Tag: financial forecasting

Percentage of sales forecasting Case Study

Percentage of sales forecasting
Percentage of sales forecasting

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Percentage of sales forecasting

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Case Studies in Finance Edition: 7 Authors: Robert F . Bruner, Kenneth Eades, & M ichael Schill ISBN: 9780077861711

Week 4 reading:

In this week, you need to finish the reading of case 9:

  1. Case 9: The Body Shop

Introduction case 9:

In this case, you are cast in the role of adviser to Anita Roddick, the managing director of the Body Shop. You are to prepare a three-year forecast of the firm’s income statements and balance sheets. The case is intended to introduce percentage of sales forecasting and walks the student through the preparation of a simplified forecast using a spreadsheet program on the personal computer. The case emphasizes the importance of being able to speak plainly about one’s financial forecast and the insights that are of use to the general manager.

Main skill to develop: Percentage of sales forecasting

Please listen the video to learn how to do Percentage of sales forecasting:

The process to do percentage-of-sale forecasting for the body shop:

  1. Calculate the growth rate of sale in each year: from 1999 to 2000, from 2000 to 2001.
  2. Calculate the percentage of each item with respect of sales (turnover) in each year.
  3. Based on the calculation of 1), estimate the sale growth rate during years 2002-2004.
  4. Based on the calculation of 2), estimate the percentage of each item with respect to sale during year 2002-2004.
  5. Estimate the values of items in financial statements in each year.
  6. Adjust the “cash” and “overdraft” to make the balance sheet balanced: total asset= total liability.

Key points in case 9:

Pay attention:

  1. Sources of assumptions: growth rates could originate from the following:
  2. historical growth rate for the firm
  3. historic growth rates for peers
  4. target growth rates used by the firm
  5. When processing forecasting, which items are changed with sale, and which are not changed with sales?
  6. The use of Overdrafts, cash to make the total asset=total liability

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Cash flow and working-capital management Case study

Cash flow and working-capital management
Cash flow and working-capital management

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Cash flow and working-capital management

1: Case reading: Read through the Horniman Horticulture case (Case 11) in the text and answer the following questions. (50 points)

Case description:

Horniman Horticulture case captures the problems concerning cash flow and working-capital management typical of small, growing businesses. At the end of 2005, Bob and Maggie Brown have completed their third year of operating Horniman Horticulture, a $1-million-revenue woody-shrub nursery in central Virginia. While experiencing booming demand and improving margins, the Browns are puzzled by their plummeting cash balance. The case highlights the difference between cash flow and accounting profits, as well as the common negative effects of growth on cash flow. The case also provides a forum for:

 i. instilling appreciation for the relevance of free cash flow to business owners and managers,

 ii. introducing financial-ratio analysis,

 iii. working-capital management, and

 iv. motivating the use of financial models.

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1):   a. From an Income Statement perspective what is going right with this business?

      i. list why you believe things are going right in terms of ratio analysis?

b. What concerns you with the balance sheet?

     i. support your concerns with ratio analysis?

2.   a. What are the 4-yr cumulative cash flows?

      b. Where is the cash going?

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3.   a. What is Maggie’s accounts payable policy?

b. Do you agree with Maggie Brown’s accounts-payable policy?

4.   a. What are the alternatives for solving the business’s cash problem?

The free-cash-flow calculation provides a reasonable framework for establishing the alternatives facing the Browns.

b. Explain how realize the Browns can solve their problem?

2: Based on the 2016 financial report of Facebook, forecast the financial performance in 2017, using percent of sales forecasting method. (50 points)

Since there are only two balance sheets, you just use the data available to do forecasting. Let me know your method of finding your base year, average, last year’s value, etc.

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Revenue Forecasting Essay Paper

Revenue Forecasting
Revenue Forecasting

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Revenue Forecasting

Using the same hypothetical manufacturing company described above, address the following questions related to forecasting the performance of the company:

  • How would you forecast revenue, profitability, and asset management, such as inventory control and accounts receivable, for a hypothetical manufacturing company?
  • What ratios would you analyze?
  • What techniques would you use? Why?
  • What non-financial factors would be important in your analysis?

Use research from at least two references to support your ideas.

Use research from at least two references to support your ideas.

Revenue Forecasting

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  • Length: Your document should include 3–6 typed, double-spaced pages to cover all of the parts of the assessment. In addition, include a title page and references page.
  • Written communication: Written communication should be free of errors that detract from the overall message.
  • Style and Formatting: Apply APA style and formatting to cite your references.
  • Resources: You must use at least four references, at least two references supporting Part 2 and two references supporting Part 3.
  • Font and font size: Times New Roman, 12 point.
Library Resources
  • Brigham, E. F., & Houston, J. F. (2016). Fundamentals of financial management (14th ed.). Boston, MA: Cengage.

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