Day 5-Ch 4-Part 1-9.14.11

Day 5-Ch 4-Part 1-9.14.11 - Business Management 201 Day 5...

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Unformatted text preview: Business Management 201 Day 5 Chapter 4: Part 1—Financial Forecasting September 14, 2011 Day 5 Agenda 1) TA Open Lab Session—Thursday 11:00 AM- 12:00 PM—3108 JKB 2) TA POW Review Session—Thursday 5:00 PM- 6:00 PM-3714 HBLL 3) POW #1 AND POW #2 Both Due Friday, September 16 at 11:59 PM 4) Book Assignments Made This Week 5) Jeopardy 6) Chapter 4: Part 1 Discussion JEOPARDY JEOPARDY http://extracreditstudy.com/Jeopardy.html Final Jeopardy Question Financial Forecasting, Financial Forecasting, Planning and Planning and Budgeting Budgeting Final Jeopardy Question A company collects 60% of its sales during the month of the sale, 30% one month after the sale, and 10% two months after the sale. The company expects sales of $10,000 in August, $20,000 in September, $30,000 in October, and $40,000 in November. How much money is expected to be collected in October ? Final Jeopardy Answer August September October November December January Totals: Sales: $10,000 $20,000 $30,000 $40,000 $100,000 August $6,000 $3,000 $1,000 $10,000 September $12,000 $6,000 $2,000 $20,000 October $18,000 $9,000 $3,000 $30,000 November $24,000 $12,000 $4,000 $40,000 Totals: $6,000 $15,000 $25,000 $35,000 $15,000 $4,000 $100,000 Same Month 60% 1 Month Delay 30% 2 Month Delay 10% Collections: October Collections: $25,000 Chapter 4: Chapter 4: Financial Forecasting, Financial Forecasting, Planning and Budgeting Planning and Budgeting Mind Map Why?: Financial statements are BACKWARDS-LOOKING . As analysts/managers, we are really interested in what will happen in the FUTURE (i.e. growth). 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. Mind Map Learning Objective: – Create pro forma income statements and balance sheets using percent of sales forecasting – Identify the key variables in the forecasting process and the key limitations – Understand the key interactions in the planning process – Estimate a cash budget in good form Mind Map Key Words/Concepts: – Percent of Sales Forecasting – Discretionary Financing Need (DFN) – Spontaneous and Non-Spontaneous Accounts – Retained Earning Forecasting – Capacity, Payout Ratio, Plowback Ratio – Sustainable Growth Rate and the DuPont Equation – Cash Budgets Financial Forecasting: Three Steps 1) Project sales revenues and expenses....
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Day 5-Ch 4-Part 1-9.14.11 - Business Management 201 Day 5...

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