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ratio times (1+.9*(.158))/(1.158).
My Income Statement Forecast Assumptions
Actual Actual Actual Actual Actual Forecast Forecast Forecast
Fiscal Year End Date 12/31/1994 12/31/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
Implied Return on Equity 0.165 0.147 0.119 0.154 0.116 0.127 0.095
Income Statement Assumptions
Sales Growth 1.1% 14.6% 42.9% 36.0% -0.6% 15.8% 17.1%
Cost of Goods Sold/Sales 62.2% 62.7% 63.0% 62.9% 60.5% 62.4% 63.4% 64.9%
R&D/Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
SG&A/Sales 15.3% 15.0% 14.3% 14.0% 13.6% 13.6% 13.4% 13.2%
Dep&Amort/Avge PP&E and Intang. 4.2% 3.8% 3.7% 3.7% 3.7% 3.7% 3.7%
Interest Expense/Avge Debt 6.5% 6.6% 6.5% 6.7% 6.7% 6.7% 6.7%
Non-Operating Income/Sales 0.0% 1.7% 0.8% 0.4% 0.4% 0.4% 0.4% 0.4%
Effective Tax Rate 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Minority Interest/After Tax Income 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Other Income/Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Ext. Items & Disc. Ops./Sales -0.5% 0.0% 0.0% -0.4% 0.0% 0.0% 0.0% -1.2%
Pref. Dividends/Avge Pref. Stock 0.0% 0.0% 0.0% 7.2% 7.2% 7.2% 7.2%
bad news forecast
capX amounts of 996M, 1196M and 1368M given in MD&A, as shown in SCF. Amortized Intangibles
Actual Actual Actual Actual Actual Forecast Forecast Forecast
Fiscal Year End Date 12/31/1994 12/31/1995 12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
Balance Sheet Assumptions:
Working Capital Assumptions
Ending Operating Cash/Sales 2.0% 2.6% 3.0% 5.7% 6.6% 6.6% 6.6% 6.6%
Ending Receivables/Sales 0.8% 1.0% 1.1% 1.2% 1.4% 1.4% 1.4% 1.4%
Ending Inventories/COGS 1.9% 2.3% 2.7% 3.1% 2.0% 2.0% 2.0% 2.0%
Ending Other Current Assets/Sales 6.1% 2.3% 2.5% 2.1% 1.7% 1.7% 1.7% 1.7%
Ending Accounts Payable/COGS 8.7% 9.6% 8.1% 8.9% 7.3% 7.3% 7.3% 7.3%
Ending Taxes Payable/Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Ending Other Current Liabs/Sales 17.8% 19.5% 23.7% 33.0% 24.5% 23.7% 23.7% 23.7%
Other Operating Asset Assumptions
Other Operating Liability Assumptions
Other Liabilities/Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Deferred Taxes/Sales 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Financing Assumptions
Current Debt/Total Assets 0.0% 0.3% 0.5% 2.6% 2.2% 2.2% 2.2% 2.2%
Long-Term Debt/Total Assets 40.1% 42.2% 47.6% 45.5% 41.2% 41.2% 41.2% 41.2%
My Balance Sheet Forecasts
So What Happened?
◼ships (berths) occurred almost exactly as
forecast; occupancy and prices fell.
year berths % change occupancy 365 days price/day revenue/berth % change (1+g)(1+c)-1
1998 29800 1.052 365 227 87163
1999E 30575 0.026 1.052 365 220 84476 -0.031 -0.006
2000E 35950 0.176 1.06 365 215 83184 -0.015 0.158
2001E 43100 0.199 1.06 365 210 81249 -0.023 0.171
1998 29800 1.052 365 227 87163
1999E 30575 0.026 1.047 365 215 82163 -0.057 -0.033
forecast
actual
Actual Actual Forecast Forecast Forecast
Fiscal Year End Date 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
Annual Growth Rates
Sales 42.9% 36.0% -0.6% 15.8% 17.1%
Advanced Dupont Model
Net Operating Margin 0.157 0.189 0.162 0.154 0.131
x Net Operating Asset Turnover 0.551 0.554 0.493 0.493 0.502
= Return on Net Operating Assets 0.086 0.105 0.080 0.076 0.066
Net Borrowing Cost (NBC) 0.063 0.067 0.067 0.067 0.067
Spread (RNOA - NBC) 0.024 0.038 0.013 0.009 (0.001)
Financial Leverage (LEV) 1.403 1.305 1.118 1.078 1.066
ROE = RNOA + LEV*Spread 0.119 0.154 0.094 0.086 0.065
Actual Actual Actual Actual Actual
Fiscal Year End Date 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
= Return on Net Operating Assets 0.105 0.098 0.095 0.062
Net Borrowing Cost (NBC) 0.062 0.051 0.052 0.056
Spread (RNOA - NBC) 0.042 0.047 0.043 0.006
Financial Leverage (LEV) 1.305 0.960 0.884 1.228
ROE = RNOA + LEV*Spread 0.160 0.143 0.133 0.069
“The reason for the discounting: A glut of luxury
ships were ordered during the booming ’90s.”
Estimating the amount of cash collected from
customers in 1999, assuming ending balance
of customer deposits was $515,308 (and sales
forecast is 2,710,151):
Estimating the ending balance of PP&E
for 1999, assuming capX=$810,261
(and depr rate is 3.7%):
Beginning balance of PP&E $5,073,008
+ capX +$810,261
