1 / 28

Chapter 4

Chapter 4. Financial Forecasting. PPT 4-1. FIGURE 4-1 Development of pro forma statements. PPT 4-2. TABLE 4-1 Projected wheel and caster sales (first six months, 2005). PPT 4-3. TABLE 4-2 Stock of beginning inventory. PPT 4-3. TABLE 4-3 Production requirements for six months. PPT 4-3.

layne
Download Presentation

Chapter 4

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 4 Financial Forecasting

  2. PPT 4-1 FIGURE 4-1 Developmentof pro formastatements

  3. PPT 4-2 TABLE 4-1 Projected wheel andcaster sales (first sixmonths, 2005)

  4. PPT 4-3 TABLE 4-2 Stock of beginninginventory

  5. PPT 4-3 TABLE 4-3 Productionrequirements for sixmonths

  6. PPT 4-3 TABLE 4-4 Unit costs

  7. PPT 4-3 TABLE 4-5 Total production costs

  8. PPT 4-3 TABLE 4-6 Allocation of manufacturing costand determination of gross profits

  9. PPT 4-3 TABLE 4-7 Value of endinginventory

  10. PPT 4-4 TABLE 4-8

  11. PPT 4-5 TABLE 4-9 Monthly sales pattern

  12. PPT 4-5 TABLE 4-10 Monthly cast receipts

  13. PPT 4-5 TABLE 4-11 Component costs ofmanufactured goods

  14. PPT 4-6 TABLE 4-12 Average monthlymanufacturing costs

  15. PPT 4-6 TABLE 4-13 Summary of all monthlycash payments

  16. PPT 4-7 TABLE 4-14 Monthly cash flow

  17. PPT 4-7 TABLE 4-15 Cash budget with borrowing andrepayment provisions

  18. PPT 4-8 TABLE 4-16

  19. PPT 4-9 FIGURE 4-2 Development of a pro formabalance sheet

  20. PPT 4-10 TABLE 4-17

  21. PPT 4-11 TABLE 4-18

  22. Chapter 4 - Outline LT 4-1 • What is Financial Forecasting? • 2 Methods of Financial Forecasting • 3 Financial Statements for Forecasting • Steps in a Pro Forma Income Statement (I/S) • Determining Production Requirements • Percent-of-Sales Method

  23. What is Financial Forecasting? LT 4-2 • Financial forecasting is looking ahead to develop a financial plan for the future • Very important for the strategic growth of a firm

  24. 2 Methods of Financial Forecasting: LT 4-3 – Using Pro Forma, or Projected, Financial Statements (more exact, time consuming) – Percent-of-Sales Method (less precise, easier to calculate) Often times these statements are required by lenders

  25. 3 Financial Statements forForecasting LT 4-4 • Pro Forma Income Statement (I/S) • Cash Budget • Pro Forma Balance Sheet (B/S) The first step is to develop a sales projection

  26. Steps in a Pro FormaIncome Statement (I/S) LT 4-5 • Establish a sales projection • Determine a production schedule (or production requirements) • Compute other expenses • Determine profit by completing an actual pro forma income statement (I/S)

  27. Determining ProductionRequirements LT 4-6 Projected Units Sales PLUS Desired Ending Inventory (EI) MINUS Beginning Inventory (BI) EQUALS Production Requirements (or Units to be Produced)

  28. Percent-of-Sales Method LT 4-7 A short-cut, less exact, easier method of determining financing needs (The “quick and dirty” approach) Assumes that B/S accounts will maintain a constant percentage relationship to sales Assets / Current Sales = % of Sales

More Related