A Amir

Financial Analysis & Forecasting Prepared by Matt H.
Evans, CPA, CMA, CFM

Purpose of Spreadsheet: Revised: 11/22/2002 active Wksh2
Wksh3 Wksh4
To illustrate concepts related to financial analysis and forecasting. Wksh5 Wksh6
The financial analysis uses a combination of ratios and industry averages to Wksh7 Wksh8
evaluate the financial performance of the company. Trend line graphs are also Wksh9 Wksh10
generated, comparing the company's performance with the industry averages. Wksh11 Wksh12
Finally, the historical information is used to prepare a set of pro forma Wksh13 Wksh14
financial statements using both linear and non-linear functions. Wksh15 Wksh16
Required Inputs:
You will need to collect financial statements for several reporting periods. If you
want to benchmark the performance against the industry, then you will also need
to collect industry averages. The spreadsheet is setup to capture five reporting
periods (annual, quarterly, monthly). All input fields are highlighted in yellow.
For best results, SEC Filings are suggested since these reports provide more
detail than published financial statements.
Note: A small red triangle in the upper right corner of a cell indicates that a comment has
been inserted. Point your mouse over the cell and the comment will appear.
If a cell appears in red, this indicates a warning concerning a calculation.
Worksheets:
This spreadsheet consists of the following worksheets, divided into three sections:
A) Input Worksheets for financial analysis using historical data:
Worksheet Title Purpose

2 General Input Enter general information here - used on several worksheets.
3 Balance Sheet Enter comparative balances sheets for up to five periods.
4 Income Statement Enter comparative income statements for up to five periods.
5 Cash Flow Statement Enter comparative cash flow statements for up to five periods.
Prepared by Matt H. Evans 05/28/2011 Page 1

Caution: If you enter less than five years of historical information, certain worksheet
formulas may have to be revised.
B) Output Worksheets for evaluating financial performance:

6 Key Financial Data Calculates key financial information for further analysis.
7 Ratio Analysis Calculates a series of ratios for further analysis.
8 Benchmark Analysis Compare ratio analysis to industry averages.
9 Horizontal Analysis Horizontal analysis with corresponding trend lines.
10 Vertical Analysis Common size financials in percentages and graphs.
C) Pro Forma / Forecasted Financials for Budgeting:
11 Pro Forma - Simple Set of pro forma financials using simple assumptions
12 Pro Forma - Regression Set of pro forma financials using linear trending
13 Pro Forma - Exponential Set of pro forma financials using exponential smoothing
14 Scenario Analysis Example of Scenario Analysis and Goal Seek Analysis
15 Budget Analysis Preliminary budget analysis
16 Final Budgets Set of budgets per various assumptions and forecasts.
Note: Some additional worksheets (Answer Reports 1 & 2) may appear in the spreadsheet
due to the running of Solver.
Macros:
No macros have been used in this spreadsheet to give everyone some assurance that no viruses
are contained in the spreadsheet. However, you are free to add your own macros to save time.
Tools > Macro > Record New Macro
Excel Functions:
This spreadsheet uses certain financial functions (such as =TREND) which might not be
found in your version of Microsoft Excel. To take full advantage of financial and statistical
functions, you should install the Add On package titled: Analysis TookPak. Go to the main
tool bar, select Tools => Add-Ins => check the Analysis TookPak option, insert your
Excel CD and install the Analysis ToolPak. Also, you might want to install the Solver
Add-in since this is useful for solving special forecasting issues (such as finding the

optimal exponential factor).
Compatibility:
This spreadsheet was created with Microsoft Excel 2000. Older versions of Excel (such as 97)
may not be compatible with this spreadsheet.
Corrections:
With any “attempt” to build an Excel Model, I can easily make some mistakes.
So if you have suggestions to make the model better, drop me an email
and I’ll be glad to improve the financial model. My email address is: matt@exinfm.com

General Input Panel Home active
The following general information should be entered: Wksh3 Wksh4
Note: Sample data has been entered in the input cells to help you get started. Wksh5 Wksh6
Wksh7 Wksh8
2-1 Name of Company => sarghoda spining mills ltd Wksh9 Wksh10
Wksh11 Wksh12
2-2 Reporting Periods => Annual (Annual, Semi-annual, Quarterly or Monthly) Wksh13 Wksh14
Wksh15 Wksh16
2-3 Number of Days in Reporting Period are 365
What reporting periods will be entered?
2-4 Most Current Period 2010 (1999, July 1998, 6/30/97, etc.)
2-5 Previous Period 2009 (1999, July 1998, 6/30/97, etc.)
2-6 2nd Previous Period 2008 (1999, July 1998, 6/30/97, etc.)
2-7 3rd Previous Period 2007 (1999, July 1998, 6/30/97, etc.)
2-8 4th Previous Period 2006 (1999, July 1998, 6/30/97, etc.)
2-9 Number of historical periods to be analyzed 5
How are the amounts expressed in the financial statements?

(such as: in millions of dollars, thousands of Canadian dollars, etc.)
2-10 millions of rupess

Balance Sheet for
sarghoda spining mills ltd
millions of rupess
Annual Annual Annual Annual Annual
Period Period Period Period Period
Description 2006 2007 2008 2009 2010
Cash and Cash Equivalents 629 994 1695 2489 3468
Short Term Marketable Securities 1585 1246 1556 1579 1962
Accounts Receivable 112951 84730 62944 40592 82259
Inventory 223475 176988 211067 128796 208931
loan and advances 3573 1627 344 148 32440
Total Current Assets #REF! #REF! #REF! #REF! #REF!
property plant and equipe 798883 821208 1094494 1042697 997609

Accumulated Depreciation
Net Fixed Assets 798883 821208 1094494 1042697 997609
Longterm Investments 540 850 529 190 259
defferd tax
long term security deposits 4739 6275 5494 5807 3365
Total Non Current Assets #REF! #REF! #REF! #REF! #REF!
Total Assets #REF! #REF! #REF! #REF! #REF!
Accounts Payable 69216 149633 154286 180762 121882

Short Term Borrowings 242276 196957 227360 148079 192111
Short Term Portion of LT Debt 77608 62679 76489 143991 113401
provision for tax 7159 6845 7627 5083 15169
Total Current Liabilities #REF! #REF! #REF! #REF! #REF!
Longterm Debt / secured 234229 217689 186609 153334 186218

sponsor's advances 43918 51788 49016 39997 30644
Total Non Current Liabilities 278147 269477 235625 193331 216862
Total Liabilities #REF! #REF! #REF! #REF! #REF!
Preferred Equity
Common Equity 312000 312000 312000 312000 312000

Balance Sheet for
millions of rupess
Description 2006 2007 2008 2009 2010
Additional Paid in Capital
Retained Earnings
reserves -129093 -179232 -229945 -347668 -220379
surplus on revaluation of stock 289062 275559 594681 586720 579247
Total Shareholder Equity #NAME? #NAME? #NAME? #NAME? #NAME?
Total Liabilities & Equity #NAME? #NAME? #NAME? #NAME? #NAME?
Check: Assets = Liab + Equity ? #REF! #REF! #REF! #REF! #REF!

