Professional Documents
Culture Documents
Price Volume
Income Statement Period 1 12 Costs 1,000
Sales 12,000 (fixed & variable) Operations
Costs 10,400 10,800
Depreciation 400
Operating profit (EBIT) 1,200
Interest 343
Profit before taxes 857
Taxes 343 Operating profit Interest
Net income 514 Dividends after taxes (tax adjusted)
Dividends 309 309 720 206
Retained earnings 206
Retained
earnings
Balance Sheet Base Period Period 1 206
Current assets 2,500 3,000 Financing
Fixed assets 8,000 8,100 Shareholders'
Assets 10,500 11,100 equity Long-term debt
5,925 3,555
Current liabilities 1,600 1,620 Change in stock Funds surplus Change in debt
Long-term debt 3,300 3,555 119 (deficit) 255
Shareholders' equity 5,600 5,925 -191
Liabilities and equity 10,500 11,100 Funding
potential
Working capital 900 1,380 389
Capitalization 8,900 9,480
Balance Sheet Base Period Period 1 Note: For purposes of illustration, all calculations in the chart above
Current assets 2,500 3,000 (except for interest expense/rate) are based on year end balances.
Fixed assets 8,000 8,100
Assets 10,500 11,100 In practice, using average balance might be more appropriate.
Investing Activities:
Capital expenditures -750
Dis-investments 250
Cash (used in) investing activities -500
Financing Activities:
Debt proceeds (repayments) 188
Dividends paid -310
Stock proceeds (retirements) 6
Cash from financing activites -116
Change in cash 0
© Modernsoft Inc., 1999
All rights reserved
Chapter 4: Projection of Financial Requirements - Cash Budgets
Current purchases and forecast 750,000 675,000 650,000 650,000 650,000 650,000
Terms: net (days) 45 45 45 45
XYZ COMPANY
Cash Budget by Month
Six Months Ended March 31, 2002 ($000's)
Cash disbursements:
Payments for purchases 1.50 months lag 713 663 650 650
Wages 215 215 215 215
Other expenses 420 420 420 420
Selling and administrative expense 326 345 343 368
Note repayments - 750 - -
Interest payments - - - 300
Dividend payments 25 - - 25
Tax payments - - - 375
Total disbursements 1,699 2,393 1,628 2,353
12/31/2001 3/31/2002
Raw materials:
Beginning balance (ending 9/30/01) 3 month average 2,725 2,725 6 month average
Purchases 650 per mo. 1,950 3,900 650
4,675 6,625
Withdrawals 825 per mo. 2,475 4,950 825
Ending balance 2,200 1,675
Finished goods:
Beginning balance (ending 9/30/01) 3 month average 6,420 6,420 6 month average
Materials 825 per mo. 2,475 4,950 825
Wages 215 per mo. 645 1,290 215
Other expenses 420 per mo. 1,260 2,520 420
Depreciation 43 per mo. 129 258 43
10,929 15,438
Cost of goods sold reported 4,848 10,605
Ending balance 6,082 4,833
Accrued Liabilities ($000's)
12/31/2001 3/31/2002
XYZ COMPANY
Pro Forma Income Statements ($000's)
3 months ended 6 months ended
12/31/2001 3/31/2002
Sales 6,925 15,150
Cost of goods sold 4,848 10,605
Gross margin 2,078 4,545
Selling and administrative 1,014 2,054
Interest 75 150 Assume annual interest of
Profit before taxes 988 2,341
Income taxes 494 1,171
Net income 494 1,171 Net income: 1/1/02 - 3/31/02
XYZ COMPANY
Pro Forma Balance Sheets ($000's)
10
20
Collection all preceding periods; fill in gaps 30
in sequencing (10-40) 40
50
Lag Diff Lag Calc Lag 1 Lag 2 Lag 3 Lag 4 60
10 10 10 10 - - - 70
20 10 20 20 - - - 80
40 20 30 30 40 - - 90
50 10 50 50 - - - 100
60 10 60 60 - - - 110
70 10 70 70 - - - 120
80 10 80 80 - - - 130
100 20 90 90 100 - - 140
110 10 110 110 - - - 150
120 10 120 120 - - - 160
130 10 130 130 - - - 170
140 10 140 140 - - - 180
150 10 150 150 - - - 190
160 10 160 160 - - - 200
170 10 170 170 - - - 210
180 10 180 180 - - - 220
190 10 190 190 - - - 230
200 10 200 200 - - - 240
1 2 3 4 5 vlookup
Terms: - 1 2 3 Month lag
15 0.5000 0.5000
30 1.0000
45 0.5000 0.5000 15
60 1.0000
90 1
o forma income statements
o forma balance sheets
Feb Mar
2,750,000 2,850,000
650,000 650,000
45 45
40 40
28 31
825,000 825,000
215,000 215,000
420,000 420,000
43,000 43,000
70.0% 70.0%
12.0% 12.0%
750,000
50.0% 50.0%
2,213 3,295
2,092
2,983
2,400
-
- 2,567
-
-
917 2,708
917
6 month average
per mo.
