interest 96.00% 1676.47% -27.48% 38.36% 69.97%

Growth in Net Income 33.50% 69.85% 25.60% 26.78% -2.65%

Growth in Earnings Per Share 32.60% 73.80% 24.45% 22.73% -0.96%

Cash and Cash Equivalents 3.08% -4.04% -5.16% 10.77% -12.83%


Short Term Marketable Securities 12.00% 50.00% -20.00% -50.00% 83.33%
Accounts Receivable 26.70% 51.96% 18.06% 22.95% 35.11%
Inventory 19.90% 35.32% 21.32% 15.15% 8.42%
Other Current Assets 26.70% 32.18% 19.13% 20.44% -7.27%
Total Current Assets 21.50% 29.01% 14.69% 18.06% 10.39%

Net Fixed Assets 17.80% 24.98% 24.02% 23.69% 2.83%


Longterm Investments 6.20% -11.11% -62.50% 391.67% 53.39%
Investments in Other Companies 0.00% -100.00% #DIV/0! #DIV/0! 64.80%
Intangibles and Other Assets 16.50% 10.00% -4.55% 28.57% 44.44%
Total Non Current Assets 32.50% 23.27% 22.14% 27.19% 4.84%

Growth in Total Assets 1.05% 24.58% 20.38% 25.14% 6.01%

Accounts Payable 26.20% 53.66% 4.44% 17.63% 24.03%


Short Term Borrowings 33.50% 52.50% 40.98% 20.16% 14.52%
Short Term Portion of LT Debt 16.70% 25.00% 66.67% 20.00% 20.00%
Other Current Liabilities 12.80% 19.05% 18.40% 7.43% -18.18%
Total Current Liabilities 38.02% 44.83% 18.09% 16.47% 12.77%
Longterm Debt / Borrowings 46.00% 50.86% 48.57% 38.46% 9.72%
Other Longterm Liabilities 11.30% 15.38% -6.53% 26.96% 11.80%
Total Non Current Liabilities 37.10% 38.12% 32.04% 36.02% 10.13%

Growth in Total Liabilities 31.05% 42.85% 22.08% 22.52% 11.87%

Preferred Equity 0.00% #DIV/0! #DIV/0! #DIV/0! #DIV/0!


Common Equity 2.60% -1.91% 3.19% 1.01% 1.44%
Additional Paid in Capital 1.50% -2.25% 5.29% 9.05% 0.04%
Retained Earnings 38.00% 38.32% 39.57% 52.95% 32.92%
Adj for Foreign Currency Transl -166.00% -56.36% -558.33% 290.36% 213.09%
Treasury Stock 2.01% 3.91% 1.37% 2.70% 1.97%

Growth in Total Equity (Net Worth) 6.11% 14.43% 19.21% 27.00% 2.00%

Sustainable Growth Rate #1 13.05% 20.53% 21.36% 23.47% 18.06%


Sustainable Growth Rate #2 10.88% 12.91% 13.91% 9.94% 7.83%

Growth in Market Capitalization 14.50% 24.69% 29.39% -6.32% -14.00%


Vertical Analysis for
X Y Z Corporation USA

Vertical analysis expresses financial statements as percentages. On the Balance Sheet,


Total Assets is assigned 100% and on the Income Statement, Total Revenues is assigned 100%.

expressed in percentages
Annual Annual Annual Annual Annual
Period Period Period Period Period
Account Title 2005 2006 2007 2008 2009

Cash and Cash Equivalents 5.77% 4.45% 3.50% 3.10% 2.55%


Short Term Marketable Securities 0.06% 0.07% 0.05% 0.02% 0.03%
Accounts Receivable 5.95% 7.26% 7.12% 6.99% 8.91%
Inventory 5.86% 6.37% 6.42% 5.90% 6.04%
Other Current Assets 5.07% 5.38% 5.33% 5.13% 4.49%
Current Assets 22.72% 23.53% 22.41% 21.14% 22.02%

Net Fixed Assets 74.22% 74.46% 76.71% 75.83% 73.55%


Longterm Investments 2.10% 1.50% 0.47% 1.83% 2.65%
Investments in Other Companies 0.38% 0.00% 0.00% 0.78% 1.21%
Intangibles and Other Assets 0.58% 0.51% 0.41% 0.42% 0.57%
Non Current Assets 77.28% 76.47% 77.59% 78.86% 77.98%

Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%

Accounts Payable 11.96% 14.75% 12.79% 12.03% 14.07%


Short Term Borrowings 7.00% 8.57% 10.03% 9.63% 10.41%
Short Term Portion of LT Debt 0.07% 0.07% 0.10% 0.09% 0.11%
Other Current Liabilities 6.12% 5.85% 5.76% 4.94% 3.81%
Total Current Liabilities 25.15% 29.24% 28.68% 26.69% 28.40%

Longterm Debt / Borrowings 6.77% 8.19% 10.11% 11.19% 11.58%


Other Longterm Liabilities 3.79% 3.51% 2.73% 2.77% 2.92%
Total NonCurrent Liabilities 10.56% 11.70% 12.84% 13.95% 14.50%

Total Liabilities 35.71% 40.94% 41.52% 40.65% 42.89%

Preferred Equity 0.00% 0.00% 0.00% 0.00% 0.00%


Common Equity 11.92% 9.39% 8.05% 6.49% 6.21%
Additional Paid in Capital 29.24% 22.94% 20.06% 17.48% 16.50%
Retained Earnings 29.73% 33.01% 38.27% 46.77% 58.64%
Adj for Foreign Currency Transl 1.60% 0.56% -2.14% -6.67% -19.71%
Treasury Stock -8.19% -6.84% -5.76% -4.72% -4.54%
Total Equity 64.29% 59.06% 58.48% 59.35% 57.11%

