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For inputs:
2020 Error Check
5% Ok
90% Ok
10% Ok
1% Ok
14% Ok
20% Ok
25% Ok
4% Ok
40% Ok
8%
10%
2020
$2,620
$26
$367
$524
$655
$105
$2,358
$65
$196
2020 Definitions:
$118 NOPAT = EBIT(1-T)
$812 NOWC = Cash + accounts receivable + inventories − Accounts payable & accruals
$1,467 Total operating capital = NOWC + Net fixed assets
ing profit after
growth rate in FCF,
t the need for
bout how well the
inventories, net
nd earnings
scenario by going
$48 FCF = NOPAT − Change in total operating capital
5.0%
8.0% ROIC = NOPAT/Total operating capital
$958
$0
$958
$500
$0
$458
10
$45.75
Forecast No Change
2017 1. Balance Sheets
$22.00 Assets
$308.00 Cash
$440.00 Accts. rec.
$770.00 Inventories
$550.00 Total CA
$1,320.00 Net fixed assets
Total assets
$88.00 Liabilities and equity
$59.00 Accts. pay. & accruals
$147.00 Line of credit
$500.00 Total CL
$647.00 Long-term debt
$420.00 Total liabilities
izon (Hint: 5%).
esent value of the
operations? Using
ice?
now forecast the
owing preliminary
common stock will be
e average balance
eficit, eliminate the
so it would create
g a special
Note: see to right for the No Change financial statements with fixed
values and not variables.
$253 Common stock
$673 Retained earnings
$1,320 Total common equity
$0.00 Total liabs. & equity
Forecast
2017 2. Income Statement
$2,200.00
$55.00 Op. costs (excl. depr.)
$165.00 Depreciation
$40.00 EBIT
$0.00 Note: Less: Interest on LTD
$125.00 Interest on LOC
$50.00 Pretax earnings
$75.00 Taxes (40%)
$22.00 Net income
$0.00
Regular common dividends
$53.00 Special dividends
Addition to RE
$8.00 3. Elimination of the Financial D
$0.00 Note: Increase in spontaneous liabil
$0.00 + Increase in long-term debt and
$53.00 − Previous line of credit
$61.00 + Net income minus regular common
$120.00 Increase in financing
−$9. − )ncrease in total assets
$59.00 Amount of deficit or surplus fin
$0.00 If deficit in financing (negative),
If surplus in financing (positive),
s shown above.
lues and not variables. Improve
1. Balance Sheets
Assets
Cash
Accts. rec.
Inventories
Total CA
Net fixed assets
Total assets
Liabilities and equity
Accts. pay. & accruals
Line of credit
rove the following
is the Improve
If there is an initial balance on the on the LOC, the
assumption is that the balance will not change until
the last day of the year. Therefore, the interest for the
year is the based only on the beginning balance.
If there is a LOC in the previous year, then it is
necessary to subtract the previous year's line of credit.
In other words, this is like paying off the old line of
credit on the last day of the year and then drawing on
a new line of credit.
Total CL
Long-term debt
Total liabilities
Common stock
Retained earnings
Total common equity
Total liabs. & equity
2. Income Statement
Sales
Op. costs (excl. depr.)
Depreciation
EBIT
Less: Interest on LTD
Interest on LOC
Pretax earnings
Taxes (40%)
Net income
Regular common dividends
Special dividends
Addition to RE
3. Elimination of the Financial D
Increase in spontaneous liabil
+ Increase in long-term debt and
− Previous line of credit
+ Net income minus regular common
Increase in financing
− )ncrease in total assets
Amount of deficit or surplus fin
If deficit in financing (negative),
If surplus in financing (positive),
NOWC = Cash + accounts receivable + inventories − Accounts payable & accruals
Most Recent Forecast
2016 Input 2017
$20.0 1.00% $22.00
280.0 14.00% $308.00
400.0 20.00% $440.00
$700.0 $770.00
500.0 25.00% $550.00
$1,200.0 $1,320.00
$80.0 4.00% $88.00
0.0 Draw on LOC if financing deficit $59.00
$80.0 $147.00
500.0 Carry over from previous year $500.00
$580.0 $647.00
Basis for 2017 Forecast
× 2017 Sales
× 2017 Sales
× 2017 Sales
× 2017 Sales
× 2017 Sales
