财务策划步骤和方法

1、1Financial Planning and Forecasting2Financial PlansnFinancial plans evaluate the economics behind the strategy and operations. They consist of six steps:1.Projected financial statements: to analyze the effects of the operating plan on projected profits and financial ratios.2.Determine the funds need

2、ed to support the plan.3.Forecast funds availability.4.Establish and maintain a system of controls to govern the allocation and use of funds within the firm.5.Develop procedures for adjusting the basic plan if the economic forecasts upon which the plan was based do not materialize6.Establish a perfo

3、rmance-based management compensation system.3Sales ForecastnSales forecasts are usually based on the analysis of historic data.nAn accurate sale forecast is critical to the firms profitability:Under-optimistic Too much inventoryand/or fixed assetsLow turnover ratioHigh cost of depreciation and stora

4、geWrite-offs of obsolete inventoryLow profitLow rate of return on equityLow free cash flowDepressed stock priceOver-optimistic Company will fail to meet demandMarket share will be lostSales Forecast4The Percent of Sales MethodnThis is the most common method, which begins with the sales forecast expr

5、essed as an annual growth rate in dollar sale revenue.nMany items on the balance sheet and income statement are assumed to change proportionally with sales.5The Percent of Sales Method: An Example*Denotes spontaneous, which means increase spontaneously with sales.All assets are spontaneous. On the l

6、iability and equity side, Accounts Payable and Accruals are the only spontaneous funds.During the next year, sales increase by 15% resulting in a 15% increase in Total Assets (4,374). Hence, the asset side on next years balance sheet must go up by 15%. Also, the spontaneous funds on the liability si

7、de must also increase by 15%.6Example (contd):The spontaneous items on the liabilities side of the projected balance sheet must also increase by 15%.7Example (contd):8Example (contd):nRetained earnings will also increase but not at the same rate as sales. The 2002 amount of RE is the old amount plus

8、 the addition to retained earnings, which we calculated in the projected income statement.nSince the TA = TL and the TA have increased to 33,534, while TL have increased to 31,406, there are additional funds needed (AFN) of 2,128 on the liabilities side.9Example (contd):nThere are two categories of

9、sources for the AFN:nIssuance of new stocks (equity)nUse some combination of debtnIn this example, there are internally generated funds from:nRetained EarningsnAccounts Payable and Accruals10Example (contd):11Financing FeedbacksnIf the business issues new debt and common stock, the total amount of i

10、nterest and dividends paid will change.nBecause interest and dividends must be paid with cash, any increase in these costs will decrease the funds the firm has to investthat is, the amount of income added to retained earnings will be less than originally forecasted.nWhen we consider the effects of t

11、he increased interest and dividend payments, we find that the AFN is actually greater than originally expected.nFinancing feedbacksthat is, the effects on the financial statements of actions taken to finance forecasted increases in assetsmust be considered to determine the exact amount of AFN.12Exam

12、ple (contd):nBorrow at 10% (Notes Payable).nIt means that next year the interest will be 560 + (10% * 2,128)nInstead of retaining 1,166, the company retains 1,096 because of the interest.nThe end results is that the company has to raise 2,128 + 70 = 219813The AFN FormulaAFNRESSLSSA)(*)(*nIn the form

13、ula, we can use either year (2001 or 2002) numbers to arrive at the final result.n*A refers to the Total Assets.n*L refers to the sum of all spontaneous liabilities (Accounts Payable and Accruals).)(198, 2096, 1400, 5*400,41280, 8400, 5*400,41534,33)(128, 2166, 1400, 5*400,41280, 8400, 5*400,41534,3

14、3PassSecondPassFirst70 AFN14Steps in Financial ForecastingnForecast salesnProject the assets needed to support salesnProject internally generated fundsnProject outside funds needednDecide how to raise fundsnSee effects of plan on ratios and stock price15Forecasting salesnReview past sales (five to t

15、en years).nYou can use average growth rate but it may not give you a correct estimate.nUse regression slope to compute growth rate.nConsider changes in economy, market conditions, etc.nImproper sales forecast can lead to serious financial planning issues.16After sales forecasting, what is next?nFore

16、cast the COGS (a certain % of sales).nInventory numbers will change with sales.nA/R (consider credit policy changes) will change and so will A/R.nAccordingly, cash and cash equivalents will change.17Sales forecasting and longer term assets and liabilitiesnDo they need to be changed as well along wit

17、h sales?nDepends.nExisting production capacity relative to the new sales projections.18Ready to prepare the income statementnStart with forecasted salesnProject the COGSnAssuming changes in longer term assets and liabilities, forecast depreciation and interest expenses (assumptions required for inte

18、rest rates / COC, etc.)nCompute EBIT.19Ready to prepare the Balance SheetnDetermine the new level of assets (both short-term and longer term).nSeparate them as operating assets and long term assets.nForecast liabilities (current as well as longer term).nIs any common stock or preferred stock to be i

19、ssued? If so, take into account the changes in these numbers.20Additional funds needednForecasted assets and liabilities may not perfectly match.nThe difference is because of AFN or additional funds needed.nAFN is the required assets minus the specified sources of financing.21How would increases in

20、these items affect the AFN?nHigher sales:nIncreases asset requirements, increases AFN.nHigher dividend payout ratio:nReduces funds available internally, increases AFN.(More)22How would increases in these items affect the AFN?nHigher profit margin:nIncreases funds available internally, decreases AFN.

21、nHigher capital intensity ratio, A*/S0:nIncreases asset requirements, increases AFN.nPay suppliers sooner:nDecreases spontaneous liabilities, increases AFN.23Projecting Pro Forma Statements with the Percent of Sales MethodnProject sales based on forecasted growth rate in salesnForecast some items as

22、 a percent of the forecasted salesnCostsnCashnAccounts receivable(More.)24nItems as percent of sales (Continued.)nInventoriesnNet fixed assetsnAccounts payable and accrualsnChoose other itemsnDebtnDividend policy (which determines retained earnings)nCommon stock25Sources of Financing Needed to Suppo

23、rt Asset RequirementsnGiven the previous assumptions and choices, we can estimate:nRequired assets to support salesnSpecified sources of financingnAdditional funds needed (AFN) is:nRequired assets minus specified sources of financing 26Implications of AFNnIf AFN is positive, then you must secure add

24、itional financing.nIf AFN is negative, then you have more financing than is needed.nPay off debt.nBuy back stock.nBuy short-term investments.27How to Forecast Interest ExpensenInterest expense is actually based on the daily balance of debt during the year.nThere are three ways to approximate interes

25、t expense. Base it on: nDebt at end of yearnDebt at beginning of yearnAverage of beginning and ending debtMore28Basing Interest Expense on Debt at End of YearnWill over-estimate interest expense if debt is added throughout the year instead of all on January 1. nCauses circularity called financial feedback: more debt causes more interest, which reduces net income, which reduces retained earnings, which causes more debt, etc.More29Basing Interest Expense on Debt at Beginning of YearnWill under-estimate interest expense if debt is added throughout the ye