Total Liabilities & Equity 100.00% 100.00% 100.00% 100.00% 100.00%


Total Revenues 100.00% 100.00% 100.00% 100.00% 100.00%

Cost of Goods Sold 40.99% 42.17% 38.84% 36.58% 36.98%

Gross Profit 58.96% 57.78% 61.11% 63.36% 62.96%

Operating Expenses 27.42% 23.28% 21.96% 23.01% 26.04%

Non Operating Expenses 7.51% 6.64% 10.79% 9.65% 10.80%

Income Before Extra Ord Items 24.08% 27.91% 28.41% 30.76% 26.18%

Net Income 24.22% 29.71% 29.44% 31.98% 28.06%


Annual Annual Annual Annual Annual
Period Period Period Period Period
Enter Your Forecast Periods => 2001 2002 2003 2004 2005

Pro Forma Income Statement

Gross Revenues 30,742 34,431 38,562 43,190 48,373


Growth Assumptions 12.00% 12.00% 12.00% 12.00% 12.00%

Cost of Goods Sold (12,024) (13,467) (15,083) (16,893) (18,920)


Growth Assumptions 39.11% 39.11% 39.11% 39.11% 39.11%

Operating Expenses (7,483) (8,381) (9,387) (10,513) (11,775)


Growth Assumptions 24.34% 24.34% 24.34% 24.34% 24.34%

NonOperating Expenses (3,200) (3,200) (3,600) (3,600) (4,000)

ExtraOrdinary Items 650 650 650 700 700

Net Income 8,685 10,033 11,143 12,884 14,378

Pro Forma Cash Flow Statement

Sources of Operating Cash Flow:


Net Income 8,685 10,033 11,143 12,884 14,378
Depreciation and Amortization 470 490 500 520 550
(Increase) Decrease Defer Taxes 0 0 0 0 0
(Gain) Loss on Sale of Assets 15 9 2 3 6
(Increase) Decrease Current Assets (789) (996) (1,116) (1,249) (1,399)
Increase (Decrease) Current Liab 1,073 1,291 1,446 1,620 1,814

Operating Cash Flow 9,453 10,827 11,975 13,777 15,348

Investment Sources of Cash Flow:


Planned Sale of Assets 100 60 20 25 35
Planned Sale of Investments 2,200 2,100 1,900 1,800 1,700
Other Investment Sources to be used 0 0 0 0 0
Total Investment Sources of Cash 2,300 2,160 1,920 1,825 1,735

Planned Investments:
Capital Expenditures (3,500) (3,000) (3,100) (2,700) (2,600)
Acquisitions in Other Co's (500) (750) (1,200) (650) (350)
Purchases of Investments (3,000) (3,500) (4,500) (6,000) (7,000)
Total Investment Applications of Cash (7,000) (7,250) (8,800) (9,350) (9,950)

Cash Flow from Financing Activities:


Proceeds from Loans & Debt 1,300 1,000 950 750 650
Proceeds from Minority Interest 20 60 80 90 100
Annual Annual Annual Annual Annual
Period Period Period Period Period
Enter Your Forecast Periods => 2001 2002 2003 2004 2005

Other Financing Activities 0 0 0 0 0


Total Financing Sources of Cash 1,320 1,060 1,030 840 750

Cash Flow Applied for Financing:


Payments on Loans & Debt (1,500) (1,000) (600) (500) (500)
Dividends Paid to Shareholders (2,500) (3,000) (4,000) (5,500) (7,000)
Purchase / Retire Stock (2,000) (2,000) (1,500) (1,000) (500)
Other Financing Activities 0 0 0 0 0
Total Financing Applications of Cash (6,000) (6,000) (6,100) (7,000) (8,000)

Total Change to Cash 73 797 25 92 (117)

Beginning Cash Balance 870 943 1,740 1,765 1,857


Forecasted Ending Balance 943 1,740 1,765 1,857 1,740

Pro Forma Balance Sheet

Cash and Cash Equivalents 943 1,740 1,765 1,857 1,740


Short Term Marketable Securities 0 0 0 0 0
Accounts Receivable 3,074 3,443 3,856 4,319 4,837
Inventory 2,459 2,754 3,085 3,455 3,870
Other Current Assets 1,998 2,238 2,507 2,807 3,144
Total Current Assets 8,475 10,175 11,213 12,438 13,591

Fixed Assets 31,600 34,600 37,700 40,400 43,000


Accumulated Depreciation (3,480) (3,970) (4,470) (4,990) (5,540)
Net Fixed Assets 28,120 30,630 33,230 35,410 37,460
Longterm Investments 1,705 3,105 5,705 9,905 15,205
Investments in Other Companies 912 1,662 2,862 3,512 3,862
Intangibles and Other Assets 200 240 320 400 650
Total Non Current Assets 30,937 35,637 42,117 49,227 57,177

Total Assets 39,412 45,812 53,330 61,665 70,768

Accounts Payable 5,226 5,853 6,556 7,342 8,223


Short Term Borrowings 3,689 4,132 4,627 5,183 5,805
Short Term Portion of LT Debt 30 30 25 20 15
Other Current Liabilities 1,845 2,066 2,314 2,591 2,902
Total Current Liabilities 10,790 12,081 13,522 15,136 16,945

Longterm Debt / Borrowings 3,750 3,750 4,100 4,350 4,500


Other Longterm Liabilities 700 750 800 800 800
Total Non Current Liabilities 4,450 4,500 4,900 5,150 5,300

Total Liabilities 15,240 16,581 18,422 20,286 22,245


Annual Annual Annual Annual Annual
Period Period Period Period Period
Enter Your Forecast Periods => 2001 2002 2003 2004 2005

Preferred Equity 0 0 0 0 0
Common Equity 2,200 2,200 2,200 2,200 2,200
Additional Paid in Capital 5,700 5,700 5,700 5,700 5,700
Retained Earnings 26,190 33,222 40,365 47,748 55,126
Adj for Foreign Currency Transl (5,000) (4,000) (2,500) (1,500) (500)
Treasury Stock (3,550) (5,550) (7,050) (8,050) (8,550)
Total Equity 25,540 31,572 38,715 46,098 53,976

External Financing Required (EFR) (1,368) (2,341) (3,807) (4,720) (5,453)


Home Wksh2 ProForma Financials (Linear Trend Model)
Wksh3 Wksh4 X Y Z Corporation USA
Wksh5 Wksh6
Wksh7 Wksh8 A set of pro forma (forecasted) financial statements are generated using the results of
Wksh9 Wksh10 the historical analysis in the previous worksheets. A statistical method known as
Wksh11 active linear regression is used to predict future values. If you have important assumptions
Wksh13 Wksh14 that are important to the forecast, then these assumptions should over-ride the
Wksh15 Wksh16 linear calculations since we want our forecast to be as accurate as possible.
Key Point => If your historical information has gradual trends, then linear regression
is an appropriate model for forecasting. However, if your historical information has
distinct steps up or down, then you should consider using a smoothing model .