Comment => #REF! #REF! #REF! #REF! #REF!
NonDepreciable Fixed Assets 0 0 0 0 0

Deferred Taxes 112 101 90 98 109
Goodwill Write Off 0 0 0 0 0
No of Common Shares o/s 1,320 1,290 1,302 1,345 1,322
Par Value of Common Stock $10.00 $10.00 $10.00 $10.00 $10.00
No of Preferred Shares o/s 0 0 0 0 0
Par Value of Preferred Stock
Market Price of Common Stock $22.65 $28.90 $37.05 $33.60 $29.40
Market Price of Preferred Stock $0.00 $0.00 $0.00 $0.00 $0.00
Preferred Dividends in Arrears 0 0 0 0 0
Liquidating value of Preferred Stk 0 0 0 0 0
Book Value per Share #NAME? #NAME? #NAME? #NAME? #NAME?
Dividends per Common Share $1.01 $1.49 $1.89 $1.75 $1.76
Dividend Payout Ratio #NAME? #NAME? #NAME? #NAME? #NAME?
Cash Dividends to Preferred Stock
Cash Dividends to Common Stock 1330 1918 2461 2354 2329
Total Dividends Paid 1330 1918 2461 2354 2329

Income Statement for
millions of rupess
Description 2006 2007 2008 2009 2010
Net Sales 1,430,953 1,349,123 1,505,524 1,402,105 1,928,141
Other Operating Revenues 2,034 312 668 329 18,678
Total Revenues 1,432,987 1,349,435 1,506,192 1,402,434 1,946,819
Cost of Goods Sold -1280791 -1309615 -1437053 -1386328 -1638531
Other Operating Expenses -3531 -7689 -3026 -3259 -10676
Total Direct Expenses -1284322 -1317304 -1440079 -1389587 -1649207
Selling, General & Administrative -52766 -55866 -53897 -60351 -84862
Operating Income 95899 -23735 12216 -47504 212750
Interest Expenses -38618 -72811 -63890 -76119 -77694

Foreign Exchange (Loss) Gain
Associated Company (Loss) Gain
Other NonOperating (Loss) Gain
Income Tax Expense -12228 -3592 -7528 -4986 -15043
Reserve Charges
Income Before Extra Ord Items #REF! #REF! #REF! #REF! #REF!
Extra Ordinary Items (Loss) Gain

Tax Effects of Extraordinary Items
Minority Interests
Net Income #NAME? #NAME? #NAME? #NAME? #NAME?
Primary EPS #NAME? #NAME? #NAME? #NAME? #NAME?

Earnings Before Int & Taxes #NAME? #NAME? #NAME? #NAME? #NAME?
Depreciation & Amortization -310
Research & Devel Expenses
Capitalized Interest Expense -16 -19
Interest Income 4 6 11
Total Non Operating Expenses #REF! #REF! #REF! #REF! #REF!

Income Statement for
millions of rupess
Description 2006 2007 2008 2009 2010
Total Extra Ordinary Items #NAME? #NAME? #NAME? #NAME? #NAME?
Tax Rate 21.35% 0.00% 0.00% 0.00% 11.14%

Cash Flow Statement for
millions of rupess
Description 2006 2007 2008 2009 2010

Depreciation and Amortization 310
(Increase) Decrease Defer Taxes -2 11 11 -8 -11
(Gain) Loss on Sale of Assets -55 45
(Increase) Decrease Current Assets -162 #REF! #REF! #REF! #REF!
Increase (Decrease) Current Liab 206 #REF! #REF! #REF! #REF!
Cash Flow from Operations #REF! #REF! #REF! #REF! #REF!
Capital Expenditures -1455 -2750 -3880 -5220 -4108

Acquisition in Other Co's -135
Proceeds from Sales of Assets 112 35 150 182
Purchases of Investments -712 -1979 -1801 -2314 -2609
Sale of Investments 162 129 330 221 50
Other Investment Activities 33 -166 61 -12
Cash Provided (Used) from Investmts #REF! #REF! #REF! #REF! #REF!
Proceeds from Borrowings 1070 1044 1460 1880 1105

Payments on Borrowings -1112 -650 -898 -801 -961
Dividends Paid to Shareholders -1330 -1918 -2461 -2354 -2329
Proceeds from Minority Interest 5 12 7 7 8
Issue Stock / Exercise Options 195 1 45 13 6
Purchase / Retire Common Stock
Other Financing Activities -75 -12
Cash Provided (Used) from Financing #REF! #REF! #REF! #REF! #REF!
Increase (Decrease) to Cash #REF! #REF! #REF! #REF! #REF!
Beginning Cash Balance 1010 629 994 1695 2489

Cash Flow Statement for
millions of rupess
Description 2006 2007 2008 2009 2010
Ending Cash Balance #REF! #REF! #REF! #REF! #REF!
Check: Should agree to Balance Sheet #REF! #REF! #REF! #REF! #REF!
Comment => #REF! #REF! #REF! #REF! #REF!

Key Financial Data for
millions of rupess
Description 2006 2007 2008 2009 2010
EBITDA :
Income before ExtraOrd Items #REF! #REF! #REF! #REF! #REF!
Interest Expense 38618 72811 63890 76119 77694
Capitalized Interest Expense 16 19
Income Tax Expense 12228 3592 7528 4986 15043
Reserve Charges
Depreciation and Amortization 310
EBITDA #REF! #REF! #REF! #REF! #REF!
EBITDA Margin #REF! #REF! #REF! #REF! #REF!
Free Cash Flow:

Operating Cash Flow #REF! #REF! #REF! #REF! #REF!
Investment Cash Flows #REF! #REF! #REF! #REF! #REF!
Preferred Dividends Paid (fixed)
Redemption of Fixed Obligations -1112 -650 -898 -801 -961
Other Critical Outlays -35 -45 -42 -30 -25
Free Cash Flow #REF! #REF! #REF! #REF! #REF!
Working Capital:
Current Assets #REF! #REF! #REF! #REF! #REF!
Current Liabilities #REF! #REF! #REF! #REF! #REF!
Working Capital #REF! #REF! #REF! #REF! #REF!
Liquid Capital:
Cash and Cash Equivalents 629 994 1695 2489 3468
Marketable Securities 1585 1246 1556 1579 1962
Notes Receivable 0 0 0 0 0

