Chapter_04 - Ross, Westerfield, and Jordan's Spreadsheet...

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by Brad Jordan and Joe Smolira Version 9.0 Chapter 4 In these spreadsheets, you will learn how to use The following conventions are used in these spr 1) Given data in blue 2) Calculations in red NOTE: Some functions used in these spreadsheets may the "Analysis ToolPak" or "Solver Add-In" be installed in To install these, click on the Office button then "Excel Options," "Add-Ins" and select "Go." Check "Analysis ToolPak" and "Solver Add-In," then click "OK." Ross, Westerfield, and Jordan's Spreadsheet Master Fundamentals of Corporate Finance, 9th edition IF Data tables Graphing Iterative calculations
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e the following Excel functions: readsheets: y require that in Excel.
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Chapter 4 - Section 2 A Simple Financial Planning Model A financial plan begins with the current financial statements. The income statement and bal COMPUTERFIELD CORPORATION Income Statement Sales $1,000 Assets Costs 800 Net income $200 Total Sales growth: 20% COMPUTERFIELD CORPORATION Sales $1,200 Assets Costs 960 Net income $240 Total Debt increased by: $50 Net income was: $240 So, dividends paid must have been: $190 To find the funds the company will need to raise next year to funds its sales gorwth, we be growth for the next year will be: If sales grow, by this amount, we can construct the pro forma, or projected financial statem rate, the pro forma statements will be: Pro forma Income Statement The advantage of financial planning is that it allows us to see what could happen in the fut occurred: Of course, that is not the only option available to Computerfield. The company could also k need to repurchase debt in order to keep the balance sheet in balance. The pro forma bala
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Assets Total Remember, the purpose of financial planning is not to tell us what to do, but rather allow us
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lance sheet for Computerfield Corporation are: COMPUTERFIELD CORPORATION Balance Sheet $500 Debt $250 Equity 250 $500 Total $500 COMPUTERFIELD CORPORATION $600 Debt $300 Equity 300 $600 Total $600 COMPUTERFIELD CORPORATION egin with the forecasted sales growth. In this case, we will assume that the sales ents. Under the assumption that all of the variables will grow by the sales growth Pro forma Balance Sheet ture and the options available. For example, in this case the following must have keep all of the net income as retained earnings. If this happens, the company will lance sheet under this scenario will be: Pro forma Balance Sheet
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$600 Debt $110 Equity 490 $600 Total $600 s to see what might happen and plan for any contingencies.
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Chapter 4 - Section 3 The Percentage of Sales Approach Below, we have the financial statements for Rosengarten Corporation. Notice, we have an input ce Tax rate 34% ROSENGARTEN CORPORATION Income Statement Sales $1,000 Current assets Costs 800 Cash Taxable income $200 Accounts receiva Taxes 68 Inventory Net income $132 Total Dividends $44 Fixed assets Addition to Net plant and equ retained earnings $88 Total assets In its financial planning, Rosengarten has projected that sales for the next year will be:
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This note was uploaded on 06/16/2011 for the course FIN 521 taught by Professor Varney during the Spring '11 term at Andrew Jackson.

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Chapter_04 - Ross, Westerfield, and Jordan's Spreadsheet...

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