per mo.
6 month average
per mo.
per mo.
per mo.
per mo.
Assume annual interest of 300
days
60
60
60 Aug Sep Oct Nov Dec Jan Feb
- 60 Oct. 1-10 642 - -
- 60 Oct. 11-20 642 - -
1 50 Oct. 21-31 642 683 -
- 50 Nov. 1-10 - 683 - -
- 50 Nov. 11-20 - 683 - -
1 50 Nov. 21-30 - - 725 -
- 50 Dec. 1-10 - 725 - -
1 40 Dec. 11-20 - 725 767 -
- 40 Dec. 21-31 - - 767 -
- 40 Jan. 1-10 - 767 - -
- 40 Jan. 11-20 - - 817 -
1 40 Jan. 21-31 - - 817 -
- 40 Feb. 1-10 - 817 - -
- 40 Feb. 11-20 - - 875 -
1 40 Feb. 21-28 - - 875 -
- 40 Mar. 1-10 - 875 -
- 40 Mar. 11-20 - - 917
1 40 Mar. 21-31 - - 917
10 20 30 40 50 60 70 80 90
Sales: 642 642 642 683 683 683 725 725 725
Aug. 1-10 Aug. 11-20 Aug. 21-31 Sep. 1-10 Sep. 11-20 Sep. 21-30 Oct. 1-10 Oct. 11-20 Oct. 21-31
Aug. 1-10
Aug. 11-20
Aug. 21-31
Sep. 1-10
Sep. 11-20
Sep. 21-30
Oct. 1-10 641.7 - - - - - - - -
Oct. 11-20 - 641.7 - - - - - - -
Oct. 21-31 - - 641.7 683.3 - - - - -
Nov. 1-10 - - - - 683.3 - - - -
Nov. 11-20 - - - - - 683.3 - - -
Nov. 21-30 - - - - - - 725.0 - -
Dec. 1-10 - - - - - - - 725.0 -
Dec. 11-20 - - - - - - - - 725.0
Dec. 21-31 - - - - - - - - -
Jan. 1-10 - - - - - - - - -
Jan. 11-20 - - - - - - - - -
Jan. 21-31 - - - - - - - - -
Feb. 1-10 - - - - - - - - -
Feb. 11-20 - - - - - - - - -
Feb. 21-28 - - - - - - - - -
Mar. 1-10 - - - - - - - - -
Mar. 11-20 - - - - - - - - -
Mar. 21-31 - - - - - - - - -
210
Mar
650,000 Purchases
45 Terms
650,000
100 110 120 130 140 150 160 170 180 190
767 767 767 817 817 817 875 875 875 917
Nov. 1-10 Nov. 11-20 Nov. 21-30 Dec. 1-10 Dec. 11-20 Dec. 21-31 Jan. 1-10 Jan. 11-20 Jan. 21-31 Feb. 1-10
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
766.7 - - - - - - - - -
- 766.7 - - - - - - - -
- - 766.7 - - - - - - -
- - - 816.7 - - - - - -
- - - - 816.7 - - - - -
- - - - - 816.7 - - - -
- - - - - - 875.0 - - -
- - - - - - - 875.0 - -
- - - - - - - - 875.0 -
- - - - - - - - - 916.7
- - - - - - - - - -
200 210 220 230 240
917 917 950 950 950
Feb. 11-20 Feb. 21-28 Mar. 1-10 Mar. 11-20 Mar. 21-31
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
- - - - -
916.7 - - - -
Chapter 5: Break-Even Analysis
Key Assumptions Profit and Losses as a Function of Volume Changes
Operating Break-Even Chart
Key Assumptions
Contribution per unit
Revenue 750
Variable costs 250
Contribution 500
Fixed costs 200
Break-even volume 400
Profits and losses as a function of volume changes of 25.0%
1,000
Operating Break-Even Chart
900
800
700
Total
600 revenue
500 Variable
costs
400
Fixed costs
300
200 200
100
- Volume
0 100 200 300 400 500 600 700 800 900 1000 1100 1200
s as a Function of Volume Changes
k-Even Chart
Volume
0
100
200
300
400
500
Total 600
revenue 700
Variable 800
costs 900
Fixed costs 1000
1100
1200
Volume
1100 1200
Capital structure:
Debt as percent of capitalization 50.0% Sustainable Growth Equation
Debt to equity ratio 100.0%
Debt 250.0 ROS
Equity 250.0 20.0%
Net assets (capitalization) 500.0 Debt to equity x
ROC 100.0% Sustainable Sales / assets
Profitability (after taxes): 10.0% x growth rate 40.0%
Gross return on net assets 10.0% x + ( ROC - i ) = = x
Amount of profit 50.0 Retention rate 6.0% 16.0% Financial leverage
