Chapter 10
Forecasting Financial Statements
10-33
Exhibit 10.H
Massachusetts Stove Company
Projected Income Statements under Best-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Income Statement Actual Projected Projected Projected Projected Projected
Interest Income 16,665
Total Sales 0.02 0.08 0.14 0.14 0.14
Cost of Goods Sold/Sales 0.5 0.5 0.5 0.5 0.5
Developmental Costs 100,000 100,000 — — —
Depre. of Devel. Costs — 20,000 40,000 40,000 40,000
Capital Expenditures 20,000 30,000 30,000 25,000 25,000
Chapter 10
Forecasting Financial Statements
10-34
Exhibit 10.I
Massachusetts Stove Company
Projected Balance Sheets under Best-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Balance Sheet Actual Projected Projected Projected Projected Projected
Assets
Cash 351,588 425,555 477,698 691,593 1,007,226 1,439,458
Accounts Receivable 5,997 6,117 6,606 7,531 8,586 9,788
Liabilities and Sh. Eq.
Treasury Stock (75,000) (75,000) (75,000) (75,000) (75,000) (75,000)
Total Share. Equity 552,080 700,502 823,728 997,064 1,268,789 1,659,429
Total Liab. & Sh. Eq. 1,437,842 1,565,329 1,684,248 1,873,232 2,164,692 2,579,874
ASSUMPTIONS
Cash Statement of Cash Flows
Chapter 10
Forecasting Financial Statements
10-35
Exhibit 10.J
Massachusetts Stove Company
Projected Statements of Cash Flows under Best-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
State. of Cash Flows Actual Projected Projected Projected Projected Projected
Cash Flow from Oper. 231,437 207,262 195,615 254,898 344,856 451,095
Investing
Capital Expenditures (22,921) (120,000) (130,000) (30,000) (25,000) (25,000)
Chapter 10
Forecasting Financial Statements
10-36
Exhibit 10.K
Massachusetts Stove Company
Projected Financial Statement Ratios under Best-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Financial Ratios Actual Projected Projected Projected Projected Projected
Profit Margin for ROA 6.76% 6.30% 4.96% 5.76% 7.53% 9.23%
Selling Expense/Sales 33.86% 34.00% 33.00% 32.00% 31.00% 30.00%
Admin. Expense/Sales 4.07% 5.06% 5.68% 5.57% 4.88% 4.28%
Interest Income/Sales 1.54% 1.37% 1.20% 0.99% 0.82% 0.66%
Chapter 10
Forecasting Financial Statements
10-37
Exhibit 10.L
Massachusetts Stove Company
Projected Income Statements under Most Likely Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Income Statement Actual Projected Projected Projected Projected Projected
Sales:
Woodstoves 2,734,986 2,680,286 2,626,681 2,574,147 2,522,664 2,472,211
Gas Stoves — — 107,211 323,779 549,137 783,898
Total Sales 2,734,986 2,680,286 2,733,892 2,897,926 3,071,801 3,256,109
Gas Stoves 0 0.04 0.08 0.08 0.08
Total Sales –0.02 0.02 0.06 0.06 0.06
Cost of Goods Sold/Sales 0.5 0.5 0.5 0.5 0.5
Developmental Costs 120,000 120,000 — — —
Depre. of Devel. Costs — 24,000 48,000 48,000 48,000
Chapter 10
Forecasting Financial Statements
10-38
Exhibit 10.M
Massachusetts Stove Company
Projected Balance Sheets under Most Likely Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Balance Sheet Actual Projected Projected Projected Projected Projected
Assets
Total Assets 1,437,842 1,540,047 1,591,264 1,651,059 1,745,910 1,879,845
Liabilities and Sh. Eq.