millions of rupess
Description 2006 2007 2008 2009 2010
Long Term Debt -234229 -217689 -186609 -153334 -186218
Preferred Equity
Liquid Capital #REF! #REF! #REF! #REF! #REF!
The following valuation indicators are very simple and basic; they are used as quick, rough estmates.
Market Capitalization:
Market Cap - Common Stk $29,898 $37,281 $48,239 $45,192 $38,867
Market Cap - Preferred Stk $0.00 $0.00 $0.00 $0.00 $0.00
Total Market Capitalization $29,898 $37,281 $48,239 $45,192 $38,867
Present Value:
Normalized Cash Flow Weight %'s 5.00% 10.00% 15.00% 30.00% 40.00%
Normalized Cash Flow #REF!
Number of Future Periods 15
Required Rate of Return 11.00%
Present Value of Free Cash Flow #REF!
Present Value of Selling Price $315,000 <= estimated selling price $65,836
Present Value of Business #REF!
Revenue Multiplier:
Recent Gross Revenues 1,946,819
Average Competitive Rev Multiplier 3.14
Value based on Revenue Multiple $6,113,012
Capitalization of Earnings:
Normalized Net Income Weights % 5.00% 5.00% 25.00% 30.00% 35.00%

millions of rupess
Description 2006 2007 2008 2009 2010
Normalized Net Income #REF!
Capitalization Rate 12.00%
Nominal Growth Rate 3.50%
Net Capitalization Rate 8.50%
Value based on Earnings #REF!
Operating Leverage #REF! #REF! #REF! #REF!
Financial Leverage #NAME? #NAME? #NAME? #NAME?
Total Leverage #NAME? #NAME? #NAME? #NAME?
Check Totals 0.00 #NAME? #NAME? #NAME? #NAME?

Ratio Analysis for

Title of Ratio 2006 2007 2008 2009 2010
Acid Test Ratio 0.29 0.21 0.14 0.09 0.20
Current Ratio #REF! #REF! #REF! #REF! #REF!
Operating Cash Flow to Net Income #NAME? #NAME? #NAME? #NAME? #NAME?
Liquidity Index:
Cash - Days Removed 0 0 0 0 0
Cash Balance 629 994 1695 2489 3468
Cash Balance Total 0 0 0 0 0
Marketable Sec - Days Removed 11 12 16 15 14
Marketable Securities Balance 1585 1246 1556 1579 1962
Marketable Securities Total 17435 14952 24896 23685 27468
Receivables - Days Removed 34 2291 1342 814 846
Receivable Balance 112951 84730 62944 40592 82259
Receivable Balance Total 3793467 194081637 84480707 33060294 69595173
Inventory - Days Removed 79 56 49 45 38
Inventory Balance 223475 176988 211067 128796 208931
Inventory Balance Total 17732255 9877009 10401685 5762396 7859173
Other - Days Removed 16 22 26 21 19
Other Current Assets Balance 3573 1627 344 148 32440
Other Current Assets Total 57168 35794 8944 3108 616360
Liquidity Index (Days) 63 768 342 224 237
Z Score:
1.2 x (working capital / total assets) #REF! #REF! #REF! #REF! #REF!
1.4 x (retained earn / total assets) #REF! #REF! #REF! #REF! #REF!
3.3 x (EBIT / total assets) #REF! #REF! #REF! #REF! #REF!

Ratio Analysis for

Title of Ratio 2006 2007 2008 2009 2010
.6 x (market value equity / b.v. debt) 0.08 0.10 0.16 0.18 0.13
.999 x (sales / total assets) #REF! #REF! #REF! #REF! #REF!
Z Score #REF! #REF! #REF! #REF! #REF!
Receivable Turnover:
Credit Sales 11520 15750 20080 23200 26500
Average Receivable Balance 1060 98841 73837 51768 61426
Receivable Turnover 10.9 0.2 0.3 0.4 0.4
Days Required to Collect A/R 34 2291 1342 814 846
Inventory Turnover:
Average Inventory Balance 1,046 200232 194028 169932 168864
Inventory Turnover 4.6 6.5 7.4 8.2 9.7
Days in Inventory 79 56 49 45 38
Total Asset Turnover #REF! #REF! #REF! #REF! #REF!
Operating Assets Ratio #REF! #REF! #REF! #REF! #REF!
Gross Profit Margin 10% 3% 5% 1% 15%
Operating Margin 7% -2% 1% -3% 11%

Ratio Analysis for

Title of Ratio 2006 2007 2008 2009 2010
Net Profit Margin #NAME? #NAME? #NAME? #NAME? #NAME?
Direct Cost to Operating Revenues 90% 98% 96% 99% 85%
Capitalization Rate / Asset Return:

Net Operating Income 75427 -23735 12216 -47504 189053
Total Investments / Operating Assets #REF! #REF! #REF! #REF! #REF!
Capitalization Rate / Return #REF! #REF! #REF! #REF! #REF!
Return on Shareholder Equity 14% -32% -19% -41% 38%
Debt to Total Assets #REF! #REF! #REF! #REF! #REF!
Debt to Common Equity 2 2 2 2 2
Times Interest Earned #NAME? #NAME? #NAME? #NAME? #NAME?
Price to Earnings (P/E) #NAME? #NAME? #NAME? #NAME? #NAME?
Price to Book Value #NAME? #NAME? #NAME? #NAME? #NAME?
Stock Yield 4.45% 5.14% 5.10% 5.21% 5.99%

Home Wksh2 Benchmark Analysis for
Wksh3 Wksh4 sarghoda spining mills ltd
Wksh5 Wksh6
Wksh7 You need to collect benchmark data on the respective industry for the subject company.
active
Wksh9 Wksh10Enter the benchmark data in the appropriate input cells. This information is used to
Wksh11 Wksh12 generate trend line graphs in this worksheet. If you do not have any benchmark data,
Wksh13 Wksh14 then fill in the highlighted yellow cell with numeric zero "0". The "industry" line will be null
Wksh15 Wksh16 in the graph and show only the company specific ratio trend.

Ref Description 2006 2007 2008 2009 2010
8-1 Acid Test Ratio - Industry 0.51 0.52 0.50 0.49 0.48
7-1 Acid Test Ratio - Company 0.29 0.21 0.14 0.09 0.20
8-2 Current Ratio - Industry 1.12 1.10 1.05 1.08 1.07

7-2 Current Ratio - Company #REF! #REF! #REF! #REF! #REF!
8-3 Receivable Turnover - Industry 8.50 8.70 8.40 8.20 8.30

7-21 Receivable Turnover - Company 10.87 0.16 0.27 0.45 0.43
8-4 Days to Collect A/R - Industry 41 39 40 41 41

7-22 Days to Collect A/R - Company 34 2291 1342 814 846
8-5 Inventory Turnover - Industry 4.40 4.45 4.20 4.30 4.38

7-25 Inventory Turnover - Company 4.60 6.54 7.41 8.16 9.70
8-6 Days in Inventory - Industry 86 88 81 89 82

7-26 Days in Inventory - Company 79 56 49 45 38
8-7 Asset Turnover - Industry 1.60 1.55 1.62 1.68 1.69

7-27 Asset Turnover - Company #REF! #REF! #REF! #REF! #REF!
8-8 Gross Profit Margin - Industry 55.00% 52.00% 60.00% 62.00% 63.00%

