Question
13.9
Question
Prepare 5 yrs financial projections
1. Project all sales revenue for each period in the financial horizon
2. Forecast operating expenses such as cost of goods sold (but not depreciation, interest, or tax expense, which are handled separately) and derive projected pre-tax operating income before depreciation and amortization. Expense margin – for example, cost of goods sold as a percentage of sales are useful for this purpose.
3. Forecast the level of balance sheet operating assets and liabilities – cash inventories accounts receivables, accounts payable, and the like – needed to support the projected operation in steps 1 and 3. Turnover ratios (also called utilizations ratios can help guide these projections.
4. Forecast depreciation expenses and tax expense each period.
5. Forecast the company’s financial structure dividend policy each period. Then use this information, along with an estimation of the interest rate charged on debt financing, to project interest expense and complete the income statement.
6. Derive projected cash flows statements from the forecasted income statements and balance sheet
Income Statements In Millions of USD (except for per share items) 2012-12-31 12 months ending 2013-12-31 12/31/2014 2015-12-31 Revenue 102,874.00 98,367.00 92,793.00 81,741.00 Other Revenue, Total - - - - Total Revenue 102,874.00 98,367.00 92,793.00 81,741.00 Cost of Revenue, Total 52,513.00 49,683.00 46,386.00 41,057.00 Gross Profit 50,361.00 48,684.00 46,407.00 40,684.00 Selling/General/Admin. Expenses, Total 23,463.00 22,214.00 21,385.00 19,512.00 Research & Development 5,816.00 5,743.00 5,437.00 5,247.00 Depreciation/Amortization - 370 374 304 Interest Expense(Income) - Net Operating - - - - Unusual Expense (Income) - 1,031.00 1,472.00 587 Other Operating Expenses, Total -1,917.00 -631 -1,843.00 -1,068.00 Total Operating Expense 80,334.00 78,123.00 72,807.00 65,797.00 Operating Income 22,540.00 20,244.00 19,986.00 15,944.00 Interest Income(Expense), Net Non-Operating - - - - Gain (Loss) on Sale of Assets - - - - Other, Net - - - 1 Income Before Tax 22,540.00 20,244.00 19,986.00 15,945.00 Income After Tax 16,999.00 16,881.00 15,752.00 13,364.00 Minority Interest - - - - Equity In Affiliates - - - - Net Income Before Extra. Items 16,999.00 16,881.00 15,752.00 13,364.00 Accounting Change - - - - Discontinued Operations - - - - Extraordinary Item - - - - Net Income 16,604.00 16,483.00 12,023.00 13,190.00 Preferred Dividends - - - - Income Available to Common Excl. Extra Items 16,999.00 16,881.00 15,751.00 13,364.00 Income Available to Common Incl. Extra Items 16,604.00 16,483.00 12,022.00 13,190.00 Basic Weighted Average Shares - - - - Basic EPS Excluding Extraordinary Items - - - - Basic EPS Including Extraordinary Items - - - - Dilution Adjustment - - - - Diluted Weighted Average Shares 1,155.45 1,103.04 1,010.00 982.7 Diluted EPS Excluding Extraordinary Items 14.71 15.3 15.6 13.6 Diluted EPS Including Extraordinary Items - - - - Dividends per Share - Common Stock Primary Issue 3.3 3.7 4.25 5 Gross Dividends - Common Stock - - - - Net Income after Stock Based Comp. Expense - - - - Basic EPS after Stock Based Comp. Expense - - - - Diluted EPS after Stock Based Comp. Expense - - - - Depreciation, Supplemental - - - - Total Special Items - - - - Normalized Income Before Taxes - - - - Effect of Special Items on Income Taxes - - - - Income Taxes Ex. Impact of Special Items - - - - Normalized Income After Taxes - - - - Normalized Income Avail to Common - - - - Basic Normalized EPS - - - - Diluted Normalized EPS 14.71 16 16.85
13.9
Explanation / Answer
Use this link to get answer
https://financeaccountsonlinetutoring-financialprojections.googledrives/