Before we adopt a regression model, it's a good idea to generate a scatter graph of the actual data
and observe if there is a clear trend for fitting a straight regression line into the data:

Total Revenues
30,000
25,000
Total Revenues

20,000
15,000 Row 10
10,000
5,000
0
2004 2006 2008 2010
Periods

The calculation of linear values is determined by defining the slope of the line and the y intercept:
Order Total Rev Linear
Formula for Linear Trendline: Year variable x actual y Value y
2005 1 12,076 12,683
y=(m*x)+b 2006 2 16,719 16,559
2007 3 21,196 20,435
m: slope of line 2008 4 24,737 24,311
x: independent variable 2009 5 27,448 28,188
b: y intercept 2001 6 32,064
2002 7 35,940
2003 8 39,816
2004 9 43,692
2005 10 47,569

The degree of linear fit with the actual data can be expressed as R Square 0.9888

Annual Annual Annual Annual


Period Period Period Period
2001 2002 2003 2004

Pro Forma Income Statement

12-1 Gross Revenues (2,822) 1,054 4,930 8,807

12-2 Cost of Goods Sold (447) (1,687) (2,927) (4,167)

12-3 Operating Expenses 737 (206) (1,149) (2,092)

12-4 Operating Income (2,532) (839) 854 2,548

12-5 Non Operating Expenses 1,303 764 225 (314)

4-25 Extra Ordinary Items 271 271 271 271

Net Income (957) 197 1,351 2,505

Pro Forma Cash Flow Statement

Sources of Operating Cash Flow:


Net Income (957) 197 1,351 2,505
Depreciation and Amortization 470 490 500 520
(Increase) Decrease Defer Taxes 0 0 0 0
(Gain) Loss on Sale of Assets 15 9 2 3
(Increase) Decrease Current Assets 8,273 (1,047) (1,047) (1,047)
Increase (Decrease) Current Liab (10,675) 1,357 1,357 1,357

Operating Cash Flow (2,874) 1,006 2,163 3,338

Investment Sources of Cash Flow:


Planned Sale of Assets 100 60 20 25
Planned Sale of Investments 2,200 2,100 1,900 1,800
Other Investment Sources to be used 0 0 0 0
Total Investment Sources of Cash 2,300 2,160 1,920 1,825

Planned Investments:
Capital Expenditures (3,500) (3,000) (3,100) (2,700)
Acquisitions (500) (750) (1,200) (650)
Purchases of Investments (3,000) (3,500) (4,500) (6,000)
Total Investment Applications of Cash (7,000) (7,250) (8,800) (9,350)

Cash Flow from Financing Activities:


Proceeds from Loans & Debt 1,300 1,000 950 750
Proceeds from Minority Interest 20 60 80 90
Other Financing Activities 0 0 0 0
Total Financing Sources of Cash 1,320 1,060 1,030 840

Cash Flow Applied for Financing:


Payments on Loans & Debt (1,500) (1,000) (600) (500)
Dividends Paid to Shareholders (2,500) (3,000) (4,000) (5,500)
Purchase / Retire Stock (2,000) (2,000) (1,500) (1,000)
Other Financing Activities 0 0 0 0
Total Financing Applications of Cash (6,000) (6,000) (6,100) (7,000)

Total Change to Cash (12,254) (9,024) (9,787) (10,347)

Beginning Cash Balance 870 (11,384) (20,408) (30,195)


Forecasted Ending Balance (11,384) (20,408) (30,195) (40,542)

Pro Forma Balance Sheet

Cash and Cash Equivalents (11,384) (20,408) (30,195) (40,542)


Short Term Marketable Securities 0 0 0 0
Accounts Receivable (282) 105 493 881
Inventory (226) 84 394 705
Other Current Assets (183) 69 320 572
Total Current Assets (12,076) (20,150) (28,988) (38,385)

Fixed Assets 31,600 34,600 37,700 40,400


Accumulated Depreciation (3,480) (3,970) (4,470) (4,990)
Net Fixed Assets 28,120 30,630 33,230 35,410
Longterm Investments 1,705 3,105 5,705 9,905
Investments in Other Companies 912 1,662 2,862 3,512
Intangibles and Other Assets 200 240 320 400
Total Non Current Assets 30,937 35,637 42,117 49,227

Total Assets 18,861 15,487 13,129 10,842

Accounts Payable (480) 179 838 1,497


Short Term Borrowings (339) 127 592 1,057
Short Term Portion of LT Debt 30 30 25 20
Other Current Liabilities (169) 63 296 528
Total Current Liabilities (958) 399 1,751 3,102

Longterm Debt / Borrowings 3,750 3,750 4,100 4,350


Other Longterm Liabilities 700 750 800 800
Total Non Current Liabilities 4,450 4,500 4,900 5,150

Total Liabilities 3,492 4,899 6,651 8,252

Preferred Equity 0 0 0 0
Common Equity 2,200 2,200 2,200 2,200
Additional Paid in Capital 5,700 5,700 5,700 5,700
Retained Earnings 16,548 13,744 11,095 8,100
Adj for Foreign Currency Transl (5,000) (4,000) (2,500) (1,500)
Treasury Stock (3,550) (5,550) (7,050) (8,050)
Total Equity 15,898 12,094 9,445 6,450
External Financing Required (EFR) (528) (1,506) (2,966) (3,860)
of the actual data

d the y intercept:
Slope Intercept
m factor b factor
3876.20 8806.60

Annual
Period
2005

12,683

(5,407)