7-29 Gross Profit Margin - Company 10.49% 2.93% 4.55% 1.13% 15.02%
8-10 Net Profit Margin - Industry 20.00% 23.00% 22.00% 19.00% 20.00%
7-31 Net Profit Margin - Company #NAME? #NAME? #NAME? #NAME? #NAME?
8-11 Return on Total Assets - Industry 38.00% 36.00% 37.00% 34.00% 36.00%
8-12 Return on Total Assets - Company 30.00% #REF! #REF! #REF! #REF!
8-13 Return on Equity - Industry 26.00% 22.00% 24.00% 19.00% 20.00%

8-14 Return on Equity - Company 14.44% -32.10% -18.98% -41.22% 38.47%
8-15 Debt to Equity - Industry 35% 38% 31% 34% 32%

7-38 Debt to Equity - Company 216% 220% 225% 215% 211%
8-16 Times Interest Earned - Industry 40 38 36 39 43

7-39 Times Interest Earned - Company #NAME? #NAME? #NAME? #NAME? #NAME?
We added the following two ratios to assess if the Company has excessive growth:
4-13 Provision for Taxes -12228 -3592 -7528 -4986 -15043
8-17 Trading Ratio - Company #NAME? #NAME? #NAME? #NAME? #NAME?
8-18 Trading Ratio - Industry 1.26 1.28 1.31 1.30 1.27
8-19 Net Sales to Net Worth - Company #NAME? #NAME? #NAME? #NAME? #NAME?
8-20 Net Sales to Net Worth - Industry 1.22 1.20 1.19 1.22 1.20
Source for Benchmark Data: Almanac of Business and Industrial Financial Ratios by Leo Troy, Prentice Hall
Graphs appear below for each of the above comparisons:
Acid Ratio Comparison
0.60
0.50 Acid Test Ratio
0.40 Prepared by Matt H. Evans 05/28/2011
- Industry Page 18
Acid Test Ratio
atio
0.30 - Company
Acid Ratio Comparison
0.60
0.50 Acid Test Ratio
0.40 - Industry
Acid Test Ratio
Ratio
0.30 - Company
0.20
0.10
0.00
2006 2007 2008 2009 2010
Periods
Current Ratio Comparison
1.20
1.00 Current Ratio -
0.80 Industry
Current Ratio -
Ratio
0.60 Company
0.40
0.20
0.00
2006 2007 2008 2009 2010
Periods
Receivable Turnover Comparison
12.00
Prepared by Matt H. Evans 05/28/2011
Receivable Page 19
10.00 Turnover -
Rate
8.00 Industry
Receivable Turnover Comparison
12.00
Receivable
10.00 Turnover -
Turnover Rate
8.00 Industry
Receivable
6.00 Turnover -
4.00 Company
2.00
0.00
2006 2007 2008 2009 2010
Periods
Receivable Collection Comparison
2500
Days to Collect A/R
2000 Days to Collect

A/R - Industry
1500 Days to Collect
A/R - Company
1000
500
2006 2007 2008 2009 2010

Periods
Inventory Turnover Comparison

12.00
Inventory
10.00
Inventory Turnover Comparison
12.00
Inventory
10.00 Turnover -
Turnover Rate
8.00 Industry
Inventory
6.00 Turnover -
4.00 Company
2.00
0.00
2006 2007 2008 2009 2010
Periods
Inventory Days Comparison
100
Days Held in Inventory
Days in
80 Inventory -
Industry
60 Days in
Inventory -
40
Company
20
2006 2007 2008 2009 2010

Periods

Asset Turnover Comparison
2.00
Turnover Rate
1.50 Asset Turnover
- Industry
Asset Turnover
1.00 - Company
0.50
0.00
2006 2007 2008 2009 2010
Periods
Gross Profit Margin
70.00%
Gross Profit
Gross Profit Margin
60.00%
Margin -
50.00% Industry
40.00% Gross Profit
30.00% Margin -
Company
20.00%
10.00%
0.00%
2006 2007 2008 2009 2010
Periods

10.00%
Gros
0.00%
2006 2007 2008 2009 2010
Periods
Net Profit Margin
25.00%
20.00% Net Profit
Net Profit Margin
15.00% Margin -
Industry
10.00%
Net Profit
5.00% Margin -
0.00% Company
-5.00%
-10.00%
-15.00%
2006 2007 2008 2009 2010
Periods
Return on Total Assets
50.00%
Return on Total Assets
40.00% Return on Total

30.00% Assets -
Industry
20.00%
Return on Total
10.00% Assets -
0.00% Company
-10.00%
-20.00%
06
07
08
09
10
20
20
20
20
20
Periods Prepared by Matt H. Evans 05/28/2011 Page 23

Assets -
0.00% Company
Return on
-10.00%
-20.00%
06
07
08
09
10
20
20
20
20
20
Periods
Return on Equity Comparison

Return on Common Equity
50.00%
40.00% Return on Total
30.00% Assets -
Industry
20.00%
Return on Total
10.00% Assets -
0.00% Company
-10.00%
-20.00%
06
07
08
09
10
20
20
20
20
20
Periods
Debt to Equity Comparison
250%
Debt to Equity Ratio
200% Debt to Equity -

Industry
Company
100%
50%
0%
2006 2007 2008 Prepared
2009 by2010
Matt H. Evans 05/28/2011 Page 24
Periods
Debt to Equit
Company
100%
50%
0%
2006 2007 2008 2009 2010
Periods
Times Interest Earned
50
Times Interest Earned
Times Interest
40 Earned -
30 Industry
Times Interest
20 Earned -
10 Company
0
-10
2006 2007 2008 2009 2010
Periods
Trading Ratio Comparison
3.50
3.00
Trading Ratio -
2.50
Industry
2.00 Trading Ratio -
Ratio
1.50 Company
1.00
0.50
0.00
3.00
Trading Ratio -
2.50
Industry
2.00 Trading Ratio -
Ratio
1.50 Company
1.00
0.50
0.00
2006 2007 2008 2009 2010
Periods
Sales to Worth Comparison
5.00
4.50
4.00 Net Sales to
3.50 Net Worth -
Industry
3.00
Net Sales to
Ratio
2.50 Net Worth -

2.00 Company
1.50
1.00
0.50
0.00
2006 2007 2008 2009 2010
Periods

Horizontal Analysis for
Horizontal Analysis expresses change between periods as percentages for each account in
the financial statements. The basic formula for horizontal analysis is:
% change = (most recent period - previous period) / previous period

Description 2006 2007 2008 2009 2010
Growth in Net Sales 32.50% -5.72% 11.59% -6.87% 37.52%
Cost of Goods Sold 29.00% 2.25% 9.73% -3.53% 18.19%
Growth in Gross Profits 2.90% -72.09% 55.31% -75.26% 1234.85%
Growth in Interest Expense 16.50% 88.54% -12.25% 19.14% 2.07%

Growth in Income Tax Expense 12.90% -70.62% 109.58% -33.77% 201.70%
Growth in Non Operating Expenses 3.80% #REF! #REF! #REF! #REF!
Growth in Minority Interest 96.00% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Growth in Net Income 33.50% #NAME? #NAME? #NAME? #NAME?
Growth in Earnings Per Share 32.60% #NAME? #NAME? #NAME? #NAME?
Cash and Cash Equivalents 3.08% 58.03% 70.52% 46.84% 39.33%

Short Term Marketable Securities 12.00% -21.39% 24.88% 1.48% 24.26%
Accounts Receivable 26.70% -24.99% -25.71% -35.51% 102.65%
Inventory 19.90% -20.80% 19.25% -38.98% 62.22%
loan and advances 26.70% -54.46% -78.86% -56.98% ###
Total Current Assets 21.50% #REF! #REF! #REF! #REF!