Interest rate (before tax) 6.0% 100.0% x 200.0%
Tax rate 33.3% Retention rate x
Interest rate (tax-adjusted) 4.0% 100.0% Retention rate
Amount of interest (tax-adjusted) 10.0 100.0%
Profit after interest 40.0
Disposition of profit:
Dividend payout 0.0% The Business System
Dividends paid - New
Reinvestment of profit 40.0 investment
105
Financing: Depreciation Dis-investment
Additional debt 40.0 effect Investment
Funding potential 80.0 25 Investment base
#REF!
Working capital
Capitalization 500 580
Financing Activities: 40
Debt
Debt proceeds (repayments) 40
Dividends paid 0
Stock proceeds (repurchase) 0 Stock 0
Cash from financing activites 40
POLICY ASSUMPTION INPUTS: Case I Case II Case III Case IV Case V Case VI Case VII
Net assets (capitalization) 500.0 500.0 500.0 500.0 500.0 500.0 500.0
Debt as percent of capitalization 0.0% 50.0% 50.0%
Gross return on net assets 10.0% 10.0% 10.0%
Interest rate (before tax) 0.00% 6.00% 6.00%
Tax rate 33.3% 33.3% 33.3%
Dividend payout 0.0% 0.0% 50.0%
Depreciation effect 25.0 25.0 25.0
Capital structure: Case I Case II Case III Case IV Case V Case VI Case VII
Debt as percent of capitalization 0.0% 50.0% 50.0% 0.0% 0.0% 0.0% 0.0%
Debt to equity ratio 0.0% 100.0% 100.0% 0.0% 0.0% 0.0% 0.0%
Debt - 250.0 250.0 - - - -
Equity 500.0 250.0 250.0 500.0 500.0 500.0 500.0
Net assets (capitalization) 500.0 500.0 500.0 500.0 500.0 500.0 500.0
Disposition of profit:
Dividend payout 0.0% 0.0% 50.0% 0.0% 0.0% 0.0% 0.0%
Dividends paid - - 20.0 - - - -
Reinvestment of profit 50.0 40.0 20.0 - - - -
Financing:
Additional debt - 40.0 20.0 - - - -
Funding potential 50.0 80.0 40.0 - - - -
Results:
Net return on net assets 10.0% 8.0% 8.0% 0.0% 0.0% 0.0% 0.0%
Return on equity 10.0% 16.0% 16.0% 0.0% 0.0% 0.0% 0.0%
Growth in equity 10.0% 16.0% 8.0% 0.0% 0.0% 0.0% 0.0%
Chapter 5: Five-Year Projection - Effect of Policy Changes
($ thousands)
Capital structure: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Debt as percent of capitalization 33.3% 43.0% 43.0% 50.0% 50.0% 50.0%
Debt to equity ratio 50.0% 75.4% 75.4% 100.0% 100.0% 100.0%
Debt 300.0 470.7 492.5 688.9 728.5 787.5
Equity 600.0 624.0 652.9 688.9 728.5 787.5
Net assets (capitalization) 900.0 1,094.7 1,145.4 1,377.7 1,457.0 1,575.0
TOTALS 0 1 2 3 4 5 6 7 8 9 10
Tax rate @36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36%
Aftertax benefits 17,920 2,560 2,560 2,560 2,560 2,560 2,560 2,560 0 0 0
Depreciation tax shield 3,780 540 540 540 540 540 540 540 0 0 0
Total project cash flows (incl. recovery) 11,200 -11,500 3,100 3,100 3,100 3,100 3,100 3,100 4,100 0 0 0
PV Factor @ 14% 1.000 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270
Present value of investment cash flows -11,100 -11,500 0 0 0 0 0 0 400 0 0 0
Present value of operating cash flows 13,294 2,719 2,385 2,092 1,835 1,610 1,412 1,239 0 0 0
Present value of total cash flows -11,500 2,719 2,385 2,092 1,835 1,610 1,412 1,639 0 0 0
Cumulative present value -11,500 -8,781 -6,395 -4,303 -2,467 -857 555 2,193 2,193 2,193 2,193
-5000
-10000
Chapter 9: Analysis of Financing Choices
ABC CORPORATION
Recap of EPS Analyses with new Product ($000's)