(3,035)

4,241

(853)

271

3,659

3,659
550
0
6
(1,047)
1,357

4,525

35
1,700
0
1,735

(2,600)
(350)
(7,000)
(9,950)

650
100
0
750
(500)
(7,000)
(500)
0
(8,000)

(10,940)

(40,542)
(51,482)

(51,482)
0
1,268
1,015
824
(48,375)

43,000
(5,540)
37,460
15,205
3,862
650
57,177

8,802

2,156
1,522
15
761
4,454

4,500
800
5,300

9,754

0
2,200
5,700
4,759
(500)
(8,550)
3,609
(4,561)
Home Wksh2 ProForma Financials (Exponential Smoothing / Weighted Moving Average)
Wksh3 Wksh4 X Y Z Corporation USA
Wksh5 Wksh6
Wksh7 Wksh8 A set of pro forma (forecasted) financial statements are generated using the results of
Wksh9 Wksh10 the historical analysis in the previous worksheets. A statistical method known as
Wksh11 Wksh12 exponential smoothing is used to plot a trend over historical data. Additionally, we
active Wksh14 can use a weighted moving average to forecast future periods.
Wksh15 Wksh16 Key Point => If you have a general upward historical trend, weighted average will tend
to underestimate forecasted values and vice versa (downward trend = overestimate).

Exponential Smoothing and Weighted Moving Averages for Total Revenues:


Years => 1996 1997
Total Revenues - Historical 12,076 16,719
Total Revenues - Exponential 12,076 12,076
Total Revenues - Wt Moving Avg 11,105 15,230

Smoothing Factor must be between 0 and 1 0 1


Set Smoothing Factor 1.00
Assign weights to appropriate periods 0.00% 1.50%

Find the Optimal Smoothing Factor:


Total Exponent
Revenues Amounts
12,076 12,076
16,719 12,076
21,196 16,719
24,737 21,196
27,448 24,737
Mean Squared Error

Find the Optimal Moving Weights:


Total Weighted
Revenues Amounts
12,076 11,105
16,719 15,230
21,196 18,890
24,737 21,605
27,448 22,965
Mean Squared Error

Exponential Comparison
30,000

25,000
Total Revenues -
otal Revenues

20,000
Historical
Total Revenues -
15,000 Exponential
Total Revenues -
10,000 Wt Moving Avg
Exponential Comparison
30,000

25,000
Total Revenues -

Total Revenues
20,000
Historical
Total Revenues -
15,000 Exponential
Total Revenues -
10,000 Wt Moving Avg

5,000

0
2001 2002 2003 2004 2005
Periods

Annual Annual
Period Period
2001 2002
Pro Forma Income Statement

Gross Revenues 26,070 26,413

Cost of Goods Sold (10,197) (10,207)

Operating Expenses (6,346) (6,226)

Operating Income 9,527 9,979

NonOperating Expenses (3,200) (3,200)

ExtraOrdinary Items 650 650

Net Income 6,977 7,429

Pro Forma Cash Flow Statement

Sources of Operating Cash Flow:


Net Income 6,977 7,429
Depreciation and Amortization 470 490
(Increase) Decrease Defer Taxes 0 0
(Gain) Loss on Sale of Assets 15 9
(Increase) Decrease Current Assets 472 (92)
Increase (Decrease) Current Liab (562) 120

Operating Cash Flow 7,372 7,956

Investment Sources of Cash Flow:


Planned Sale of Assets 100 60
Planned Sale of Investments 2,200 2,100
Other Investment Sources to be used 0 0
Total Investment Sources of Cash 2,300 2,160

Planned Investments:
Capital Expenditures (3,500) (3,000)
Acquisitions (500) (750)
Purchases of Investments (2,000) (3,000)
Total Investment Applications of Cash (6,000) (6,750)

Cash Flow from Financing Activities:


Proceeds from Loans & Debt 1,300 2,000
Proceeds from Minority Interest 20 60
Other Financing Activities 0 0
Total Financing Sources of Cash 1,320 2,060

Cash Flow Applied for Financing:


Payments on Loans & Debt (1,500) (1,800)
Dividends Paid to Shareholders (2,500) (3,000)
Purchase / Retire Stock 0 0
Other Financing Activities 0 0
Total Financing Applications of Cash (4,000) (4,800)

Total Change to Cash 992 626

Beginning Cash Balance 870 1,862


Forecasted Ending Balance 1,862 2,488

Pro Forma Balance Sheet

Cash and Cash Equivalents 1,862 2,488


Short Term Marketable Securities 0 0
Accounts Receivable 2,607 2,641
Inventory 2,086 2,113
Other Current Assets 1,695 1,717
Total Current Assets 8,249 8,959

Fixed Assets 31,600 34,600


Accumulated Depreciation (3,480) (3,970)
Net Fixed Assets 28,120 30,630
Longterm Investments 705 1,605
Investments in Other Companies 912 1,662
Intangibles and Other Assets 75 100
Total Non Current Assets 29,812 33,997

Total Assets 38,061 42,956

Accounts Payable 4,432 4,490


Short Term Borrowings 3,128 3,170
Short Term Portion of LT Debt 30 30
Other Current Liabilities 1,564 1,585
Total Current Liabilities 9,155 9,274

Longterm Debt / Borrowings 3,750 3,950


Other Longterm Liabilities 700 750
Total Non Current Liabilities 4,450 4,700

Total Liabilities 13,605 13,974

Preferred Equity 0 0
Common Equity 2,200 2,200
Additional Paid in Capital 5,700 5,700
Retained Earnings 17,505 14,505
Adj for Foreign Currency Transl (5,000) (3,500)
Treasury Stock (1,550) (1,550)
Total Equity 18,855 17,355

External Financing Required (EFR) 5,602 11,627


ighted Moving Average)

d using the results of


ethod known as
. Additionally, we

hted average will tend


end = overestimate).