Net Fixed Assets 17.80% 2.79% 33.28% -4.73% -4.32%
Longterm Investments 6.20% 57.41% -37.76% -64.08% 36.32%
defferd tax 0.00% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
long term security deposits 16.50% 32.41% -12.45% 5.70% -42.05%
Total Non Current Assets 32.50% #REF! #REF! #REF! #REF!
Growth in Total Assets 1.05% #REF! #REF! #REF! #REF!
Accounts Payable 26.20% 116.18% 3.11% 17.16% -32.57%

Short Term Borrowings 33.50% -18.71% 15.44% -34.87% 29.74%
Short Term Portion of LT Debt 16.70% -19.24% 22.03% 88.25% -21.24%
provision for tax 12.80% -4.39% 11.42% -33.36% 198.43%
Total Current Liabilities 38.02% #REF! #REF! #REF! #REF!
Longterm Debt / secured 46.00% -7.06% -14.28% -17.83% 21.45%

sponsor's advances 11.30% 17.92% -5.35% -18.40% -23.38%
Total Non Current Liabilities 37.10% -3.12% -12.56% -17.95% 12.17%
Growth in Total Liabilities 31.05% #REF! #REF! #REF! #REF!
Preferred Equity 0.00% #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Common Equity 2.60% 0.00% 0.00% 0.00% 0.00%
Additional Paid in Capital 1.50% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Retained Earnings 38.00% #DIV/0! #DIV/0! #DIV/0! #DIV/0!
reserves -166.00% 38.84% 28.29% 51.20% -36.61%
surplus on revaluation of stock 2.01% -4.67% 115.81% -1.34% -1.27%
Growth in Total Equity (Net Worth) 6.11% #NAME? #NAME? #NAME? #NAME?
Sustainable Growth Rate #1 #NAME? #NAME? #NAME? #NAME? #NAME?

Sustainable Growth Rate #2 #NAME? #NAME? #NAME? #NAME? #NAME?
Growth in Market Capitalization 14.50% 24.69% 29.39% -6.32% -14.00%

Vertical Analysis for
Vertical analysis expresses financial statements as percentages. On the Balance Sheet,

Total Assets is assigned 100% and on the Income Statement, Total Revenues is assigned 100%.
expressed in percentages
Account Title 2006 2007 2008 2009 2010
Cash and Cash Equivalents #REF! #REF! #REF! #REF! #REF!

Short Term Marketable Securities #REF! #REF! #REF! #REF! #REF!
Accounts Receivable #REF! #REF! #REF! #REF! #REF!
Inventory #REF! #REF! #REF! #REF! #REF!
loan and advances #REF! #REF! #REF! #REF! #REF!
Current Assets #REF! #REF! #REF! #REF! #REF!
Net Fixed Assets #REF! #REF! #REF! #REF! #REF!

Longterm Investments #REF! #REF! #REF! #REF! #REF!
defferd tax #REF! #REF! #REF! #REF! #REF!
long term security deposits #REF! #REF! #REF! #REF! #REF!
Non Current Assets 70.15% 75.72% 79.86% 85.80% 75.26%
Accounts Payable #REF! #REF! #REF! #REF! #REF!

Short Term Borrowings #REF! #REF! #REF! #REF! #REF!
Short Term Portion of LT Debt #REF! #REF! #REF! #REF! #REF!
provision for tax #REF! #REF! #REF! #REF! #REF!
Longterm Debt / secured #REF! #REF! #REF! #REF! #REF!

sponsor's advances #REF! #REF! #REF! #REF! #REF!
Total NonCurrent Liabilities #REF! #REF! #REF! #REF! #REF!

Total Liabilities #REF! #REF! #REF! #REF! #REF!
Preferred Equity #NAME? #NAME? #NAME? #NAME? #NAME?

Common Equity #NAME? #NAME? #NAME? #NAME? #NAME?
Additional Paid in Capital #NAME? #NAME? #NAME? #NAME? #NAME?
Retained Earnings #NAME? #NAME? #NAME? #NAME? #NAME?
reserves #NAME? #NAME? #NAME? #NAME? #NAME?
surplus on revaluation of stock #NAME? #NAME? #NAME? #NAME? #NAME?
Total Equity #NAME? #NAME? #NAME? #NAME? #NAME?
Total Liabilities & Equity #NAME? #NAME? #NAME? #NAME? #NAME?
Total Revenues 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of Goods Sold 89.38% 97.05% 95.41% 98.85% 84.16%
Gross Profit 10.49% 2.93% 4.55% 1.13% 15.02%
Operating Expenses 3.93% 4.71% 3.78% 4.54% 4.91%
Non Operating Expenses 3.55% 5.66% 4.74% 5.78% 4.76%
Income Before Extra Ord Items #REF! #REF! #REF! #REF! #REF!

Enter Your Forecast Periods => 2001 2002 2003 2004 2005
Pro Forma Income Statement
Gross Revenues 2,180,437 2,442,090 2,735,141 3,063,357 3,430,960

Growth Assumptions 12.00% 12.00% 12.00% 12.00% 12.00%

Operating Expenses -95332 -106772 -119584 -133935 -150007

NonOperating Expenses -3200 -3200 -3600 -3600 -4000
ExtraOrdinary Items 650 650 650 700 700
Net Income 55385 62338 69724 78495 87862
Pro Forma Cash Flow Statement
Sources of Operating Cash Flow:

Net Income 55385 62338 69724 78495 87862
Depreciation and Amortization 470 490 500 520 550
(Increase) Decrease Defer Taxes
(Gain) Loss on Sale of Assets 15 9 2 3 6
(Increase) Decrease Current Assets #REF! -70646 -79124 -88619 -99253
Increase (Decrease) Current Liab #REF! 91578 102568 114876 128661
Operating Cash Flow #REF! 83769 93670 105275 117827
Investment Sources of Cash Flow:

Planned Sale of Assets 100 60 20 25 35

Planned Sale of Investments 2200 2100 1900 1800 1700
Other Investment Sources to be used
Total Investment Sources of Cash 2300 2160 1920 1825 1735
Planned Investments:
Acquisitions in Other Co's -500 -750 -1200 -650 -350
Total Investment Applications of Cash -7000 -7250 -8800 -9350 -9950
Cash Flow from Financing Activities:

Proceeds from Loans & Debt 1300 1000 950 750 650
Other Financing Activities
Total Financing Sources of Cash 1320 1060 1030 840 750
Cash Flow Applied for Financing:

Payments on Loans & Debt -1500 -1000 -600 -500 -500
Purchase / Retire Stock -2000 -2000 -1500 -1000 -500
Total Financing Applications of Cash -6000 -6000 -6100 -7000 -8000
Total Change to Cash #REF! 73739 81720 91590 102362
Beginning Cash Balance 3468 #REF! #REF! #REF! #REF!

