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IFM9 Ch 09 P10 Build a Model

# IFM9 Ch 09 P10 Build a Model - Chapter 9 Ch 09-10 Build a...

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Chapter 9. Ch 09-10 Build a Model Here are the company's historical sales. Hint: Use the Trend function to forecast sales for 2007. Year Sales Growth Rate 2001 129,215,000 2002 180,901,000 40.0% 2003 235,252,000 30.0% 2004 294,065,000 25.0% 2005 396,692,000 34.9% 2006 455,150,000 14.7% 2007 515,465,267 % Increase in Predicted Sales for 2007 over 2006: 2006 Sales 455,150,000 2007 Sales 515,465,267 % increase 13.25% Note: This growth rate has been declining over time. Key Input Data: Used in the forecast Tax rate 40% Dividend growth rate 8% 9% 11% December 31 Income Statements: (in thousands of dollars) Forecasting 2006 2007 2007 Cumberland Industries' financial planners must forecast the company's financial results for the coming year. The forecast will be based o the percent of sales method, and any additional funds needed will be obtained as notes payable. a. Assuming the historical trend continues, what will sales be in 2007? Base your forecast on a spreadsheet regression analysis of the 2001-2006 sales data above, and include the summary output of the regression in your answer. By what percentage are sales predicted to increase in 2007 over 2006? Is the sales growth rate increasing or decreasing? b. Cumberland’s management believes that the firm will actually experience a 20 percent increase in sales during 2007. Construct 2007 pro forma financial statements.

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IFM9 Ch 09 P10 Build a Model - Chapter 9 Ch 09-10 Build a...

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