Total Revenues:
1998 1999 2000 2001 2002 2003 2004 2005
21,196 24,737 27,448
16,719 21,196 24,737
18,890 21,605 22,965 26,070 26,413 26,316 26,355 26,340

Total weights should add up to => 100.00%

4.50% 34.50% 59.50% 100.00%

Difference Square
0 0
4,643 21,557,449
4,477 20,043,529
3,541 12,538,681
2,711 7,349,521
12,297,836

Difference Square
971 942,841
1,489 2,217,121
2,306 5,317,636
3,132 9,809,424
4,483 20,100,607
7,677,526

son

Total Revenues -
Historical
Total Revenues -
Exponential
Total Revenues -
Wt Moving Avg
son

Total Revenues -
Historical
Total Revenues -
Exponential
Total Revenues -
Wt Moving Avg

05

Annual Annual Annual


Period Period Period
2003 2004 2005

26,316 26,355 26,340

(9,860) (9,694) (9,740)

(6,229) (6,464) (6,859)

10,227 10,197 9,740

(3,600) (3,600) (4,000)

650 700 700

7,277 7,297 6,440

7,277 7,297 6,440


500 520 550
0 0 0
2 3 6
26 (11) 4
(34) 14 (5)

7,771 7,824 6,995

20 25 35
1,900 1,800 1,700
0 0 0
1,920 1,825 1,735

(3,100) (3,900) (4,600)


(500) 0 0
(3,000) (1,000) (1,000)
(6,600) (4,900) (5,600)

3,000 4,500 7,000


80 90 100
0 0 0
3,080 4,590 7,100

(2,500) (4,000) (6,000)


(4,000) (4,000) (3,000)
0 0 0
0 0 0
(6,500) (8,000) (9,000)

(329) 1,339 1,230

2,488 2,159 3,497


2,159 3,497 4,728

2,159 3,497 4,728


0 0 0
2,632 2,636 2,634
2,105 2,108 2,107
1,711 1,713 1,712
8,606 9,955 11,181

37,700 41,600 46,200


(4,470) (4,990) (5,540)
33,230 36,610 40,660
2,705 1,905 1,205
2,162 2,162 2,162
150 150 100
38,247 40,827 44,127

46,853 50,782 55,308

4,474 4,480 4,478


3,158 3,163 3,161
25 20 15
1,579 1,581 1,580
9,236 9,244 9,234

4,450 4,950 5,950


800 800 800
5,250 5,750 6,750

14,486 14,994 15,984

0 0 0
2,200 2,200 2,200
5,700 5,700 5,700
10,505 6,505 3,505
(1,000) 0 0
(1,550) (1,550) (1,550)
15,855 12,855 9,855

16,513 22,932 29,469


Home Wksh2 Scenario Analysis for
Wksh3 Wksh4 X Y Z Corporation USA
Wksh5 Wksh6
Wksh7 Wksh8 We can copy our forecast into a new worksheet and do scenario analysis and goal-seek analysis.
Wksh9 Wksh10 Although Microsoft Excel includes Scenario Manager, it can be easier and quicker to simply do our
Wksh11 Wksh12 scenario analysis manually. We can use Goal Seek to find a value for a cell given a corresponding
Wksh13 active formula in another cell.
Wksh15 Wksh16
Annual Annual Annual
Period Period Period
2001 2002 2003

Pro Forma Income Statement (Simple Projection Method)


Scenario => Non Operating Expenses will decline by $ 100,000 in year 2003 and again in year 2005:

Gross Revenues 30,742 34,431 38,562


Cost of Goods Sold (12,024) (13,467) (15,083)
Operating Expenses (7,483) (8,381) (9,387)
NonOperating Expenses (3,200) (3,200) (3,100)
ExtraOrdinary Items 650 650 650
Net Income 8,685 10,033 11,643

Instead of copying our forecast into this worksheet, we can simply do scenario analysis directly in
the forecast itself.

Pro Forma Income Statement (Linear Trend Method)


Goal Seek => What total revenues are required if Net Income must be $ 13.5 million in Year 2004?

Gross Revenues 32,064 35,940 39,816


Cost of Goods Sold (11,607) (12,847) (14,087)
Operating Expenses (7,750) (8,693) (9,636)
Non Operating Expenses (3,549) (4,088) (4,627)
Extra Ordinary Items 271 271 271
Net Income (formula cells) 9,430 10,584 11,738

Do not change formula cells (goals) to


when using Goal Seek (Tools > Goal S

This is the target cell that Goal Seek is


to change per the value 13,500 in cell
ysis and goal-seek analysis.
and quicker to simply do our
a cell given a corresponding

Annual Annual
Period Period
2004 2005

ar 2003 and again in year 2005:

43,190 48,373
(16,893) (18,920)
(10,513) (11,775)
(3,100) (3,000)
700 700
13,384 15,378

scenario analysis directly in

e $ 13.5 million in Year 2004?

44,301 47,569
(15,327) (16,567)
(10,579) (11,522)
(5,166) (5,705)
271 271
13,500 14,046

Do not change formula cells (goals) to values


when using Goal Seek (Tools > Goal Seek)

This is the target cell that Goal Seek is seeking


o change per the value 13,500 in cell G34
Home Wksh2 Budget Analysis for
Wksh3 Wksh4 X Y Z Corporation USA
Wksh5 Wksh6
Wksh7 Wksh8 Once we complete our forecast, we can summarize and review it before finalizing it
Wksh9 Wksh10 into the form of budgets. We also need to summarize our assumptions that should
Wksh11 Wksh12 go into our final budget. We can start our budget process by reviewing the different
Wksh13 Wksh14 revenue forecast:
active Wksh16

Annual Annual Annual


Period Period Period
2001 2002 2003

Summarize Revenue Forecast:


Simple Projection Model 30,742 34,431 38,562
Linear Trend Model (2,822) 1,054 4,930
Wt Moving Avg Model 26,070 26,413 26,316
Declining Growth Model 29,644 31,422 32,679
Historical Data 12,076 16,719 21,196

Projection using declining growth rates:

Gross Revenues 29,644 31,422 32,679

Forecast Comparisons
60,000

50,000
Simple
40,000
Projection Model
Total Revenues

Linear Trend
30,000
Model
Wt Moving Avg
20,000
Model
Declining
10,000
Growth Model
Historical Data
0

(10,000)
2001 2002 2003 2004 2005
Periods

In addition to using linear models for forecasting, we can apply several non-linear (curve) models:
Logarithmic - Used when rate of change in data suddenly shifts upward or downward.
Power - Used when rate of change in data occurs at a specific rate.
Exponential - Used when rate of change is increasing or decreasing at ever higher rates.
Polynomial - Used when rate of change fluctuates with no pattern.