Forecasted Ending Balance #REF! #REF! #REF! #REF! #REF!
Pro Forma Balance Sheet


Short Term Marketable Securities
Inventory 174435 195367 218811 245069 274477
loan and advances 141728 158736 177784 199118 223012
property plant and equipe 1001109 1004109 1007209 1009909 1012509

Accumulated Depreciation -470 -960 -1460 -1980 -2530
Net Fixed Assets 1000639 1003149 1005749 1007929 1009979
defferd tax 500 1250 2450 3100 3450
long term security deposits 200 240 320 400 650
Total Non Current Assets 1002398 1007098 1013578 1020688 1028638

provision for tax 130826 146525 164108 183801 205858
Total Current Liabilities 763183 854761 957324 1072195 1200851
Longterm Debt / secured 186018 186018 186368 186618 186768

sponsor's advances 700 750 800 800 800
Total Liabilities 949901 1041529 1144492 1259613 1388419
Preferred Equity
Common Equity 2200 2200 2200 2200 2200
Additional Paid in Capital 5700 5700 5700 5700 5700

Retained Earnings 52885 112223 177947 250942 331804

reserves -5000 -4000 -2500 -1500 -500
surplus on revaluation of stock 577247 575247 573747 572747 572247
Total Equity 633032 691370 757094 830089 911451
External Financing Required (EFR) #REF! #REF! #REF! #REF! #REF!

Home Wksh2 ProForma Financials (Linear Trend Model)
Wksh5 Wksh6
Wksh7 Wksh8 A set of pro forma (forecasted) financial statements are generated using the results of
Wksh9 Wksh10 the historical analysis in the previous worksheets. A statistical method known as
Wksh11 active linear regression is used to predict future values. If you have important assumptions
Wksh13 Wksh14 that are important to the forecast, then these assumptions should over-ride the
Wksh15 Wksh16 linear calculations since we want our forecast to be as accurate as possible.
Key Point => If your historical information has gradual trends, then linear regression
is an appropriate model for forecasting. However, if your historical information has
distinct steps up or down, then you should consider using a smoothing model .
Before we adopt a regression model, it's a good idea to generate a scatter graph of the actual data
and observe if there is a clear trend for fitting a straight regression line into the data:
Total Revenues
2,500,000
Total Revenues
2,000,000 Total
1,500,000 Revenues
1,000,000
500,000
0
20042006200820102012
Periods
The calculation of linear values is determined by defining the slope of the line and the y intercept:
Order Total Rev Linear Slope Intercept
Formula for Linear Trendline: Year variable x actual y Value y m factor b factor
2006 1 1,432,987 1,311,441 108066.30 ###
y=(m*x)+b 2007 2 1,349,435 1,419,507

2008 3 1,506,192 1,527,573
m: slope of line 2009 4 1,402,434 1,635,640
x: independent variable 2010 5 1,946,819 1,743,706
b: y intercept 2001 6 1,851,772
2002 7 1,959,839
2003 8 2,067,905
2004 9 2,175,971
2005 10 2,284,038
The degree of linear fit with the actual data can be expressed as R Square 0.5022

2001 2002 2003 2004 2005
12-1 Gross Revenues 771109 879176 987242 1095308 1203375
12-2 Cost of Goods Sold -855928 -935148 -1014367 -1093586 -1172806
12-3 Operating Expenses -13475 -20342 -27210 -34078 -40945
12-4 Operating Income -98294 -76314 -54335 -32356 -10376
12-5 Non Operating Expenses #REF! #REF! #REF! #REF! #REF!
4-25 Extra Ordinary Items #NAME? #NAME? #NAME? #NAME? #NAME?
Net Income #REF! #REF! #REF! #REF! #REF!

Net Income #REF! #REF! #REF! #REF! #REF!
(Increase) Decrease Defer Taxes
(Increase) Decrease Current Assets #REF! -29178 -29178 -29178 -29178
Increase (Decrease) Current Liab #REF! 37823 37823 37823 37823
Operating Cash Flow #REF! #REF! #REF! #REF! #REF!

Acquisitions -500 -750 -1200 -650 -350


Purchase / Retire Stock -2000 -2000 -1500 -1000 -500
Total Change to Cash #REF! #REF! #REF! #REF! #REF!


Inventory 61689 70334 78979 87625 96270
Other Current Assets 50122 57146 64171 71195 78219
Fixed Assets 1001109 1004109 1007209 1009909 1012509

Net Fixed Assets 1000639 1003149 1005749 1007929 1009979
Investments in Other Companies 500 1250 2450 3100 3450
Intangibles and Other Assets 200 240 320 400 650

Other Current Liabilities 46267 52751 59235 65718 72202
Longterm Debt / Borrowings 186018 186018 186368 186618 186768

Other Longterm Liabilities 700 750 800 800 800
Preferred Equity

Common Equity 2200 2200 2200 2200 2200
Retained Earnings #REF! #REF! #REF! #REF! #REF!
Adj for Foreign Currency Transl -5000 -4000 -2500 -1500 -500
Treasury Stock 577247 575247 573747 572747 572247
Total Equity #REF! #REF! #REF! #REF! #REF!

Home Wksh2 ProForma Financials (Exponential Smoothing / Weighted Moving Average)
Wksh5 Wksh6
Wksh7 Wksh8 A set of pro forma (forecasted) financial statements are generated using the results of
Wksh9 Wksh10 the historical analysis in the previous worksheets. A statistical method known as
Wksh11 Wksh12 exponential smoothing is used to plot a trend over historical data. Additionally, we
active Wksh14 can use a weighted moving average to forecast future periods.
Wksh15 Wksh16 Key Point => If you have a general upward historical trend, weighted average will tend
to underestimate forecasted values and vice versa (downward trend = overestimate).
Exponential Smoothing and Weighted Moving Averages for Total Revenues:

Years => 1996 1997 1998 1999 2000 2001
Total Revenues - Historical 1432987 1349435 1506192 1402434 1946819
Total Revenues - Exponential 1432987 1432987 1349435 1506192 1402434
Total Revenues - Wt Moving Avg 11105 15230 18890 21605 1436304 1730217
Smoothing Factor must be between 0 and 1 1 Total weights should add up to => 100.00%
Set Smoothing Factor 1
Assign weights to appropriate periods 0.00% 1.50% 4.50% 34.50% 59.50% 100.00%
Find the Optimal Smoothing Factor:

