【正文】 itivity analysis means changing some basic assumptions, and seeing what the impact on the results of the business will be. ? There is no limit to the number of sensitivities that can be prepared. ? In the case of this Enterprise, the limited sensitivity analysis shows that cash flow of this business will change substantially if sales and / or collection assumptions change. ? This is very important to understand for management purposes, and also debt repayment purposes. ? Management should run their own sensitivities to test assumptions. 10 Financial projections cont. 11 R mb 39。 ? accounts payable assumptions, including pay down of opening balance and payment terms for new purchases. ? Particular attention should be paid to assumptions impacting cash flow. 8 Financial projections cont. ? Until the full model has been reviewed again by management, in particular focusing on the issues on the previous page, it is premature to consider the results as realistic. ? However, when a final version is agreed, it is important to determine if the model represents: ? management’s optimistic view。 ? accounts receivable assumptions, including collection of opening balance, time taken to collect new sales, and % of sales that will be uncollectable。 ? sales growth assumptions。 ? cash flow shortages are projected for 2020 and 2020. These will have to be funded by additional borrowings or delaying payment of other liabilities。 ? profit before interest and tax increases over the projection period。 0 0 0 2020 2020 2020 2020 2020 2020A c tu a lSa l e s 251 319 460 624 799 1 , 0 1 8 C o st o f sa l e s 140 163 230 302 375 478 G ro ss p ro f i t / (l o ss) 111 156 230 322 424 540 EBI T D A 40 27 39 74 100 147 I n t e re st 27 29 27 27 26 24 13 (2 ) 12 47 74 123 D e p re ci a t i o n 11 15 15 15 15 15 Pro f i t / (l o ss) b e f o re t a x 2 (1 7 ) (3 ) 32 59 108 N e t ca sh f l o w (3 ) (2 0 ) 17 36 55 Scenario 1 Base model Management projections Financial projections cont. ? Issues from the “Base Case” model: ? Sales growth assumptions look aggressive. A review of this growth needs to be made to confirm it is realistic。 ?changes in the business。ABC Co Ltd Debt / Financial Restructuring Report June 2020 DRAFT 1 Index 1. Current Financial Position 2. Financial projections 3. Accounts receivable 4. Enterprise restructuring / Debt restructuring 5. Action plan 2 Current financial position Balance sheet 31/12/00 Post due diligence adjustments Rmb’mil Cash 13 A/R () 152 Inventory 28 Other current 29 Fixed assets () 209 Other long term 29 460 Bank loans with interest 385 Bank loans no interest 30 Advances from customers 16 Accounts payable 57 Other not repayable 31 Other 56 575 Net deficiency (115) Notes / issues ? “good” A/R likely much less. Refer later. ? Refer analysis later ? Refer analysis later ? to Parent should be removed ? includes approx. Rmb’21 from Parents 3 Current financial position cont... ? The actual deficiency position of the Enterprise is likely to be substantially worse as “Good” or collectable accounts receivable is estimated to be significantly less than as currently shown in the accounts. ? The Enterprise is paying interest on most bank borrowings. ? If amounts shown as not repayable genuinely do not have to be repaid, they should be removed from the balance sheet to improve the asset position. 4 Financial projection