Logarithmic Trend
Actual Predicted
Formula for Logarithmic Trendline x factor Values Value y
1 12,076 (11,242)
y = ( c * LN (x)) - b 2 16,719 (4,587)
3 21,196 (695)
LN: Natural Logarithm 4 24,737 2,067
5 27,448 4,210
6 5,960
7 7,440
8 8,722
9 9,853
10 10,865

Power Trendline
Actual Predicted
y = b * x^c x factor Values Value y
1 12,076 11,951
2 16,719 17,109
3 21,196 21,104
4 24,737 24,493
5 27,448 27,491
6 30,212
7 32,721
8 35,063
9 37,267
10 39,356

Exponential Trendline
Actual Predicted
x factor Values Value y
y = b * EXP ( c * x ) 1 12,076 13,061
2 16,719 16,007
3 21,196 19,618
4 24,737 24,043
5 27,448 29,465
6 36,111
7 44,256
8 54,238
9 66,472
10 81,464

Polynomial Trendline
Actual Predicted
y = (c2 * x^2) + (c1 * x^1) + b x factor Values Value y
1 12,076 #VALUE!
2 16,719 #VALUE!
3 21,196 #VALUE!
4 24,737 #VALUE!
5 27,448 #VALUE!
6 #VALUE!
7 #VALUE!
8 #VALUE!
9 #VALUE!
10 #VALUE!

Summarize Non Linear Curves on Graph:


1996 1997 1998
Logarithmic Trendline (11,242) (4,587) (695)
Power Trendline 11,951 17,109 21,104
Exponential Trendline 13,061 16,007 19,618
Polynomial Trendline #VALUE! #VALUE! #VALUE!
Actual Revenues 12,076 16,719 21,196

Non Linear Trends


100,000

80,000
Logarithmic
Total Revenues

60,000 Trendline
Power
40,000 Trendline
Exponential
20,000 Trendline
0 Polynomial
Trendline
(20,000) Actual
Revenues
96

98

00

02

04
19

19

20

20

20

Periods
Variance Analysis of Past Budgets:

Accuracy in the budget process should be examined to determine the degree of error or
variance in the budget process. If the variance is high, this indicates a need to improve
planning techniques within the company. TBD: To be Determined

2005 2006 2007


Income Statement Items
Total Revenues - Budgeted 10,500 14,500 22,500
Total Revenues - Actual 12,076 16,719 21,196
% difference from actual -13% -13% 6%

Cost of Goods Sold - Budgeted (4,500) (6,500) (8,648)


Cost of Goods Sold - Actual (4,950) (7,050) (8,233)
% difference from actual -9% -8% 5%

Operating Income - Budgeted 3,100 4,900 9,000


Operating Income - Actual 3,815 5,776 8,309
% difference from actual -19% -15% 8%

Net Income - Budgeted 2,100 4,100 6,500


Net Income - Actual 2,925 4,968 6,240
% difference from actual -28% -17% 4%

Balance Sheet Items


Current Assets - Budgeted 3,450 4,400 6,250
Current Assets - Actual 3,895 5,025 5,763
% difference from actual -11% -12% 8%

NonCurrent Assets - Budgeted 10,900 14,000 22,000


NonCurrent Assets - Actual 13,251 16,335 19,951
% difference from actual -18% -14% 10%

Current Liabilities - Budgeted 3,750 5,600 8,200


Current Liabilities - Actual 4,312 6,245 7,375
% difference from actual -13% -10% 11%

NonCurrent Liabilities - Budgeted 1,750 2,450 3,750


NonCurrent Liabilities - Actual 1,810 2,500 3,301
% difference from actual -3% -2% 14%

Ratio Items
Current Ratio - Budgeted 0.92 0.79 0.76
Current Ratio - Actual 0.90 0.80 0.78
% difference from actual 2% -2% -2%

Total Asset Turnover - Budgeted 0.68 0.72 0.80


Total Asset Turnover - Actual 0.70 0.78 0.82
% difference from actual -3% -8% -3%
Gross Profit Margin - Budgeted 60% 60% 60%
Gross Profit Margin - Actual 59% 58% 61%
% difference from actual 2% 4% -2%

Net Profit Margin - Budgeted 19% 25% 28%


Net Profit Margin - Actual 24% 30% 29%
% difference from actual -22% -16% -5%

Debt to Common Equity - Budgeted 0.45 0.50 0.60


Debt to Common Equity - Actual 0.50 0.63 0.63
% difference from actual -11% -20% -4%

Return on Equity - Budgeted 20% 29% 32%


Return on Equity - Actual 24% 33% 35%
% difference from actual -16% -13% -9%

We can use specific measurements to track and control forecasting errors:

Mean Absolute Error - An absolute value of forecast errors, does not place weight on the
amount of the error. Calculated as the sum of (actual values - predicted values) / n.

Mean Square Error - Similar to Mean Absolute Error, but does place more emphasis on
the amount of error; i.e. an error of 8 is twice as significant as 4. Calculated as the
sum of (actual values - predicted values)^2 / n.

