PHARMA BIOTECH CORPORATION

Forecasted Financial Statements

Chapter 6 Mini Case--2 years
[Thousands of Dollars]
Income Statements
Actual
2012
Net Sales
15000
Operating Expenses
-13000
Interest
-400
EBT
1600
Taxes (40%)
-640
Net Income (NI)
960
Cash Dividends (40% of NI)
Added Retained Earnings
Balance Sheets
Cash & Mkt Sec
Accounts Rec
Inventories
Total Current Assets
Fixed Assets, Net
Total Assets
Accounts Pay
Bank Loan
Acc Liab
Total Current Liab
Additional Funds Needed (AFN)
Long-Term Debt (New)
Long-Term Debt (Old)
Common Stock
Retained Earnings
Total Iiab & Equity

Percent of Sales-Based Forecasts

Percent
of Sales
Forecast Basis
100.00% (1+growth rate) x Cur. Sales
86.67% .8667 x Forecasted Sales
Initially Fixed
40% of EBT
6.40%

-384
576
Actual
2012
1000
2000
2200
5200
6800
12000
1600
1800
1200
4600
0
2200
2400
2800
12000

40% of NI

Percent
of Sales
6.67%
13.33%
14.67%
34.67%
45.33%
80.00%

Forecast Basis
.0667 x Forecasted Sales
.1333 x Forecasted Sales
.1467 x Forecasted Sales
.4533 x Forecasted Sales

10.67% .1067 x Forecasted Sales

8.00% .0800 x Forecasted Sales

[+ Inc. in Forecasted RE]

Base Forecast
[Without New Financing]
50% Growth 80% Growth
2013
2014
22500
40500
-19501
-35101
-400
-400
2599
4999
-1040
-1999
1560
2999
-624
936

-1200
1800

Base Forecast
2013
2014
1501
2701
2999
5399
3301
5941
7801
14041
10199
18359
18000
32400
2401
1800
1800
6001
3664
0
2200
2400
3736
18000

4321
1800
3240
9361
12903
0
2200
2400
5535
32400

Revised Forecast
[With New Financing]
50% Growth 80% Growth
2013
2014
22500
40500
-19501
-35101
-766
-1690
2233
3708
-893
-1483
1340
2225
-536
804

-890
1335

Revised Forecast
2013
2014
1501
2701
2999
5399
3301
5941
7801
14041
10199
18359
18000
32400
2401
1800
1800
6001
132
3664
2200
2400
3604
18000

4321
1800
3240
9361
596
12903
2200
2400
4939
32400

[Note: Interest rate on all interest-bearing debt (bank loan and long-term, old and new, debt) is 10%.
AFN is met by issuing new long-term debt.]
Statement of Cash Flows
Net Income
Inc. in A/R
Inc. in Inv.

Base Forecast
2013
2014
1560
2999
-999
-2399
-1101
-2641

Revised Forecast
2013
1340
-999
-1101

2014
2225
-2399
-2641

Inc. in A/P
Inc. in Acc. Liab.
CF from Operations

801
600
860

1921
1440
1320

801
600
640

1921
1440
546

Inc. in Fixed Assets, Net

CF from Investments

-3399
-3399

-8159
-8159

-3399
-3399

-8159
-8159

Inc. in Bank Loan

Inc. in Long-Term Debt (New)
Inc. in Common Stock
Payment of Cash Dividends
CF from Financing
Net Cash Flow
Beginning Cash
Ending Cash Before Borrowing
Target Ending Cash (% of sales)
Additional Funds Needed (AFN)
Cumulative AFN

0
0
0
-624
-624
-3163
1000
-2163
1501
3664
3664

0
0
0
-1200
-1200
-8039
1501
-6539
2701
9240
12903

0
3664
0
-536
3128
369
1000
1369
1501
132
132

0
9240
0
-890
8350
736
1501
2237
2701
465
596

PHARMA BIOTECH CORPORATION

Forecasted Financial Statements
Chapter 6 Mini Case--2 years
[Thousands of Dollars]
Income Statements
Actual
2012
Net Sales
15000 x
Operating Expenses
-13000 x
Interest
-400
EBT
1600
Taxes (40%)
-640
Net Income (NI)
960
Cash Dividends (40% of NI)
Added Retained Earnings
Balance Sheets
Cash & Mkt Sec
Accounts Rec
Inventories
Total Current Assets
Fixed Assets, Net
Total Assets
Accounts Pay
Bank Loan
Acc Liab
Total Current Liab
Additional Funds Needed (AFN)
Long-Term Debt (New)
Long-Term Debt (Old)
Common Stock
Retained Earnings
Total Iiab & Equity

Percent of Sales-Based Forecasts

Percent
of Sales

Forecast Basis

Base Forecast
[Without New Financing]
50% Growth
2013

Forecast Basis

Base Forecast
2013

-384
576
Actual
2012
1000
2000
2200
5200
6800
12000

Percent
of Sales
x
x
x
x
x
x

1600 x
1800
1200 x
4600
0
2200
2400
2800
12000

[Note: Interest rate on all interest-bearing debt (bank loan and long-term, old and new, debt) is 10%.
AFN is met by issuing new long-term debt.]
Statement of Cash Flows
Net Income
Inc. in A/R
Inc. in Inv.
Inc. in A/P
Inc. in Acc. Liab.
CF from Operations
Inc. in Fixed Assets, Net
CF from Investments
Inc. in Bank Loan

Base Forecast
2013
0
2000
2200
-1600
-1200
1400
6800
6800
0

Inc. in Long-Term Debt (New)

Inc. in Common Stock
Payment of Cash Dividends
CF from Financing
Net Cash Flow
Beginning Cash
Ending Cash Before Borrowing
Target Ending Cash (% of sales)
Additional Funds Needed (AFN)
Cumulative AFN

0
0
0
0
8200
1000
9200
0
-9200
-9200

Base Forecast
Without New Financing]
80% Growth
2014

Base Forecast

Revised Forecast
[With New Financing]
50% Growth 80% Growth
2013
2014

2014

Revised Forecast
2013
2014

2014
0
0
0
0
0
0

Revised Forecast
2013
2014
0
0
2000
0
2200
0
-1600
0
-1200
0
1400
0

Base Forecast

0
0

6800
6800

0
0

0
0
0
0
0
0
0
0
0
-9200

0
0
0
0
8200
1000
9200
0
-9200
-9200

0
0
0
0
0
0
0
0
0
-9200