New Financing of $10 Million
Original Debt Preferred Common
Earnings before interest and taxes (EBIT) 7,999 9,999 9,999 9,999
Less: Interest charges on long-term debt 0 1,150 0 0
Earnings before income taxes 7,999 8,849 9,999 9,999
Less: Incomes taxes at 34% 2,720 3,009 3,400 3,400
Earnings after income taxes 5,279 5,840 6,599 6,599
Less: Preferred dividends 0 0 1,250 0
Earnings available for common stock 5,279 5,840 5,349 6,599
ABC CORPORATION
Zero EPS Calculation ($000's)
New Financing of $1 Million
Original Debt Preferred Common
Earnings per share (EPS) 0 0 0 0
Common shares outstanding (000's) 1,000 1,000 1,000 1,275
Earnings available for common stock 0 0 0 0
Preferred dividends 0 0 1,250 0
Earnings after taxes 0 0 1,250 0
Incomes taxes at 34% 0 0 644 0
Earnings before income taxes 0 0 1,894 0
Interest charges on long-term debt 0 1,150 0 0
EBIT or zero EPS 0 1,150 1,894 0
Original
Earnings before interest and taxes (EBIT) 7,999 Earnings before interest and taxes (EBIT)
Less: Interest charges on long-term debt Less: Interest charges on long-term debt
Earnings before income taxes 7,999 Earnings before income taxes
Less: Incomes taxes at 34% 2,720 Less: Incomes taxes at 34%
Earnings after income taxes 5,279 Earnings after income taxes
Less: Preferred dividends Less: Preferred dividends
Earnings available for common stock 5,279 Earnings available for common stock
Common shares outstanding (000's) 1,000 1,000 Common shares outstanding (000's)
Earnings per share (EPS) $ 4.03 $ 5.35 Earnings per share (EPS)
Less: Common dividends per share $ 2.50 $ 2.50 Less: Common dividends per share
Retained earnings per share $ 1.53 $ 2.85 Retained earnings per share
Retained earnings in total 1,529 2,849 Retained earnings in total
Original EPS $ 5.28 $ 5.28 Original EPS
Change in EPS -$ 1.25 $ 0.07 Change in EPS
Percent change in EPS -23.7% 1.3% Percent change in EPS
EPS Calculation with New Bond Issue
EPS Calculation with New Preferred Stock Issue
EPS Calculation with New Common Stock Issue
2.75
2.50
Original E(1-t)/s
Bonds
Preferred (E-i)(1-t)/s
Common (E(1-t)-d)/s
Orig. EPS
Div/Sh E(1-t)/s
rred dividends $
es outstanding
Totals
Key Assumptions Year: 0 1 2 3 4 5 6 7 8 9
Key Assumptions The Divergence of Accounting and Cash Flow Measures (gra
Working capital - initial 2,000
Fixed investment - initial 10,000 Economic Profit Analysis
Economic life 8 Cash Flow Return on Investment Analysis
Cost of capital 10.0% Other Measures
Net present value factor 10.0%
NOPAT 824.4 Note: The simplified example here shows a company earning exa
Capital amortization 874.4 In other words, the net present value of Economic profits when dis
Depreciation effect 1,250 capital equals zero; likewise the DCF-ROI or IRR equals the Cost
Other Measures 0 1 2 3 4 5
ROE 6.9% 7.7% 8.7% 10.0% 11.8%
ROCE / RONA 6.9% 7.7% 8.7% 10.0% 11.8%
ROGI 17.3% 17.3% 17.3% 17.3% 17.3%
CFROI 10.0% 10.0% 10.0% 10.0% 10.0%
Accounting ROGI
25.0%
20.0%
15.0%
Project/business IRR The Divergence of Accounting and Cash Flow Meas
Cost of capital 30.0%
Accounting ROA
Rate of return
Accounting ROGI
25.0%
20.0%
15.0%
10.0%
5.0%6.9%