Root Mean Square Error - To make the Mean Square Error useful and comparable to the Mean
Absolute Error, we can take the square root of the Mean Square Error. We can then use this
as a guide to establish an error limit or standard for flagging unacceptable errors.
Actual Forecasted
Example: Total Revenues Period Revenues Revenues
n: total number of periods 1996 12,076 10,500
1997 16,719 14,500
1998 21,196 22,500
1999 24,737 28,500
2000 27,448 30,000
n => 5 Sum =>

Mean Absolute Error


Mean Square Error
Root Mean Sqr Error
Establish Error Limits
before finalizing it
ions that should
wing the different

Annual Annual
Period Period
2004 2005

43,190 48,373
8,807 12,683
26,355 26,340
33,170 31,000
24,737 27,448

33,170 31,000

imple
rojection Model
near Trend
Model
Wt Moving Avg
Model
eclining
rowth Model
istorical Data

veral non-linear (curve) models:


ward or downward.
ng at ever higher rates.

Slope Intercept
c factor b factor
9600.92 11242.34

Slope Intercept
c factor b factor
0.52 9.39
11951.33

< - calculate using c and b factor - >


Slope Intercept Predicted
c factor b factor ( c * x) EXP Value y
0.2 9.27 0.20339 1.23 13,061
10657.5 0.40678 1.5 16,007
0.61017 1.84 19,618
0.81356 2.26 24,043
1.01695 2.76 29,465
1.22034 3.39 36,111
1.42373 4.15 44,256
1.62712 5.09 54,238
1.83051 6.24 66,472
2.03390 7.64 81,464

c2 c1 b
#VALUE! #VALUE! #VALUE!
1999 2000 2001 2002 2003 2004 2005
2,067 4,210 5,960 7,440 8,722 9,853 10,865
24,493 27,491 30,212 32,721 35,063 37,267 39,356
24,043 29,465 36,111 44,256 54,238 66,472 81,464
#VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE! #VALUE!
24,737 27,448

Trends

Logarithmic
Trendline
Power
Trendline
Exponential
Trendline
Polynomial
Trendline
Actual
Revenues
2

04
20
the degree of error or
es a need to improve

(Wksht 16)
2008 2000 2001

28,500 30,000 30,500


24,737 27,448 TBD
15% 9% #VALUE!

(9,650) (11,000) (11,929)


(9,050) (10,150) TBD
7% 8% #VALUE!

11,000 10,500 11,146


9,995 10,150 TBD
10% 3% #VALUE!

9,000 9,300 7,986


7,911 7,701 TBD
14% 21% #VALUE!

7,500 7,900 8,253


6,804 7,511 TBD
10% 5% #VALUE!

27,500 29,500 31,555


25,375 26,602 TBD
8% 11% #VALUE!

9,050 9,400 10,715


8,590 9,687 TBD
5% -3% #VALUE!

4,900 5,100 5,250


4,490 4,945 TBD
9% 3% #VALUE!

0.83 0.80 0.77


0.79 0.78 TBD
5% 3% #VALUE!

0.80 0.79 0.77


0.77 0.80 TBD
4% -2% #VALUE!
60% 60% 0.61
63% 63% TBD
-5% -5% #VALUE!

30% 28% 26%


32% 28% TBD
-6% 0% #VALUE!

0.65 0.55 0.48


0.57 0.53 TBD
13% 4% #VALUE!

35% 30% 24%


33% 26% TBD
5% 16% #VALUE!

not place weight on the


dicted values) / n.

ce more emphasis on
alculated as the

and comparable to the Mean


rror. We can then use this
eptable errors. Is Error
Error Outside
Error Absolute Squared Limit?
1,576 1,576 2,483,776 No
2,219 2,219 4,923,961 Yes
(1,304) 1,304 1,700,416 No
(3,763) 3,763 14,160,169 Yes
(2,552) 2,552 6,512,704 Yes
(3,824) 3,824 14,622,976 Yes

Mean Absolute Error 765


Mean Square Error 2,924,595
Root Mean Sqr Error 1,710
Establish Error Limits 1,710
Home Wksh2 Final Budgets for
Wksh3 Wksh4 X Y Z Corporation USA
Wksh5 Wksh6
Wksh7 Wksh8 Now that we have analyzed our historical data and placed it into a set of
Wksh9 Wksh10 forecast, we can pull it all together with our assumptions for a final budget.
Wksh11 Wksh12 Many of these assumptions should be included in our forecast for improved
Wksh13 Wksh14 accuracy. However, we need to fine tune and finalize all assumptions
Wksh15 active so that we can produce a final finished budget for planning purposes.

Budget
Period
Ref 2001

Operating Plan

16-1 Total Revenues 30,500


16-2 Cost of Goods Sold (11,929)
16-3 Operating Expenses (7,424)
16-4 Operating Income 11,146

16-5 Interest Expenses (310)


16-6 Income Taxes (3,300)
16-7 Other Non Operating Expenses (200)

16-8 Earnings Before Extra Ord Items 7,336


16-9 Extra Ordinary Items 650

16-10 Net Income 7,986

Financial Plan

Budgeted Cash Flows

16-11 Net Income 7,986


16-12 Depreciation and Amortization 470
16-13 (Increase) Decrease Defer Taxes 0
16-14 (Gain) Loss on Sale of Assets 15
16-15 (Increase) Decrease Current Assets (724)
16-16 (Increase) Decrease Current Liab 988

16-17 Operating Cash Flow 8,735

Investment Sources of Cash:


16-18 Planned Sale of Assets 100
16-19 Planned Sale of Investments 2,200
16-20 Other Investment Sources to be used 0
16-21 Total Investment Sources of Cash 2,300

Planned Investments:
16-22 Capital Expenditures (4,500)
16-23 Acquisitions in Other Co's (350)
16-24 Purchases of Investments (2,500)
16-25 Total Investment Applications of Cash (7,350)

Cash Flow from Financing Activities


16-26 Proceeds from Loans & Debt 1,450
16-27 Proceeds from Minority Interest 15
16-28 Other Financing Activities 0
16-29 Total Financing Sources of Cash 1,465

Cash Flow Applied for Financing:


16-30 Payments on Loans and Debt (1,250)
16-31 Dividends Paid to Shareholders (2,500)
16-32 Purchase / Retire Stock (1,500)
16-33 Other Financing Activities 0
16-34 Total Financing Applications of Cash (5,250)

