Professional Documents
Culture Documents
Balance Sheet Base Period Period 1 Note: For purposes of illustration, all calculations in the chart above
Current assets 2,500 500,000,000 (except for interest expense/rate) are based on year end balances.
Fixed assets 8,000 200,008,000
Assets 10,500 700,008,000 In practice, using average balance might be more appropriate.
Investing Activities:
Capital expenditures -200,000,000
Dis-investments 0
Cash (used in) investing activities -200,000,000
Financing Activities:
Debt proceeds (repayments) 149,999,700
Dividends paid 0
Stock proceeds (retirements) 254,049,570
Cash from financing activites 404,049,270
Change in cash 0
© Modernsoft Inc., 1999
All rights reserved
Chapter 4: Projection of Financial Requirements - Cash Budgets
XYZ COMPANY
Cash Budget by Month
Six Months Ended March 31, 2002 ($000's)
Cash disbursements:
Payments for purchases 1.50 months lag Err:502 Err:502 Err:502
Wages 215 215 215
Other expenses 420 420 420
Selling and administrative expense 326 345 343
Note repayments - 750 -
Interest payments - - -
Dividend payments 25 - -
Tax payments - - -
Total disbursements Err:502 Err:502 Err:502
12/31/2001 3/31/2002
Raw materials:
Beginning balance (ending 9/30/01) 3 month average 2,725 2,725
Purchases 650 per mo. 1,950 3,900
4,675 6,625
Withdrawals 825 per mo. 2,475 4,950
Ending balance 2,200 1,675
Finished goods:
Beginning balance (ending 9/30/01) 3 month average 6,420 6,420
Materials 825 per mo. 2,475 4,950
Wages 215 per mo. 645 1,290
Other expenses 420 per mo. 1,260 2,520
Depreciation 43 per mo. 129 258
10,929 15,438
Cost of goods sold reported 4,848 10,605
Ending balance 6,082 4,833
12/31/2001 3/31/2002
XYZ COMPANY
Pro Forma Balance Sheets ($000's)
1 2 3 4 5 vlookup
Terms: - 1 2 3 Month lag
15 0.5000 0.5000
30 1.0000
45 0.5000 0.5000 15
60 1.0000
90 1
Pro forma income statements
Pro forma balance sheets
40 40 40
31 28 31
2,608
2,092
2,983
-
- 2,400
-
- -
875 - 2,567
875 -
875 -
- 917 2,708
- 917
days
days
days
6 month average
650 per mo.
6 month average
825 per mo.
215 per mo.
420 per mo.
43 per mo.
Assume annual interest of 300
45 days
60
60
60 Aug Sep Oct Nov Dec
10 - 60 Oct. 1-10 642 - -
20 - 60 Oct. 11-20 642 - -
31 1 50 Oct. 21-31 642 683 -
10 - 50 Nov. 1-10 - 683 - -
20 - 50 Nov. 11-20 - 683 - -
31 1 50 Nov. 21-30 - - 725 -
10 - 50 Dec. 1-10 - 725 - -
20 1 40 Dec. 11-20 - 725 767 -
31 - 40 Dec. 21-31 - - 767 -
10 - 40 Jan. 1-10 - 767 -
20 - 40 Jan. 11-20 - - 817
31 1 40 Jan. 21-31 - - 817
10 - 40 Feb. 1-10 - 817
20 - 40 Feb. 11-20 - -
31 1 40 Feb. 21-28 - -
10 - 40 Mar. 1-10 -
20 - 40 Mar. 11-20 -
31 1 40 Mar. 21-31 -
10 20 30 40 50 60 70
Sales: 642 642 642 683 683 683 725
Aug. 1-10 Aug. 11-20 Aug. 21-31 Sep. 1-10 Sep. 11-20 Sep. 21-30 Oct. 1-10
