Lecture 8 spr 10

Lecture 8 spr 10 - Pro formaforma Pro forma Pro Interest...

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Forecast Sales Forecast Turnovers Forecast Margins Depreciation Expense Forecast Leverage Interest Expense Other income and expense Other assets and liabilities Pro forma Balance Sheet Pro forma Income Statement Pro forma Statement of Cash Flows Distributions to Equity Holders Property, Plant, & Equip Spring 2010 NBA 5060 Lecture 8 – Pro Forma Financial Statements & Forecasting I 1. Pro forma financial statements 2. A structured forecasting approach Step 1: Forecasting Sales Step 2: Forecasting the rest of the income statement Step 3: Forecasting the balance sheet Step 4: Computing the statement of cash flows and free cash flows to equity Step 5: Terminal year assumptions Step 6: Economic reality checks and an iterative process Lecture 8 Page 1 of 9
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For next class, we will complete our discussion of forecasting and develop forecasts for SBUX. Consider how you would forecast the income statement and balance sheet for SBUX. Lecture 8 Page 2 of 9
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Pro Forma Financial Statements Motivation The key component for any serious security analysis Limited by the reliability of key assumptions and the inherent uncertainty of future events
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