This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: 1 t t t 1 t sales sales assets fixed net assets fixed net + + = We then proceed by assuming that the ratio of depreciation expense to net fixed assets is constant over time. 1 t 1 t t t assets fixed net expense on depreciati assets fixed net expense on depreciait + + = Our forecast is then: FIN 340 Forecasting Fixed Assets and Depreciation Prof. David Allen 1 t 1 t t 1 t assets fixed net assets fixed net expense on depreciati expense on depreciati + + + = Since we have net fixed assets and depreciation for year t+1, we work “up” the balance sheet and solve for gross fixed assets: 1 t 1 t 1 t expense on depreciati assets fixed net assets fixed gross + + + + = Note that in the last equation, we are adding depreciation expense....
View Full Document
This note was uploaded on 10/22/2010 for the course FIN 340 taught by Professor Davidallen during the Spring '10 term at N. Arizona.
- Spring '10