10 Aug. 1-10
20 Aug. 11-20
30 Aug. 21-31
40 Sep. 1-10
50 Sep. 11-20
60 Sep. 21-30
70 Oct. 1-10 641.7 - - - - - -
80 Oct. 11-20 - 641.7 - - - - -
90 Oct. 21-31 - - 641.7 683.3 - - -
100 Nov. 1-10 - - - - 683.3 - -
110 Nov. 11-20 - - - - - 683.3 -
120 Nov. 21-30 - - - - - - 725.0
130 Dec. 1-10 - - - - - - -
140 Dec. 11-20 - - - - - - -
150 Dec. 21-31 - - - - - - -
160 Jan. 1-10 - - - - - - -
170 Jan. 11-20 - - - - - - -
180 Jan. 21-31 - - - - - - -
190 Feb. 1-10 - - - - - - -
200 Feb. 11-20 - - - - - - -
210 Feb. 21-28 - - - - - - -
220 Mar. 1-10 - - - - - - -
230 Mar. 11-20 - - - - - - -
240 Mar. 21-31 - - - - - - -
180 210
Feb Mar
650,000 650,000 Purchases
45 45 Terms
Err:502 Err:502
Jan Feb
-
-
-
- -
875 -
875 -
875 -
- 917
- 917
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
725.0 - - - - - - - - -
- 725.0 766.7 - - - - - - -
- - - 766.7 - - - - - -
- - - - 766.7 - - - - -
- - - - - 816.7 - - - -
- - - - - - 816.7 - - -
- - - - - - - 816.7 - -
- - - - - - - - 875.0 -
- - - - - - - - - 875.0
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
180 190 200 210 220 230 240
875 917 917 917 950 950 950
Jan. 21-31 Feb. 1-10 Feb. 11-20 Feb. 21-28 Mar. 1-10 Mar. 11-20 Mar. 21-31
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
875.0 - - - - - -
- 916.7 - - - - -
- - 916.7 - - - -
Chapter 5: Break-Even Analysis
Key Assumptions Profit and Losses as a Function of Volume Changes
Operating Break-Even Chart
Key Assumptions
Contribution per unit
Revenue 750
Variable costs 250
Contribution 500
Fixed costs 200
Break-even volume 400
Profits and losses as a function of volume changes of 25.0%
700
600
500 Column Q
Column R
400 Column S
300
200
200
100
-
0 100 200 300 400 500 600 700 800 900 1000 1100 1200
Volume
s as a Function of Volume Changes
k-Even Chart
Volume
0
100
200
300
400
500
600
Column Q 700
Column R 800
Column S 900
1000
1100
1200
Capital structure:
Debt as percent of capitalization 50.0% Sustainable Growth Equation
Debt to equity ratio 100.0%
Debt 250.0 ROS
Equity 250.0 20.0%
Net assets (capitalization) 500.0 Debt to equity x
ROC 100.0% Sustainable Sales / assets
Profitability (after taxes): 10.0% x growth rate 40.0%
Gross return on net assets 10.0% x + ( ROC - i ) = = x
Amount of profit 50.0 Retention rate 6.0% 16.0% Financial leverage
Interest rate (before tax) 6.0% 100.0% x 200.0%
Tax rate 33.3% Retention rate x
Interest rate (tax-adjusted) 4.0% 100.0% Retention rate
Amount of interest (tax-adjusted) 10.0 100.0%
Profit after interest 40.0
Disposition of profit:
Dividend payout 0.0% The Business System
Dividends paid - New
Reinvestment of profit 40.0 investment
105
Financing: Depreciation Dis-investment
Additional debt 40.0 effect Investment
Funding potential 80.0 25 Investment base
#REF!
