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Day 3-Part 2 Slides-Ch 4-Part 2-6.28.11

Day 3-Part 2 Slides-Ch 4-Part 2-6.28.11 - Day3:Part2...

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Business Management 301 Day 3: Part 2 Chapter 4: Part 2—Financial Forecasting June 28, 2011
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Day 3: Part 2 Agenda 1) Final Book Assignments—Email   Tomorrow 2) Chapter 5 Reading Quiz Due Thursday at  8:00 AM 3) POW Quizzes Due Friday at 9:00 PM 4) Financial Calculators—Chapter 5 5) Personal Information Cards 6) Chapter 4: Part 2 Discussion
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Chapter 4:  Chapter 4:  Financial Forecasting, Financial Forecasting, Planning and Budgeting Planning and Budgeting
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Financial Forecasting OBJECTIVE:  To make  fundamental assumptions   about the future progress of the firm and then  forecast future results .   ULTIMATE GOAL:   To understand the possible implications of  today’s  decisions on tomorrow’s  performance.  
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Percent of Sales Forecasting Process 1) Project sales revenues and expenses. 2) Estimate current assets and fixed assets necessary to  support projected sales. 3) Analyze financing/calculate DFN or the “plug” figure. Key Point:  Growth requires  increased investment… But efficient growth requires  advanced planning.
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Balance Sheet Assets Liabilities & Owners Equity Current Assets      Cash      Marketable Securities      Accounts Receivable      Prepaid Expenses      Inventories Fixed Assets      Land      Plant & Equipment      Less:  Depreciation Current Liabilities      Accounts Payable      Notes Payable      Accrued Salaries Long-Term Liabilities      Mortgage Debt      Debentures Owners’ Equity      Common Stock  ($1 Par)      Add’l Paid In Capital      Retained Earnings Investment Decision Financing Decision
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Forecasting Financial Statements Question:   What type of accounts vary with  sales? Answer:   Many  asset accounts and  some   current liability accounts.
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