Project 4 - Project 4 Financial Forecasting and Growth BASE...

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Project 4 – Financial Forecasting and Growth BASE CASE - How much external financing will your firm need for each of the next 10 years? The following table represents the external financing needed for each of the next 10 years: (All amounts in 000,000) MONTH / YEAR FUNDS NEEDED Dec 2009 9254 Dec 2010 11366 Dec 2011 14650 Dec 2012 19688 Dec 2013 23777 Dec 2014 27369 Dec 2015 29753 Dec 2016 Dec 2017 Dec 2018 38377 41813 46993 As you can see from the table above, CVS will have to significantly increase external financing as they progress through the years. I retrieved all of the data from the Bank Lines of Credit account on the Projected 10-year balance sheet. What about surplus funds? There are no surplus funds in my Base Case scenario. The Marketable Securities account is zero for every projected fiscal year. (All amounts in 000,000) MONTH / YEAR FUNDS NEEDED 1
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Dec 2009 0 Dec 2010 0 Dec 2011 0 Dec 2012 0 Dec 2013 0 Dec 2014 0 Dec 2015 0 Dec 2016 Dec 2017 Dec 2018 0 0 0 Differences in the liquidity, activity, leverage, profitability, and cash flow ratios calculated in the Base Case, Long-Term Debt, and Equity scenario. In a table format, show the three scenario’s ratios and their differences. Explain the main differences in the ratios and the impact that this will have on the financial management of the firm: Selected Ratios for each Scenario, December 2009 Base Case Long-Term Debt Equity Liquidity Ratios Current Ratio 0.86 1.53 1.53 Net Working Capital -2985 +6269 +6269 Quick Ratio 0.36 0.65 0.65 Activity Ratios A/R Turnover 15.22 15.22 15.22 Day A/R 23.65 23.65 23.65 Inventory Turnover 7.51 7.51 7.51 Days Inventory 47.94 47.94 47.94 Fixed Asset Turnover 9.01 9.01 9.01 2
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Project 4 - Project 4 Financial Forecasting and Growth BASE...

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