Questions Prepare a 5 year Financial Projection from 2015 - 2020 1. Project all
ID: 2464389 • Letter: Q
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Prepare a 5 year Financial Projection from 2015 - 2020
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) 12 months ending 2015-12-31 12 months ending 2014-12-31 12 months ending 2013-12-31 2012-12-31 Revenue 81,741.00 92,793.00 98,367.00 102,874.00 Other Revenue, Total - - - - Total Revenue 81,741.00 92,793.00 98,367.00 102,874.00 Cost of Revenue, Total 41,057.00 46,386.00 49,683.00 52,513.00 Gross Profit 40,684.00 46,407.00 48,684.00 50,361.00 Selling/General/Admin. Expenses, Total 19,512.00 21,385.00 22,214.00 23,463.00 Research & Development 5,247.00 5,437.00 5,743.00 5,816.00 Depreciation/Amortization 304 374 370 - Unusual Expense (Income) 587 1,472.00 1,031.00 - Other Operating Expenses, Total -1,068.00 -1,843.00 -631 -1,917.00 Total Operating Expense 65,797.00 72,807.00 78,123.00 80,334.00 Operating Income 15,944.00 19,986.00 20,244.00 22,540.00 Other, Net 1 - - - Income Before Tax 15,945.00 19,986.00 20,244.00 22,540.00 Income After Tax 13,364.00 15,752.00 16,881.00 16,999.00 Net Income Before Extra. Items 13,364.00 15,752.00 16,881.00 16,999.00 Net Income 13,190.00 12,023.00 16,483.00 16,604.00 Income Available to Common Excl. Extra Items 13,364.00 15,751.00 16,881.00 16,999.00 Income Available to Common Incl. Extra Items 13,190.00 12,022.00 16,483.00 16,604.00 Diluted Weighted Average Shares 982.7 1,010.00 1,103.04 1,155.45 Diluted EPS Excluding Extraordinary Items 13.6 15.6 15.3 14.71 Dividends per Share - Common Stock Primary Issue 5 4.25 3.7 3.3 Diluted Normalized EPS 13.9 16.85 16 14.71Explanation / Answer
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