Working capital
Capitalization 500 580
POLICY ASSUMPTION INPUTS: Case I Case II Case III Case IV Case V Case VI Case VII
Net assets (capitalization) 500.0 500.0 500.0 500.0 500.0 500.0 500.0
Debt as percent of capitalization 0.0% 50.0% 50.0%
Gross return on net assets 10.0% 10.0% 10.0%
Interest rate (before tax) 0.00% 6.00% 6.00%
Tax rate 33.3% 33.3% 33.3%
Dividend payout 0.0% 0.0% 50.0%
Depreciation effect 25.0 25.0 25.0
Capital structure: Case I Case II Case III Case IV Case V Case VI Case VII
Debt as percent of capitalization 0.0% 50.0% 50.0% 0.0% 0.0% 0.0% 0.0%
Debt to equity ratio 0.0% 100.0% 100.0% 0.0% 0.0% 0.0% 0.0%
Debt - 250.0 250.0 - - - -
Equity 500.0 250.0 250.0 500.0 500.0 500.0 500.0
Net assets (capitalization) 500.0 500.0 500.0 500.0 500.0 500.0 500.0
Disposition of profit:
Dividend payout 0.0% 0.0% 50.0% 0.0% 0.0% 0.0% 0.0%
Dividends paid - - 20.0 - - - -
Reinvestment of profit 50.0 40.0 20.0 - - - -
Financing:
Additional debt - 40.0 20.0 - - - -
Funding potential 50.0 80.0 40.0 - - - -
Results:
Net return on net assets 10.0% 8.0% 8.0% 0.0% 0.0% 0.0% 0.0%
Return on equity 10.0% 16.0% 16.0% 0.0% 0.0% 0.0% 0.0%
Growth in equity 10.0% 16.0% 8.0% 0.0% 0.0% 0.0% 0.0%
($ thousands)
Capital structure: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Debt as percent of capitalization 33.3% 43.0% 43.0% 50.0% 50.0% 50.0%
Debt to equity ratio 50.0% 75.4% 75.4% 100.0% 100.0% 100.0%
Debt 300.0 470.7 492.5 688.9 728.5 787.5
Equity 600.0 624.0 652.9 688.9 728.5 787.5
Net assets (capitalization) 900.0 1,094.7 1,145.4 1,377.7 1,457.0 1,575.0
Year 7 Year 8
Year 7 Year 8
0.0% 0.0%
0.0% 0.0%
- -
787.5 787.5
787.5 787.5
Year 7 Year 8
0.0% 0.0%
- -
0.00% 0.00%
0.0% 0.0%
0.00% 0.00%
- -
- -
Year 7 Year 8
0.0% 0.0%
- -
- -
Year 7 Year 8
- -
- -
- -
Year 7 Year 8
- -
- -
- -
- -
- -
- -
- -
Year 7 Year 8
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
- -
- -
TOTALS 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Tax rate @36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36%
Aftertax benefits 17,920 2,560 2,560 2,560 2,560 2,560 2,560 2,560 0 0 0 0 0 0 0 0
Depreciation tax shield 3,780 540 540 540 540 540 540 540 0 0 0 0 0 0 0 0
Total project cash flows (incl. recovery) 11,200 -11,500 3,100 3,100 3,100 3,100 3,100 3,100 4,100 0 0 0 0 0 0 0 0
PV Factor @ 14% 1.000 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140
Present value of investment cash flows -11,100 -11,500 0 0 0 0 0 0 400 0 0 0 0 0 0 0 0
Present value of operating cash flows 13,294 2,719 2,385 2,092 1,835 1,610 1,412 1,239 0 0 0 0 0 0 0 0
Present value of total cash flows -11,500 2,719 2,385 2,092 1,835 1,610 1,412 1,639 0 0 0 0 0 0 0 0
Cumulative present value -11,500 -8,781 -6,395 -4,303 -2,467 -857 555 2,193 2,193 2,193 2,193 2,193 2,193 2,193 2,193 2,193
-7500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
ABC CORPORATION
Recap of EPS Analyses with new Product ($000's)
New Financing of $10 Million
Original Debt Preferred
Earnings before interest and taxes (EBIT) 7,999 9,999 9,999
Less: Interest charges on long-term debt 0 1,150 0
Earnings before income taxes 7,999 8,849 9,999
Less: Incomes taxes at 34% 2,720 3,009 3,400
Earnings after income taxes 5,279 5,840 6,599
Less: Preferred dividends 0 0 1,250
Earnings available for common stock 5,279 5,840 5,349
Common shares outstanding (000's) 1,000 1,000 1,000
Earnings per share (EPS) $5.28 $5.84 $5.35
Less: Common dividends per share $2.50 $2.50 $2.50
Retained earnings per share $2.78 $3.34 $2.85
Retained earnings in total 2,779 3,340 2,849