0.0%
1 2 3 4 Year 5 6
Graph Data
1 2 3 4 5 6
Project/business IRR 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Cost of capital 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Accounting ROA 6.9% 7.7% 8.7% 10.0% 11.8% 14.3%
Accounting ROGI 17.3% 17.3% 17.3% 17.3% 17.3% 17.3%
d Cash Flow Measures (graph)
6 7 8 9 10 11 12 13 14 15
3,750 2,500 1,250 0 0 0 0 0 0 0
2,000 2,000 2,000 0 0 0 0 0 0 0
5,750 4,500 3,250 0 0 0 0 0 0 0
10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
575 450 325 0 0 0 0 0 0 0
824 824 824 0 0 0 0 0 0 0
249 374 499 0 0 0 0 0 0 0
0.564 0.513 0.467 - - - - - - -
141 192 233 0 0 0 0 0 0 0
6 7 8 9 10 11 12 13 14 15
824 824 824 0 0 0 0 0 0 0
1,250 1,250 1,250 0 0 0 0 0 0 0
2,074 2,074 2,074 0 0 0 0 0 0 0
6 7 8 9 10 11 12 13 14 15
14.3% 18.3% 25.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
14.3% 18.3% 25.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
17.3% 17.3% 17.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
25.4%
17.3%
unting and Cash Flow Measures
25.4%
17.3%
10.0%
10.0%
Year 5 6 7 8
7 8
10.0% 10.0%
10.0% 10.0%
18.3% 25.4%
17.3% 17.3%
WELCOME to Interactive Templates for TFA
These templates are intended to be used as a companion to TECHNIQUES OF FINANCIAL ANALYSIS (TFA),
by Dr. Erich Helfert, 10th Millennium Edition.
Every template is taken from specific examples/exercises in the text book. References to the book are
found on the Main Menu. As such, these templates should be used along side the book which explains
the relevance and design of each exercise.
Insofar as TFA's emphasis is around the concept that any business is essentially a financial system of cash
flows ... these templates allow the user to examine the interrelationships between investment,
operating, and financing variables within the financial system. Collectively, they should greatly enhance
your understanding of the concepts presented in TFA.
Below is a quick reference on How to Use Interactive Templates for TFA and a few
Tips and Tricks.
600.0 Change values here and observe the results in the tables
and charts.
500.0
400.0
Sales
300.0 Costs
Results are displayed in separate tables. Every table is
Income taken directly from TFA. All calculated terms are displayed
200.0
in shaded cells (which are locked and protected).
100.0
SENSITIVITY To quickly view the results of changing one input, first enter new value in Assumptions
ANALYSIS section for input. Go to table / chart / graph to observe resultant change. Now use the
undo and redo buttons on your toolbar, alternatively, to see before and after impact.
MODIFYING If you're an experienced Excel user, if you wish you can easily modify and customize
TEMPLATES the template(s) for your own use. Simply unprotect the worksheet. However, be
careful not to violate the financial integrity of the interrelationships. (P.S. If you
mess up, don't worry. Simply retrieve the original templates from your program disk.)
Note: Some of the graphics may not appear correctly on your screen. This is NOT a problem
with your computer/screen or the template. These templates are optimized for
a screen resolution of 1024 x 768.