【文章內(nèi)容簡介】 It is based on the short and longerterm objectives. Elements of Financial Planning Investment in new assets – determined by capital budgeting decisions Degree of financial leverage – determined by capital structure decisions Cash paid to shareholders – dividend policy decisions Liquidity requirements – determined by working capital decisions Role of Financial Planning Examining interactions – helps management see the interactions between decisions Exploring options – gives management a systematic framework for exploring its opportunities Avoiding surprises – helps management identify possible outes and plan accordingly Ensuring Feasibility and Internal Consistency – helps management determine if goals can be acplished and if the various stated (and unstated) goals of the firm are consistent with one another Financial Planning Model Ingredients Sales Forecast – many cash flows depend directly on the level of sales (often estimated using a growth rate in sales) Pro Forma Statements – setting up the plan as projected financial statements allows for consistency and ease of interpretation Asset Requirements – how much additional fixed assets will be required to meet sales projections Financial Requirements – how much financing will we need to pay for the required assets Plug Variable – management decision about what type of financing will be used (makes the balance sheet balance) Economic Assumptions – explicit assumptions about the ing economic environment Example: Historical Financial Statements Gourmet Coffee Inc. Balance Sheet December 31, 2022 Assets 1000 Debt 400 Equity 600 Total 1000 Total 1000 Gourmet Coffee Inc. Ine Statement For Year Ended December 31, 2022 Revenues 2022 Costs 1600 Net Ine 400 Example: Pro Forma Ine Statement Initial Assumptions – Revenues will grow at 15% (2022*) – All items are tied directly to sales and the current relationships are optimal – Consequently, all other items will also grow at 15% Gourmet Coffee Inc. Pro Forma Ine Statement For Year Ended 2022 Revenues 2,300 Costs 1,840 Net Ine 460 Example: Pro Forma Balance Sheet Case I – Dividends are the plug variable, so equity increases at 15% – Dividends = 460 NI – 90 increase in equity = 370 Case II – Debt is the plug variable and no dividends are paid – Debt = 1,150 – (600+460) = 90 – Repay 400 – 90 = 310 in debt Gourmet Coffee Inc. Pro Forma Balance Sheet Case 1 Assets 1,150 Debt 460 Equity 690 Total 1,150 Total 1,150 Gourmet Coffee Inc. Pro Forma Balance Sheet Case 1 Assets 1,150 Debt 90 Equity 1,060 Total 1,150 Total 1,150 Percent of Sales Approach Some items tend to vary directly with sales, while others do not Ine Statement – Costs may vary directly with sales – If this is the case, then the profit margin is constant – Dividends are a management decision and generally do not vary directly with sales – this affects the retained earnings that go on the balance sheet Balance Sheet – Initially assume that all assets, including fixed, vary directly with sales – Accounts payable will also normally vary directly with sales – Notes payable, longterm debt and equity generally do not because they depend on management decisions about capital structure – The change in the retained earnings portion of equity will e from the dividend decision Example: Ine Statement Tasha’s Toy Emporium Ine Statement, 2022 % of Sales Sales 5,000 Costs 3,000 60% EBT 2,000 40% Taxes (40%) 800 16% Net Ine 1,200 24% Dividends 600 Add. To RE 600 Tasha’s Toy Emporium Pro Forma Ine Statement, 2022 Sales 5,500 Costs 3,300 EBT 2,200 Taxes 880 Net Ine 1,320 Dividends 660 Add. To RE 660 Assume Sales grow at 10% Dividend Payout Rate = 50% Example: Balance Sheet Tasha’s Toy Emporium – Balance Sheet Current % of Sales Pro Forma Current % of Sales Pro Forma ASSETS Liabilities amp。 Owners’ Equity Current Assets Current Liabilities Cash $500 10% $550 A/P $900 18% $990 A/R 2,000 40 2,200 N/P 2,500 n/a 2,500 Inventory 3,000 60 3,300 Total 3,400 n/a 3,490 Total 5,500 110 6,050 LT Debt 2,000 n/a 2,000 Fixed Assets Owners’ Equity Net PPamp。E 4,000 80 4,400 CS amp。 APIC 2,000 n/a 2,000 Total Assets 9,500 190 10,450 RE 2,100 n/a 2,760 Total 4,100 n/a 4,760 Total L amp。 OE 9,500 10,250 Example: External Financing Needed The firm needs to e up with an additional $200 in debt or equity to make the balance sheet balance – TA – TLamp。OE = 10,450 – 10,250 = 200 Choose plug variable – Borrow more shortterm (Notes Payable) – Borrow more longterm (LT Debt) – Sell more mon stock (CS amp。 APIC) – Decrease dividend payout, which increase Add. To RE Example: Operating at Less than Full Capacity Suppose that the pany is currently operating at 80% capacity. – Full Capacity sales = 5000 / .8 = 6,250 – Estimated sales = $5,500, so would still only be operating at 88% – Therefore, no additional fixed assets would be required. – Pro forma Total Assets = 6,050 + 4,000 = 10,050 – Total Liabilities and Owners’ Equity = 10,250 Choose plug variable – Repay some shortterm debt (decrease Notes Payable) – Repay some longterm debt (decrease LT Debt) – Buy back stock (decrease CS amp。 APIC) – Pay more in dividends (reduce Add. To RE) – Increase cash account Growth and External Financing At low growth levels, internal financing (retained earnings) may exceed the required investment in assets As the growth rate increases, the internal financing will not be enough and the firm will have to go to the capital markets for money Examining the relationship between growth and external financing required is a useful tool in longrange planning The Internal Growth Rate The internal growth rate tells us how much the firm