Original EPS change (before new product) -14.4% -23.7%
Final EPS change (with new product) 10.6% 1.3%
Specific cost 7.59% 12.50%
ABC CORPORATION
Zero EPS Calculation ($000's)
New Financing of $1 Million
Original Debt Preferred
Earnings per share (EPS) 0 0 0
Common shares outstanding (000's) 1,000 1,000 1,000
Earnings available for common stock 0 0 0
Preferred dividends 0 0 1,250
Earnings after taxes 0 0 1,250
Incomes taxes at 34% 0 0 644
Earnings before income taxes 0 0 1,894
Interest charges on long-term debt 0 1,150 0
EBIT or zero EPS 0 1,150 1,894
Original
Earnings before interest and taxes (EBIT) 7,999 Earnings before interest and taxes (EBIT)
Less: Interest charges on long-term debt Less: Interest charges on long-term debt
Earnings before income taxes 7,999 Earnings before income taxes
Less: Incomes taxes at 34% 2,720 Less: Incomes taxes at 34%
Earnings after income taxes 5,279 Earnings after income taxes
Less: Preferred dividends Less: Preferred dividends
Earnings available for common stock 5,279 Earnings available for common stock
Common shares outstanding (000's) 1,000 1,000 Common shares outstanding (000's)
Earnings per share (EPS) $4.03 $5.35 Earnings per share (EPS)
Less: Common dividends per share $2.50 $2.50 Less: Common dividends per share
Retained earnings per share $1.53 $2.85 Retained earnings per share
Retained earnings in total 1,529 2,849 Retained earnings in total
Original EPS $5.28 $5.28 Original EPS
Change in EPS -$1.25 $0.07 Change in EPS
Percent change in EPS -23.7% 1.3% Percent change in EPS
EPS Calculation with New Bond Issue
EPS Calculation with New Preferred Stock Issue
EPS Calculation with New Common Stock Issue
5.00
4.53
4.50
Original
4.00 Bonds
3.50 Preferred
2.75
Common
3.00
Orig. EPS
2.50 Div/Sh
2.00
1.50
1.00
0.50
0.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00
EBIT ($millions)
ng of $10 Million
Common
9,999
0
9,999
3,400
6,599
0
6,599
1,275
$5.18
$2.50
$2.68
3,412
-21.6%
-2.0%
13.25%
ng of $1 Million
Common
0
1,275
0
0
0
0
0
0
0
CORPORATION
ngs per Share with New Bond Issue ($000's)
Before New With New
Product Product
gs before interest and taxes (EBIT) 7,999 9,999
s: Interest charges on long-term debt 1,150 1,150
gs before income taxes 6,849 8,849
s: Incomes taxes at 34% 2,329 3,009
gs after income taxes 4,520 5,840
s: Preferred dividends - 0
gs available for common stock 4,520 5,840
CORPORATION
ngs per Share with New Common Stock Issue ($000's)
Before New With New
Product Product
gs before interest and taxes (EBIT) 7,999 9,999
s: Interest charges on long-term debt 0 0
gs before income taxes 7,999 9,999
s: Incomes taxes at 34% 2,720 3,400
gs after income taxes 5,279 6,599
s: Preferred dividends 0 0
gs available for common stock 5,279 6,599
Totals
Key Assumptions Year: 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Key Assumptions The Divergence of Accounting and Cash Flow Measures (grap
Working capital - initial 2,000
Fixed investment - initial 10,000 Economic Profit Analysis
Economic life 8 Cash Flow Return on Investment Analysis
Cost of capital 10.0% Other Measures
Net present value factor 10.0%
NOPAT 824.4 Note: The simplified example here shows a company earning exac
Capital amortization 874.4 In other words, the net present value of Economic profits when disc
Depreciation effect 1,250 capital equals zero; likewise the DCF-ROI or IRR equals the Cost o
Other Measures 0 1 2 3 4 5
ROE 6.9% 7.7% 8.7% 10.0% 11.8%
ROCE / RONA 6.9% 7.7% 8.7% 10.0% 11.8%
ROGI 17.3% 17.3% 17.3% 17.3% 17.3%
CFROI 10.0% 10.0% 10.0% 10.0% 10.0%
17.