Total Exponent
Revenues Amounts Difference Square
1432987 1432987
1349435 1432987 -83552 6980936704
1506192 1349435 156757 ###
1402434 1506192 -103758 ###
1946819 1402434 544385 ###
Mean Squared Error ###
Find the Optimal Moving Weights:

Total Weighted
Revenues Amounts Difference Square
1432987 11105 1421882 ###

1349435 15230 1334205 ###
1506192 18890 1487302 ###
1402434 21605 1380829 ###
1946819 1436304 510515 ###
Mean Squared Error ###
Exponential Comparison
2,500,000
Total
Revenues -
2,000,000 Historical
Total Revenues
Total
1,500,000 Revenues -
Exponential
1,000,000 Total
Revenues - Wt
Moving Avg
500,000
2001 2002 2003 2004 2005

Periods

2001 2002 2003 2004 2005
Gross Revenues 1730217 1786834 1768735 1775917 1773245

Operating Income 45973 29451 49241 66959 193782
Net Income 43423 26901 46291 64059 190482

Net Income 43423 26901 46291 64059 190482
(Increase) Decrease Defer Taxes 0 0 0 0 0
(Increase) Decrease Current Assets #REF! -15287 4887 -1939 721
Increase (Decrease) Current Liab #REF! 19816 -6335 2514 -935
Operating Cash Flow #REF! 31930 45345 65157 190824

Acquisitions -500 -750 -500


Purchase / Retire Stock
Total Change to Cash #REF! 24600 37245 58672 185059


Inventory 138417 142947 141499 142073 141860
Other Current Assets 112464 116144 114968 115435 115261
Fixed Assets 1001109 1004109 1007209 1011109 1015709

Net Fixed Assets 1000639 1003149 1005749 1009129 1013179
Investments in Other Companies 500 1250 1750 1750 1750
Intangibles and Other Assets 75 100 150 150 100


Other Current Liabilities 103813 107210 106124 106555 106395
Longterm Debt / Borrowings 186018 186218 186718 187218 188218

Other Longterm Liabilities 700 750 800 800 800
Preferred Equity
Common Equity 2200 2200 2200 2200 2200
Retained Earnings -2500 -5500 -9500 -13500 -16500
Adj for Foreign Currency Transl -5000 -3500 -1000
Treasury Stock 579247 579247 579247 579247 579247
Total Equity 579647 578147 576647 573647 570647

2002 2003 2004 2005
1786834 1768735 1,775,917 1,773,245

Home Wksh2 Scenario Analysis for
Wksh5 Wksh6
Wksh7 Wksh8 We can copy our forecast into a new worksheet and do scenario analysis and goal-seek analysis.
Wksh9 Wksh10Although Microsoft Excel includes Scenario Manager, it can be easier and quicker to simply do our
Wksh11 Wksh12 scenario analysis manually. We can use Goal Seek to find a value for a cell given a corresponding
Wksh13 active formula in another cell.
Wksh15 Wksh16
2001 2002 2003 2004 2005
Pro Forma Income Statement (Simple Projection Method)

Scenario => Non Operating Expenses will decline by $ 100,000 in year 2003 and again in year 2005:
Gross Revenues 2180437 2442090 2735141 3063357 3430960

Net Income 55,385 62,338 70,224 78,995 88,862
Instead of copying our forecast into this worksheet, we can simply do scenario analysis directly in
the forecast itself.
Pro Forma Income Statement (Linear Trend Method)

Goal Seek => What total revenues are required if Net Income must be $ 13.5 million in Year 2004?
Gross Revenues 32064 35940 39816 44301 47569

Non Operating Expenses -3549 -4088 -4627 -5166 -5705
Extra Ordinary Items 271 271 271 271 271
Net Income (formula cells) 9430 10584 11738 13500 14046
Do not change formula cells (goals) to values

when using Goal Seek (Tools > Goal Seek)
This is the target cell that Goal Seek is seeking

to change per the value 13,500 in cell G34

Home Wksh2 Budget Analysis for
Wksh5 Wksh6
Wksh7 Wksh8 Once we complete our forecast, we can summarize and review it before finalizing it
Wksh9 Wksh10 into the form of budgets. We also need to summarize our assumptions that should
Wksh11 Wksh12 go into our final budget. We can start our budget process by reviewing the different
Wksh13 Wksh14 revenue forecast:
active Wksh16

2001 2002 2003 2004 2005
Summarize Revenue Forecast:

Simple Projection Model 2,180,437 2,442,090 2,735,141 3,063,357 3,430,960
Linear Trend Model 771109 879176 987242 1095308 1203375
Wt Moving Avg Model 1730217 1786834 1768735 1775917 1773245
Declining Growth Model 2102565 2228718 2317867 2352635 31000
Historical Data 1432987 1349435 1506192 1402434 1946819
Projection using declining growth rates:
Gross Revenues 2102565 2228718 2317867 2352635 31000
Forecast Comparisons
4,000,000
Simple
3,500,000 Projection
Model
3,000,000
Linear Trend
Total Revenues
2,500,000 Model
Wt Moving
2,000,000 Avg Model
1,500,000 Declining
Growth Model
1,000,000 Historical Data
Model
3,000,000
Linear Trend
Total Revenues
2,500,000 Model
Wt Moving
2,000,000 Avg Model
1,500,000 Declining
Growth Model
1,000,000 Historical Data
500,000
0
2001 2002 2003 2004 2005
Periods
In addition to using linear models for forecasting, we can apply several non-linear (curve) models:
Logarithmic - Used when rate of change in data suddenly shifts upward or downward.
Power - Used when rate of change in data occurs at a specific rate.
Exponential - Used when rate of change is increasing or decreasing at ever higher rates.
Polynomial - Used when rate of change fluctuates with no pattern.
Logarithmic Trend
Actual Predicted Slope Intercept
Formula for Logarithmic Trendline x factor Values Value y c factor b factor
1 1,432,987 -1317578 219316.7 ###
y = ( c * LN (x)) - b 2 1,349,435 -1165559
3 1,506,192 -1076634
LN: Natural Logarithm 4 1,402,434 -1013541
5 1,946,819 -964601
6 -924615
7 -890807
8 -861522
9 -835690
10 -812583
Power Trendline
y = b * x^c x factor Values Value y c factor b factor
1 1,432,987 1333994 0.13 14.1

