fm3_chapter03 - A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17...

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SETTING UP THE FINANCIAL STATEME Sales growth 10% Current assets/Sales 15% Current liabilities/Sales 8% Net fixed assets/Sales 77% Costs of goods sold/Sales 50% Depreciation rate 10% Interest rate on debt 10.00% Interest paid on cash and marketable securities 8.00% Tax rate 40% Dividend payout ratio 40% Year 0 1 Income statement Sales 1,000 1,100 Costs of goods sold (500) (550) Interest payments on debt (32) (32) Interest earned on cash and marketable securities 6 9 Depreciation (100) (117) Profit before tax 374 410 Taxes (150) (164) Profit after tax 225 246 Dividends (90) (98) Retained earnings 135 148 Balance sheet Cash and marketable securities 80 144 Current assets 150 165 Fixed assets At cost 1,070 1,264 Depreciation (300) (417) Net fixed assets 770 847 Total assets 1,000 1,156 Current liabilities 80 88 Debt 320 320 Stock 450 450 Accumulated retained earnings 150 298 Total liabilities and equity 1,000 1,156 A B C 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
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ENT MODEL #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? #MACRO? D 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39
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FIRST FINANCIAL MODEL Sales growth 10% Current assets/Sales 15% Current liabilities/Sales 8% Net fixed assets/Sales 77% Costs of goods sold/Sales 50% Depreciation rate 10% Interest rate on debt 10.00% Interest paid on cash and marketable securities 8.00% Tax rate 40% Dividend payout ratio 40% Year 0 1 2 3 Income statement Sales 1,000 1,100 1,210 1,331 Costs of goods sold (500) (550) (605) (666) Interest payments on debt (32) (32) (32) (32) Interest earned on cash and marketable securities 6 9 14 20 Depreciation (100) (117) (137) (161) Profit before tax 374 410 450 492 Taxes (150) (164) (180) (197) Profit after tax 225 246 270 295 Dividends (90) (98) (108) (118) Retained earnings 135 148 162 177 Balance sheet Cash and marketable securities 80 144 213 289 Current assets 150 165 182 200 Fixed assets At cost 1,070 1,264 1,486 1,740 Depreciation (300) (417) (554) (715) Net fixed assets 770 847 932 1,025 Total assets 1,000 1,156 1,326 1,513 Current liabilities 80 88 97 106 Debt 320 320 320 320 Stock 450 450 450 450 Accumulated retained earnings 150 298 460 637 Total liabilities and equity 1,000 1,156 1,326 1,513 Year 0 1 2 3 Free cash flow calculation Profit after tax 246 270 295 Add back depreciation 117 137 161 Subtract increase in current assets (15) (17) (18) Add back increase in current liabilities 8 9 10 Subtract increase in fixed assets at cost (194) (222) (254) Add back after-tax interest on debt 19 19 19 Subtract after-tax interest on cash and+A14 mkt. securities (5) (9) (12) Free cash flow 176 188 201 A B C D E 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52
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CONSOLIDATED STATEMENT OF CASH FLOWS: RECONCILIN Cash flow from operating activities Profit after tax 246 270 295 Add back depreciation 117 137 161 Adjust for changes in net working capital: Subtract increase in current assets (15) (17) (18) Add back increase in current liabilities 8 9 10 Net cash from operating activities 356 400 448 Cash flow from investing activities Aquisitions of fixed assets--capital expenditures (194) (222) (254) Purchases of investment securities 0 0 0 Proceeds from sales of investment securities 0 0 0 Net cash used in investing activities (194) (222) (254) Cash flow from financing activities
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This note was uploaded on 01/23/2011 for the course FGB 780 taught by Professor Edwardchang during the Spring '09 term at Missouri State University-Springfield.

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fm3_chapter03 - A 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17...

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