17.5%
15.0%
12.5%
10.
10.0%
27.5%
25.
25.0%
22.5%
20.0%
Rate of return
17.
17.5%
15.0%
12.5%
10.
10.0%
7.5% 6.9%
5.0%
2.5%
0.0%
1 2 3 4 5 6 7 8
Year
Graph Data
1 2 3 4 5 6
Project/business IRR 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Cost of capital 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Accounting ROA 6.9% 7.7% 8.7% 10.0% 11.8% 14.3%
Accounting ROGI 17.3% 17.3% 17.3% 17.3% 17.3% 17.3%
nd Cash Flow Measures (graph)
6 7 8 9 10 11 12 13 14 15
3,750 2,500 1,250 0 0 0 0 0 0 0
2,000 2,000 2,000 0 0 0 0 0 0 0
5,750 4,500 3,250 0 0 0 0 0 0 0
10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
575 450 325 0 0 0 0 0 0 0
824 824 824 0 0 0 0 0 0 0
249 374 499 0 0 0 0 0 0 0
0.564 0.513 0.467 - - - - - - -
141 192 233 0 0 0 0 0 0 0
6 7 8 9 10 11 12 13 14 15
824 824 824 0 0 0 0 0 0 0
1,250 1,250 1,250 0 0 0 0 0 0 0
2,074 2,074 2,074 0 0 0 0 0 0 0
6 7 8 9 10 11 12 13 14 15
14.3% 18.3% 25.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
14.3% 18.3% 25.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
17.3% 17.3% 17.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Measures
25.4%
17.3%
Project/business IRR
Cost of capital
Accounting ROA
Accounting ROGI
10.0%
25.4%
17.3%
Project/business IRR
Cost of capital
Accounting ROA
Accounting ROGI
10.0%
7 8
7 8
10.0% 10.0%
10.0% 10.0%
18.3% 25.4%
17.3% 17.3%
WELCOME to Interactive Templates for TFA
These templates are intended to be used as a companion to TECHNIQUES OF FINANCIAL ANALYSIS (TFA),
by Dr. Erich Helfert, 10th Millennium Edition.
Every template is taken from specific examples/exercises in the text book. References to the book are
found on the Main Menu. As such, these templates should be used along side the book which explains
the relevance and design of each exercise.
Insofar as TFA's emphasis is around the concept that any business is essentially a financial system of cash
flows ... these templates allow the user to examine the interrelationships between investment,
operating, and financing variables within the financial system. Collectively, they should greatly enhance
your understanding of the concepts presented in TFA.
Below is a quick reference on How to Use Interactive Templates for TFA and a few
Tips and Tricks.
300.0
Sales
Costs
200.0
Income Results are displayed in separate tables. Every table is
taken directly from TFA. All calculated terms are
100.0 displayed in shaded cells (which are locked and
protected).
-
Column F
SENSITIVITY To quickly view the results of changing one input, first enter new value in Assumptions
ANALYSIS section for input. Go to table / chart / graph to observe resultant change. Now use the
undo and redo buttons on your toolbar, alternatively, to see before and after impact.
MODIFYING If you're an experienced Excel user, if you wish you can easily modify and customize
TEMPLATES the template(s) for your own use. Simply unprotect the worksheet. However, be
careful not to violate the financial integrity of the interrelationships. (P.S. If you
mess up, don't worry. Simply retrieve the original templates from your program disk.)
Note: Some of the graphics may not appear correctly on your screen. This is NOT a problem
with your computer/screen or the template. These templates are optimized for
a screen resolution of 1024 x 768.