Treasury Stock (75,000) (75,000) (75,000) (75,000) (75,000) (75,000)
Total Share. Equity 552,080 687,423 761,860 834,759 944,116 1,094,093
Total Liab. and Sh. Eq. 1,437,842 1,540,047 1,591,264 1,651,059 1,745,910 1,879,845
ASSUMPTIONS
Cash Statement of Cash Flows
Chapter 10
Forecasting Financial Statements
10-39
Exhibit 10.N
Massachusetts Stove Company
Projected Statements of Cash Flows under Most Likely Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
State. of Cash Flows Actual Projected Projected Projected Projected Projected
Operations
Investing
Capital Expenditures (22,921) (140,000) (150,000) (30,000) (25,000) (25,000)
Chapter 10
Forecasting Financial Statements
10-40
Exhibit 10.O
Massachusetts Stove Company
Projected Financial Statement Ratios under Most Likely Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Financial Ratios Actual Projected Projected Projected Projected Projected
Profit Margin for ROA 6.76% 6.07% 3.68% 3.36% 4.31% 5.26%
Admin. Expense/Sales 4.07% 5.27% 6.26% 6.60% 6.22% 5.87%
Interest Income/Sales 1.54% 1.42% 1.32% 1.18% 1.04% 0.91%
Chapter 10
Forecasting Financial Statements
10-41
Exhibit 10.P
Massachusetts Stove Company
Projected Income Statements under Worst-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Income Statement Actual Projected Projected Projected Projected Projected
Sales:
Administrative Expenses (111,199) (141,199) (171,199) (191,199) (191,199) (191,199)
Operating Income 240,166 198,936 47,301 (35,430) (65,327) (95,225)
Gas Stoves 00.020.040.04 0.04
Total Sales (0.04) (0.02) 0 0 0
Cost of Goods Sold/Sales 0.5 0.5 0.5 0.5 0.5
Developmental Costs 160,000 160,000 — — —
Depre. of Devel. Costs — 32,000 64,000 64,000 64,000
Chapter 10
Forecasting Financial Statements
10-42
Exhibit 10.Q
Massachusetts Stove Company
Projected Balance Sheets under Worst-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Balance Sheet Actual Projected Projected Projected Projected Projected
Assets
Cash 351,588 354,615 269,816 318,168 354,773 374,005
Total Assets 1,437,842 1,526,867 1,510,605 1,439,304 1,347,088 1,233,332
Liabilities and Sh. Eq.
Treasury Stock (75,000) (75,000) (75,000) (75,000) (75,000) (75,000)
Total Share. Equity 552,080 680,343 699,139 659,238 600,921 523,766
Total Liab. and Sh. Eq. 1,437,842 1,526,867 1,510,605 1,439,304 1,347,088 1,233,332
ASSUMPTIONS
Cash Statement of Cash Flows
Chapter 10
Forecasting Financial Statements
10-43
Exhibit 10.R
Massachusetts Stove Company
Projected Statements of Cash Flows under Worst-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
State. of Cash Flows Actual Projected Projected Projected Projected Projected
Operations
Net Income (Prelim.) 154,601 115,776 7,976 (50,107) (70,034) (89,835)
Capital Expenditures (22,921) (180,000) (190,000) (30,000) (25,000) (25,000)
Chapter 10
Forecasting Financial Statements
Exhibit 10.S
Massachusetts Stove Company
Projected Financial Statement Ratios under Worst-Case Scenario
(Case 10.2)
MASS. STOVE Year 7 Year 8 Year 9 Year 10 Year 11 Year 12
Financial Ratios Actual Projected Projected Projected Projected Projected
Profit Margin for ROA 6.76% 5.93% 1.74% (0.59%) (1.37%) (2.17%)
Assets Turnover 1.94 1.77 1.69 1.74 1.85 1.99
Selling Expense/Sales 33.86% 34.00% 35.00% 36.00% 37.00% 38.00%
Admin. Expense/Sales 4.07% 5.38% 6.65% 7.43% 7.43% 7.43%
Interest Income/Sales 1.54% 1.45% 1.41% 1.33% 1.24% 1.15%