Financial planning my ppt @ bec dom s

1. Financial Planning

12. The Planning Task What we have and what we need to project Figure 4.4 12

14. Planning Assumptions Example 4.1 14 A: There are three inter-related planning assumptions: (1) a management action regarding pricing; (2) the expected customer response to the price change; and (3) and change in collection efforts. The first two assumptions establish the revenue forecast. Next year, the firm expects to sell 15 million coffee cakes at $0.90 each, revenue = 15,000,000 x $.90 = $13,500,000. The third assumption regarding receivables requires the use of the total revenue forecast. Receivables are expected to decrease from two months of revenue to only one month; thus receivables are expected to be $13,500,000  12 = $1,125,000. Example

19. The Percentage of Sales Method— A Formula Approach Example 4.4 19 Q: Forecast the external financing requirements of the Underhill Manufacturing Company assuming net fixed assets and EAT grow at the same rate as sales. However, also assume the firm plans to pay a dividend equal to 25% of earnings next year. Example The items needed to apply the EFR equation are highlighted. We also need the ROS figure of 11% (EAT  sales, or $1,488  $13,580) and the expected dividend payout ratio of 25%. Revenues are expected to increase by 15%.