Project S15 - Forecasting the Income Statement

Description Not Provided.

---

Closed Caption:

alright look into hopefully probably our
one and only part 3 tutorial
where we're going to create our pro
forma financial statements
and it is in this tab that we're later
going to calculate our free cash flow
and you are sensitive you know us
am but we're not going to do that now if
you want to do that
am as part this submission I will take a
look at it and give me feedback
and then your BS death ahead when you
need to do this for your final part
I'm but you know take it as it comes
whatever you wanna do so it created this
little plan of attack
am obvious a started with some
formatting
but we're gonna bring over categories
right sales revenue total revenue all
the income statement balance sheet
drivers
I'm categories that will bring over the
drivers and we're gonna bring over our
most recent actual values from you that
was 2013
and then we're gonna fix any funky
little lines like dividends paid is
weird on my sheet you might have a sales
growth rate or something else in there
an I'll take no tenia my drivers that
are percentage of total revenue
I'm so that I don't incorrectly for cast
an animal actually perform the forecast
but see if we can get this all done in
15 minutes or less
alright start with your comments I
statement
bring over your categories highlight
man see bring them over
command me step 1: to
alright step 2 bring over your drivers
here we go drivers
highlights them all
the truth is you can't just case then
you have to do what's called
paste special if you just paste them
yeah I'll try it to get these weird
references in
blah blah blah it doesn't work you have
to paste special are you bring
only the values and the number formats
and then it looks pretty
right so you have to do next
is line at your sales revenue right you
might have sales revenue
above or below because if we replace
this value drivers line
may need to add a rope or you may need
to
delete a row either way and then after
that we need to bring over
our most recent values for me it's 2013
for you it will either be 2013 or 2014
nor the common size percentages
but the actual
dollar values
great again make sure that your sales
revenue
lines up with your value driver
and the title so never gonna
set up for years that we're gonna
forecasts are in the forecast to 2014
2015
16-17 18 if you have
2014 is your most recent actually here
and you'll be forecasting 15 turn 18
i right and better for our drivers
they bring over our most recent values
then we need to just go through
and I want to adjust my dividend payout
ratio si I have this
dividend payout ratio my other thank you
lines are that it brought over
all these things that we had hidden hide
those again
and then consider dividend payout ratio
any
cheap only made evident paid and I need
my addition to retained earnings
up
in both cases these are going to be
the forecasted values this number here
would be the dollar amount of dividends
at this haven 2013
if that's what that is enter it if not
don't worry about it
but we're going to use
a hopes payment of dividends yummy
you only want one dividend payment throw
make sure you only have one I had
entered it twice haven't done that
that's fine the rest of the data to
retained earnings
alright so
what is next
the next thing is
to know the drivers that are on a
percentage of total revenue and I don't
mean things like
interest them art appreciation or cash
which is the plug
that what I mean is that most everything
gets forecast as a percentage of total
revenue except for those ones that we
went through
right tax interest depreciation cash
however
when I was looking at my comments a
statement in creating my drivers
I gave sales a growth rate right because
it was
100 percent actual revenue every year
that's not helpful right I need
something to
forecast the growth in sales or decline
in sales is that maybe
and also for additional paid in capital
and treasury stock then rates
those as percentages sales seem to have
their own trajectory
the right and as it turns out additional
paid in capital is growing faster than
sales and treasury stock is growing more
slowly than sales
so each have those three are not
forecast as percentage of sales
versus percentage of total revenue
instead
their growth rates in their own right
I'm gonna marked them
just so that I don't forecast them as a
percentage of sales
percent revenue right to VM stick okay
we did it any drivers that are
percentage of total revenue
and then here's are favorite are the
actual forecast
and remember the golden rules the Holy
Grail a forecasting
them there's a few other than the first
one is to always use an absolute
reference whenever you reference value
driver
and and another is to don't panic about
referencing and the self
there are you reading so
were forecasting that 2014 sales
are going to be 7.7 per six
7.7 percent larger than 2013 sales
right give it a value driver if you have
another sales I am
you line it up there
but the total revenues in equal the some
have all your sales revenues right well
direct costs
casa goods sold we think is going to be
roughly a little over half have our
total revenues it's gonna cost
takes her she's about half every dollar
they make
just to go into raw materials direct
labor rights but it cost them to make
their product they're gonna take a look
at depreciation amortization
which we're forecasting to be just under
six percent
up average
plant cropping equipment cost an Grosse
Pointe Park equipment in here
I want to be the average what we started
the year with
what we ended the year with so many as
2013
actual data post-2014 forecaster data
well once we have all of those things
right now we get to our next time to
rely
which is gross profit in gross profit is
equal to total revenue
less direct costs and in this case
less depreciation amortization then we
can hang on to our next
item sales general and administrative
which kids 26 percent
total revenue restructuring mediation
pair met less than one percent
have total revenue and then I've got my
total in direct operating costs so in
direct operating costs
in my case i'm concerned. selling
general and administrative
restriction remediation impairments
right for you to be anything below gross
profit
which means
my operating income income from
operations
is equal to gross profit less
total indirect operating costs right
these are the ones we didn't get drivers
for because we calculate them
as percent or as a sum total
other things that we forecasted
interest expense gross
is going to be in this case interest
paid up
and we think that our interest paid on
debts is going to be 4.73 percent
love
are average
balance and debt right
that thing is is that we have to balance
isn't that deter
up important here so
we have are average balance current debt
but the average parent
long-term debt if you're from doesn't
have current debt
and only have one to deal with where
parity
enter interest
income is based on our interest value
driver
up
and our total cash cash equivalents and
short term investments
right that line item is and deeper that
same here but that's okay
which means that our total non-operating
income
get this is going to be equal to
negative interest paid
plus interest income right
this number is then going to probably be
negative and it's our only expensive
injured as a negative number
damn you can adjust them so they're all
injured as negative
that makes more sense to you but I leave
us a negative and that's
the convention that interests can be
positive or negative and you need to
sign to tell
SAR
earnings before tax then estimate based
on our operating income minus
our total non-operating income but if
that numbers entered negative you
add the native
that are taxation 35-21
percent a our earnings before tax
gives us annette in CAM
a earnings before tax less income tax
expense
hope enough that net income
we are going to pay half a bit
as dividends and we're then going to
add the remaining bit to retained
earnings
and with this fifty percent dividend
payout ratio that makes everything
pretty handy
alright long
been here 12 minutes all right we're
gonna do another one
it showing how to forecast the ballot
she happy calculating
email me if you have any questions