【正文】 n s N o d e b t H a l f d e b t B a d Y e a r 1% 0 . 6 % 4 . 8 % N o r ma l Y e a r 12% 7 . 2 % 8 . 4 % G o o d Y e a r 30% 1 8 . 0 % 3 0 . 0 %Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 39 The Financial Planning Process ? “I don’t give a strawberry what happens. I want you all to stonewall it. Let them plead the Fifth Amendment, coverup or anything else, if it’ll save it, save the plan.” – Richard Milhous Nixon on Planning (22 March, 1973) (Bowdlerized to avoid offending accounting students) Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 41 The Financial Planning Process – Financial planning is a dynamic process that follows a cycle of making plans, implementing them, and revising them in the light of actual results Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 43 The Financial Planning Process – Length of the planning horizon ? The longer the financial plan, the less detailed it should be (in general) ? The revision of a financial plan is generally a function of the length of the planning horizon – Shortterm plans are revised frequently, longterm plans are revised much less frequently Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 45 The Financial Planning Process ? Specific performance targets are generated for the divisions, functions and key individuals of the firm ? Periodic measurements of performance are made, and pared to the plan in order to correct either the plan or performance ? Periodically, key personnel are counseled, rewarded or punished, and a new iteration is instigated Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 47 The Financial Planning Process: Notes – Planning horizons must be appropriate – For a magazine stand, a two year planning horizon may be far too long – A pharmaceutical business (with long newplant construction leadtimes, and long drug development/testing/approval procedures) needs a planning horizon that may be as long a ten years Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 49 The Financial Planning Process: – A plan should make reasonable tradeoffs between flexibility and the cost of flexibility ? Recall that in capital budgeting, options were sometimes very valuable Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 51 ?GPC Financial Statements, Years xxx1 xxx3 ? (Nearest $ Million) ? (Percent of Year39。 admin. expenses ?30 ?36 ?43 ?% ?% ?% ?EBIT ?60 ?72 ?86 ?% ?% ?% ?Interest expenses ?30 ?45 ?64 ?% ?% ?% ?Taxes ?12 ?11 ?9 ?% ?% ?% ?Net ine ?18 ?16 ?13 ?% ?% ?% ?Dividends ?5 ?5 ?4 ?% ?% ?% ?Change in shareholder39。 equivalents ?10 ?12 ?14 ?17 ?% ?% ?% ? Receivables ?40 ?48 ?58 ?69 ?% ?% ?% ? Inventories ?50 ?60 ?72 ?86 ?% ?% ?% ? Property, Plant amp。s equity ?300 ?313 ?324 ?333 ?% ?% ?% Copyright 169。 admin. expenses ?30 ?36 ?43 ?EBIT ?60 ?72 ?86 ?Interest expenses ?30 ?45 ?64 ?Taxes ?12 ?11 ?9 ?Net ine ?18 ?16 ?13 ?Dividends ?5 ?5 ?4 ?Change in shareholder39。 2021 Pearson Education, Inc. Publishing as Prentice Hall 53 B a la n c e S h e e tA s s e ts : C a s h amp。 e q u i p m e n t 500 600 720 864 T o ta l A s s e ts 600 720 864 1037L i a b i l i ti e s : Pa ya b l e s 30 36 43 52 Sh o rt t e rm d e b t 120 221 347 502 L o n g t e rm d e b t 150 150 150 150 T o ta l L i a b i l i ti e s 300 407 540 704Sh a r e h o l d e r 39。 2021 Pearson Education, Inc. Publishing as Prentice Hall 54 ? (Percent of Year39。 admin exp. ?% ?% ?% EBIT ?% ?% ?% Interest expenses ?% ?% ?% Taxes ?% ?% ?% Net ine ?% ?% ?% Dividends ?% ?% ?% Change in equity ?% ?% ?% Copyright 169。 e q u i v a l e n t s 6 . 0 % 6 . 0 % 6 . 0 % R e ce i v a b l e s 2 4 . 0 % 2 4 . 0 % 2 4 . 0 % I n v e n t o ri e s 3 0 . 0 % 3 0 . 0 % 3 0 . 0 % Pro p e rt y, Pl a n t amp。s e q u i ty 1 5 6 . 3 % 1 3 4 . 9 % 1 1 5 . 7 %Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 57 Constructing a Financial Planning Model ? Percentofsales method – The second step is to forecast sales ? This is a major exercise, but we will assume that sales will continue to grow at 20% next year (as it has in the past) Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 59 Constructing a Financial Planning Model ? Percentofsales method – The fourth and final step is to forecast the missing items that have not been assumed to vary with sales – We need some assumptions: Copyright 169。 2021 Pearson Education, Inc. Publishing as Prentice Hall 61 Constructing a Financial Planning Model – The ine statement may now be constructed given the dividend payout ratio and tax rate (30% and 40%) – The change in equity is added to the equity for year xxx3, to give the new balance for year xxx4 –“Total assets” is available, so the “Total liabilities” may now be puted Copyright 169。s Sales) Year xxx0 xxx1 xxx2 xxx3 xxx1 xxx2 xxx3 F(sales)? xxx4 Ine Statement Sales 200 240 288 % % % N/A 346 Cost of goods sold 110 132 158 % % % Yes 190 Gross margin 90 108 130 % % % N/A(Yes) 156 Selling, general amp。s equity 13 11 9 % % % 7 Balance Sheet Assets: Cash amp。 equipment 500 600 720 864 % % % Yes 1037 Total Assets 600 720 864 1037 % % % N/A(Yes) 1244 Liabilities: Payables 30 36 43 52 % % % Yes 62 Shortterm debt 120 221 347 502 % % % No Longterm debt 150 150 150 150 % % % No Total Liabilities 300 407 540 704 % % % N/A 904 Shareholder39。 2021 Pearson Education, Inc. Publishing as Prentice Hall 63 Example Completed – We plete the balance sheet by recognizing that there are only two accounts that need to be estimated, S