16-35 Total Change to Cash (100)

16-36 Beginning Cash Balance 870


16-37 Forecasted Ending Balance 770

Budgeted Balance Sheet

16-38 Cash and Cash Equivalents 770


16-39 Short Term Marketable Securities 10
16-40 Accounts Receivable 3,050
16-41 Inventory 2,440
16-42 Other Current Assets 1,983
16-43 Total Current Assets 8,253

16-44 Fixed Assets 32,600


16-45 Accumulated Depreciation (3,480)
16-46 Net Fixed Assets 29,120
16-47 Longterm Investments 1,205
16-48 Investments in Other Companies 1,000
16-49 Intangibles and Other Assets 230
16-50 Total Non Current Assets 31,555

16-51 Total Assets 39,808

16-52 Accounts Payable 5,185


16-53 Short Term Borrowings 3,660
16-54 Short Term Portion of LT Debt 40
16-55 Other Current Liabilities 1,830
16-56 Total Current Liabilities 10,715

16-57 Longterm Debt / Borrowings 4,150


16-58 Other Longterm Liabilities 1,100
16-59 Total Non Current Liabilities 5,250
16-60 Total Liabilities 15,965

16-61 Preferred Stock 0


16-62 Common Equity 2,200
16-63 Additional Paid in Capital 5,700
16-64 Retained Earnings 25,491
16-65 Adj for Foreign Currency Translation (5,000)
16-66 Treasury Stock (3,050)
16-67 Total Equity 25,341

16-68 Total Liabilities and Equity 41,306

16-69 External Financing Required (1,499)


a and placed it into a set of
ssumptions for a final budget.
ed in our forecast for improved
finalize all assumptions
et for planning purposes.

Assumptions & Comments

Based on review of Pro Forma Financials, Marketing, etc.


Volume projections, production budgets, and vertical analysis
Average % of Sales per Vertical Analysis

Based on anticipated levels of debt and past history


Based on anticipated taxable income and effective rate
Provision for contingency was added on this line item

Per our Simple Model Forecast

Review of Simple Model Forecast and Capital Expenditure Budget

Per Simple Forecast Model


Same formula as used in forecast models
Same formula as used in forecast models

Per Simple Model Forecast


Per Simple Model Forecast

Budgeted $ 4.5 million in Capital Expenditure Budget


Per forecast, strategic plan, and other budgets
Per forecast, strategic plan, and other budgets

Per Financing Requirements and other budgets


Per historical financials and investment budget

Per forecast and other budgets


Per Simple Model Forecast
Per strategic plan and other budgets

Per above
Per historical financials
Same formula as used in forecast models
Same formula as used in forecast models
Same formula as used in forecast models

Same formula as used in forecast models


Same formula as used in forecast models

Same formula as used in forecast models


Per review of forecast and strategic plans
Per review of forecast and historical balances

Same formula as used in forecast models


Same formula as used in forecast models
Per review of forecast and historical information
Same formula as used in forecast models

Same formula as used in forecast models


Per review of historical information and expected growth rates.
Per Simple Model Forecast
Per Simple Model Forecast
Same formula as used in forecast models
Per Simple Model Forecast
Same formula as used in forecast models
Microsoft Excel 9.0 Answer Report
Worksheet: [Detail_Analysis.xls]13 - Pro Forma (Exp)
Report Created: 3/16/2002 3:42:28 PM

Target Cell (Min)


Cell Name Original Value Final Value
$G$60 Mean Squared Error Square 20,525,549 12,297,836

Adjustable Cells
Cell Name Original Value Final Value
$D$24 Set Smoothing Factor 0.70 1.00

Constraints
Cell Name Cell Value Formula Status Slack
$D$23 Smoothing Factor must be between 0 and 1 0 $D$23>=$D$23 Binding 0
$D$24 Set Smoothing Factor 1.00 $D$24<=$E$23 Binding 0
Microsoft Excel 9.0 Answer Report
Worksheet: [Detail_Analysis.xls]13 - Pro Forma (Exp)
Report Created: 3/16/2002 5:19:05 PM

Target Cell (Min)


Cell Name Original Value
$G$46 Mean Squared Error Square 65,536,151

Adjustable Cells
Cell Name Original Value
$D$25 Assign weights to appropriate periods 0.00%
$E$25 Assign weights to appropriate periods 2.00%
$F$25 Assign weights to appropriate periods Total weights should add up to => 5.00%
$G$25 Assign weights to appropriate periods 35.00%
$H$25 Assign weights to appropriate periods 60.00%

Constraints
Cell Name Cell Value
$I$25 Assign weights to appropriate periods 100.00%
$D$25 Assign weights to appropriate periods 0.00%
$E$25 Assign weights to appropriate periods 1.50%
$F$25 Assign weights to appropriate periods Total weights should add up to => 4.50%
$G$25 Assign weights to appropriate periods 34.50%
$H$25 Assign weights to appropriate periods 59.50%
$D$25 Assign weights to appropriate periods 0.00%
$E$25 Assign weights to appropriate periods 1.50%
$F$25 Assign weights to appropriate periods Total weights should add up to => 4.50%
$G$25 Assign weights to appropriate periods 34.50%
$H$25 Assign weights to appropriate periods 59.50%
Final Value
59,853,342

Final Value
0.00%
1.50%
4.50%
34.50%
59.50%

Formula Status Slack


$I$25=$E$23 Binding 0
$D$25<=$E$23 Not Binding 1
$E$25<=$E$23 Not Binding 0.99
$F$25<=$E$23 Not Binding 0.96
$G$25<=$E$23 Not Binding 0.66
$H$25<=$E$23 Not Binding 0.41
$D$25>=$D$23 Binding 0.00%
$E$25>=$D$23 Not Binding 1.50%
$F$25>=$D$23 Not Binding 4.50%
$G$25>=$D$23 Not Binding 34.50%
$H$25>=$D$23 Not Binding 59.50%