To make operating decisions for a company through the forecasting of one-year forecast of the income statement and mainly the operating assets To make assumptions regarding the environment and industry dynamics. Weightage must be given to the overall economic conditions (peak of recession and credit crisis), trends and issues within the industry (political resistance to genetically modified plants) and company’s strategy (shift from the company’s flagship Roundup herbicide to seeds and genetic modification)

1. Monsanto Company
Forecasting & Planning

2. Objectives of the case
• To make operating decisions for a company through the forecasting of
one-year forecast of the income statement and mainly the operating
assets
• To make assumptions regarding the environment and industry
dynamics. Weightage must be given to the overall economic
conditions (peak of recession and credit crisis), trends and issues
within the industry (political resistance to genetically modified plants)
and company’s strategy (shift from the company’s flagship Roundup
herbicide to seeds and genetic modification)

3. MONSANTO COMPANY
Growth Rates and Financial Ratios
PART1: SALES GROWTH BY PRODUCT 2006 2007 2008 CAGR
Roundup 20.0% 56.6% 26.2% 33.3%
Corn seeds and traits 10.4% 13.5% 59.4% 26.0%
All other 10.2% -1.2% 25.4% 10.9%
PART2: FINANCIAL RATIOS
Income Statement 2005 2006 2007 2008 Average
Operating Costs
Cost of Goods Sold (COGS) COGS/Sales 52.3% 51.3% 49.3% 45.6% 49.6%
Selling, General and Admin (SGA) SGA/Sales 22.4% 22.7% 22.3% 20.3% 21.9%
Research & Development (RD) RD/Sales 13.0% 9.9% 11.5% 10.1% 11.1%
Non-Operating Costs
Other Expenses (OE) OE/Sales 4.8% -0.2% -1.5% -2.7% 0.1%
Income Taxes (TAX) TAX/Taxable 29.0% 32.4% 28.9% 30.8% 30.2%
Balance Sheet
Operating Current Assets
Cash Cash/Sales 8.4% 20.7% 10.4% 14.2% 13.4%
Accounts Receivable (AR) AR/Sales*365 85.68 75.17 68.99 86.81 79.16
Inventory (INV) COGS/INV 1.97 2.15 2.40 2.11 2.16
Other Current Assets (OCA) OCA/Sales 15.6% 12.1% 12.0% 13.0% 13.2%
Fixed Assets
Property, Plant & Equipment (PPE) Sales/PPE 2.64 2.92 3.14 3.42 3.03
Goodwill (GW) Sales/GW 2.61 2.57 2.07 2.44 2.42
Other Long-Term Assets (OLTA) Sales/OLTA 5.43 6.43 7.43 6.46 6.44
Operating Current Liabilities
Accounts Payable (AP) AP/COGS*365 58.42 51.80 57.51 76.69 61.10
Income Taxes Payable (TaxP) TaxP/Sales 3.3% 3.3% 1.8% 1.4% 2.5%
Deferred Revenues (DR) DR/Sales 0.0% 1.7% 3.1% 7.6% 3.1%
Other Accruals (ACCR) ACCR/Sales 20.7% 18.8% 19.8% 19.0% 19.6%

4. MONSANTO COMPANY
Income Statement Forecast
Net Sales 2005 2006 2007 2008 2009F Choice
Roundup 2,049 2,262 2,568 4,094 4,299 5.0%(a)
Corn seeds and traits 1,494 1,793 2,807 3,542 3,896 10.0%(a)
All other 2,732 3,010 2,974 3,729 4,139 11.0%(b)
6,275 7,065 8,349 11,365 12,334
Cost of Goods Sold 3,280 3,622 4,119 5,188 5,624 45.6%(d)
Gross Profits 2,995 3,443 4,230 6,177 6,710
Selling, General and Admin 1,404 1,604 1,858 2,312 2,703 21.9%(e)
Research & Development 813 700 963 1,144 1,371 11.1%(e)
Operating Expenses 2,217 2,304 2,821 3,456 4,075
Net Income from Operations 778 1,139 1,409 2,721 2,635
Other Expenses 304 -13 -123 -312 -339 -2.7%(c)
Interest Expense 115 133 136 110 110 same
Income Before Taxes 359 1,019 1,396 2,923 2,864
Income Taxes 104 330 403 899 866 30.2%(e)
Net Income 255 689 993 2,024 1,998
NOTES
(a) Case instructions - will vary
(b) Three year compound annual growth
(c) Same as last year - most recent data
(d) Same as last year despite trend - no more economies
(e) Average of past four years

5. MONSANTO COMPANY
Balance Sheet Forecast
Assets 2005 2006 2007 2008 2009F Choice
Cash 525 1,460 866 1,613 1,653 13.40%(a)
Accounts Receivable 1,473 1,455 1,578 2,703 2,331 68.99(b)
Inventory 1,664 1,688 1,719 2,453 2,607 2.16(a)
Other Current Assets 982 858 1,000 1,476 1,526 12.37%(c)
Current Assets 4,644 5,461 5,163 8,245 8,117
Property, Plant & Equipment, Net 2,378 2,418 2,656 3,323 4,111 3.00(d)
Goodwill 2,401 2,751 4,040 4,663 5,061 2.44(d)
Other Long-Term Assets 1,156 1,098 1,124 1,760 1,916 6.44(a)
Fixed Assets 5,935 6,267 7,820 9,746 11,088
Operating Liabilities
Accounts Payable 525 514 649 1,090 862 55.91(e)
Income Taxes Payable 208 234 150 161 175 1.42%(d)
Deferred Revenues 0 120 260 867 941 7.63%(d)
Other Accruals 1,300 1,328 1,650 2,165 2,415 19.58%(a)
Current Operating Liabilities 2,159 2,279 3,075 4,439 4,392
NOTES
(a) Average of four years
(b) Return to 2007 level
(c) Average of last three years
(d) Most recent year
(e) Average 2005–07