Exam 18: Financial Modelling and Pro Forma Analysis

Stanley Corp.has current sales of $50 million,cost of sales of $40 million and forecasts that next year's sales will grow to $60 million.Using the percent of sales method,compute the forecast for next year's cost of sales.

Use the tables for the question(s)below. Estimated 2010 Income Statement and Balance Sheet Data for Ideko Corporation The following are financial ratios for three comparable companies: -Based upon the average price-earnings ratio of the comparable firms,Ideko's target market value of equity is closest to:

The ________ method assumes that as sales grow,many income statement and balance sheet items will grow,remaining the same percent of sales.

What is common starting point for forecasting?

Kendo Corp.is projecting sales of $14 million in the coming year.If the size of the market is $120 million,and Kendo sells its products for an average sale price of $36.25,what is Kendo's projected market share?

Use the information about Billy's Burgers to answer the following question(s): -Using the percent of sales method,and assuming 20% growth in sales,estimate Billy's Burgers' accounts payable for 2016.

XYZ has excess cash of $600,000 and earns 3% on excess cash.The firm plans to pay back $500,000 of debt this year,after paying the full annual interest on its debt.If XYZ has a corporate tax rate of 40%,what is the free cash flow to the firm?

Use the information about Billy's Burgers to answer the following question(s): -Using the percent of sales method,and assuming 20% growth in sales and no change in interest expense,estimate Billy's Burgers' pretax income for 2016.

Compute the after-tax interest expense for a firm with Interest on Excess Cash = $2000,Interest on Debt = $7000,and a tax rate of 30%.

If XYZ has no excess cash and has a corporate tax rate of 25%,what is the free cash flow to the firm?

What are a firm's options when it generates more cash than planned?

Use the table for the question(s)below. -The amount of net working capital for Ideko in 2017 is closest to:

Granger Inc.has done a long-term forecast of its balance sheet.Total assets are projected to be $800,000 and other long-term liabilities are $300,000.If the firm expects to need $150,000 in net new financing,what are the projected current liabilities?

Long-term financial planning allows a financial manager to understand the business by ________ between sales,costs,capital investments,and financing.

Calgary Doughnuts had sales of $300 million in 2015.Its cost of sales were $200 million.If sales are expected to grow at 15% in 2016,compute the forecasted costs using the percent of sales method.

Use the information about Billy's Burgers to answer the following question(s): -Using the percent of sales method,and assuming 20% growth in sales,estimate Billy's Burgers' accounts receivable for 2016.

One of the shortcomings of the percent of sales method is that it does not account for the fact that capacity changes are lumpy and not incremental.

The percent of sales method relies on the fact that capacity increases are ________,even though in practice such increases are ________.

________ is the amount of additional external financing needed to fund planned increases in assets.

A firm has ROA of 30%,ROE of 40%,and a payout ratio of 10%.What is the firm's sustainable growth rate?