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Chris Droussiotis September 2011

Lecture Series #2. Budget Planning, Implementation and Monitoring Second Step : Building the Projections – Corporate Approach. Chris Droussiotis September 2011. Table of Contents. Top to Bottom / Bottom to Top Line ( Government Approach ) Revenue Growth & Operating Assumptions

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Chris Droussiotis September 2011

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  1. Lecture Series #2 Budget Planning, Implementation and MonitoringSecond Step: Building the Projections – Corporate Approach Chris Droussiotis September 2011

  2. Table of Contents • Top to Bottom / Bottom to Top Line (Government Approach) • Revenue Growth & Operating Assumptions • Striving for Cash Flow / Profit • Performance measurements These slides could be obtain via the Instructor’s Web page at www.celeritymoment.com

  3. Top to Bottom Line Drivers • Revenue Drivers • Growth Assumptions (increase/decrease) • Historical averages • Future assumptions / views • Demand and Supply: Volume Vs Price • “Volume” concept • “Same Store Sales” • “Acquisitions / “New Stores” • “Price” concept • Market Conditions / Pass-through concepts • Revenue Segments (subsidiaries, product/services, geographical, departments)

  4. Top to Bottom Line Drivers • Cost / Expense Drivers • Direct Expenses / Gross Profit • Cost of Revenue as % of Revenue • Material / Labor / Overhead • Cost per Unit / Hourly Wages • Indirect Expenses / EBIT or EBITDA Margins • Operating Assumptions as % of Revenues • Selling / General / Administrative • Utility Expenses • Depreciation Expenses (% of Revenue / Based on Assets and Average Life) • Interest Expense • New or Existing Debt • Taxes / Tax Rate

  5. Bottom to Top Line Approach • Cost Drives Revenue • Gross Margin / Operating Margin • EBITDA / Net Income REVENUE Price

  6. Operating Assumptions / Drivers

  7. Operating Assumptions / Drivers

  8. Operating Assumptions / Drivers

  9. Results

  10. Results

  11. Results

  12. Performance Measurements

  13. Performance Measurements • Solvency Ratios – Managing Debt • Leverage Ratio / Debt Capacity • Coverage Ratio / Adequate coverage of Obligations • Profitability Ratios • Cost efficiencies / Cost Rationalization • Revenue Drivers / Acquisition Growth Rationale • Striving for Higher Margin Business • Activity Ratios • Inventory Management • Working Capital Management

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