2 1,349,435 1461934 ###
3 1,506,192 1542389
4 1,402,434 1602144
5 1,946,819 1650083
6 1690315
7 1725095
8 1755801
9 1783339
10 1808338
Exponential Trendline < - calculate using c and b factor - >

x factor Values Value y c factor b factor ( c * x) EXP
y = b * EXP ( c * x ) 1 1,432,987 1328976 0.07 14.03 0.06514 1.07
2 1,349,435 1418426 ### 0.13028 1.14
3 1,506,192 1513898 0.19542 1.22
4 1,402,434 1615795 0.26056 1.3
5 1,946,819 1724551 0.32570 1.38
6 1840626 0.39084 1.48
7 1964515 0.45598 1.58
8 2096742 0.52112 1.68
9 2237870 0.58626 1.8
10 2388496 0.65139 1.92
Polynomial Trendline
Actual Predicted
y = (c2 * x^2) + (c1 * x^1) + b x factor Values Value y c2 c1 b
1 1,432,987 1453635 71097.07 ### 1701054
2 1,349,435 1348410
3 1,506,192 1385379
4 1,402,434 1564543
5 1,946,819 1885900
6 2349452
7 2955198
8 3703138
9 4593272

10 5625600
Summarize Non Linear Curves on Graph:

1996 1997 1998 1999 2000 2001 2002
Logarithmic Trendline -1317578 -1165559 -1076634 -1013541 -964601 -924615 -890807
Power Trendline 1333994 1461934 1542389 1602144 1650083 1690315 1725095
Exponential Trendline 1328976 1418426 1513898 1615795 1724551 1840626 1964515
Polynomial Trendline 1453635 1348410 1385379 1564543 1885900 2349452 2955198
Actual Revenues 1,432,987 1,349,435 1,506,192 1,402,434 1,946,819
Non Linear Trends
7,000,000
6,000,000 Logarithmic
Trendline
5,000,000
Power
Total Revenues
4,000,000
Trendline
3,000,000
Exponential
2,000,000 Trendline
1,000,000 Polynomial
Trendline
(1,000,000) Actual
(2,000,000) Revenues
1996
1997
1998
2099
2000
2001
2002
2003
2004
05
19
Periods
Actual
(2,000,000) Revenues
1996
1997
1998
2099
2000
2001
2002
2003
2004
05
19
Periods
Variance Analysis of Past Budgets:
Accuracy in the budget process should be examined to determine the degree of error or
variance in the budget process. If the variance is high, this indicates a need to improve
planning techniques within the company. TBD: To be Determined
(Wksht 16)
2006 2007 2008 2009 2000 2001
Income Statement Items
Total Revenues - Budgeted 10500 14500 22500 28500 30000 30500
Total Revenues - Actual 1432987 1349435 1506192 1402434 1946819 TBD
% difference from actual -99% -99% -99% -98% -98% #VALUE!
Cost of Goods Sold - Budgeted -4500 -6500 -8648 -9650 -11000 -28356
Cost of Goods Sold - Actual -1280791 -1309615 -1437053 -1386328 -1638531 TBD
Operating Income - Budgeted 3100 4900 9000 11000 10,500 810

Operating Income - Actual 95899 -23735 12216 -47504 212750 TBD
Net Income - Budgeted 2100 4100 6500 9000 9300 -2350

Net Income - Actual #NAME? #NAME? #NAME? #NAME? #NAME? TBD
% difference from actual #NAME? -104% -111% -107% -92% #VALUE!
Balance Sheet Items

Current Assets - Budgeted 3450 4400 6250 7500 7900 #REF!
Current Assets - Actual #REF! #REF! #REF! #REF! #REF! TBD
% difference from actual #REF! -98% -98% -96% -98% #VALUE!
NonCurrent Assets - Budgeted 10900 14000 22000 27500 29,500 1003428

NonCurrent Assets - Actual #REF! #REF! #REF! #REF! #REF! TBD
Current Liabilities - Budgeted 3750 5600 8200 9050 9400 10715

Current Liabilities - Actual #REF! #REF! #REF! #REF! #REF! TBD
NonCurrent Liabilities - Budgeted 1750 2450 3750 4900 5100 187518

NonCurrent Liabilities - Actual 278147 269477 235625 193331 216862 TBD
Ratio Items
Current Ratio - Budgeted 1 1 1 1 0.80 #REF!
Current Ratio - Actual #REF! #REF! #REF! #REF! #REF! TBD
% difference from actual #REF! 23% 28% 128% 8% #VALUE!
Total Asset Turnover - Budgeted 0.68 0.72 0.80 0.80 0.79 #REF!
Total Asset Turnover - Actual #REF! #REF! #REF! #REF! #REF! TBD
Gross Profit Margin - Budgeted 60% 60% 60% 60% 60%

Gross Profit Margin - Actual 10% 3% 5% 1% 15% TBD
% difference from actual 472% 1949% 1219% 5232% 299% #VALUE!
Net Profit Margin - Budgeted 19% 25% 28% 30% 28% -8%
Net Profit Margin - Actual #NAME? #NAME? #NAME? #NAME? #NAME? TBD
% difference from actual #NAME? -437% -812% -427% 354% #VALUE!
Debt to Common Equity - Budgeted 0.45 0.50 0.60 0.65 0.55 #REF!
Debt to Common Equity - Actual 2 2 2 2 2 TBD
Return on Equity - Budgeted 20% 29% 32% 35% 30% #REF!

Return on Equity - Actual 14% -32% -19% -41% 38% TBD
% difference from actual 39% -190% -269% -185% -22% #VALUE!

We can use specific measurements to track and control forecasting errors:
Mean Absolute Error - An absolute value of forecast errors, does not place weight on the
amount of the error. Calculated as the sum of (actual values - predicted values) / n.
Mean Square Error - Similar to Mean Absolute Error, but does place more emphasis on
the amount of error; i.e. an error of 8 is twice as significant as 4. Calculated as the
sum of (actual values - predicted values)^2 / n.
Root Mean Square Error - To make the Mean Square Error useful and comparable to the Mean
Absolute Error, we can take the square root of the Mean Square Error. We can then use this
as a guide to establish an error limit or standard for flagging unacceptable errors. Is Error
Actual Forecasted Error Outside
Example: Total Revenues Period Revenues Revenues Error Absolute Squared Limit?
n: total number of periods 1996 1432987 10500 1422487 1422487 ### No
1997 1349435 14500 1334935 1334935 ### No
1998 1506192 22500 1483692 1483692 ### No
1999 1402434 28500 1373934 1373934 ### No
2000 1946819 30000 1916819 1916819 ### No
n => 5 Sum => 7531867 7531867 ### Yes
Mean Absolute Error 1506373

Mean Square Error ###
Root Mean Sqr Error 3,368,353
Establish Error Limits 3,368,353

e using c and b factor - >
Predicted
Value y
1328976
1418426
1513898
1615795
1724551
1840626
1964515
2096742
2237870
2388496

2003 2004 2005
-861522 -835690 -812583
1755801 1783339 1808338
2096742 2237870 2388496
3703138 4593272 5625600

Home Wksh2 Final Budgets for
Wksh5 Wksh6
Wksh7 Wksh8 Now that we have analyzed our historical data and placed it into a set of
Wksh9 Wksh10 forecast, we can pull it all together with our assumptions for a final budget.
Wksh11 Wksh12 Many of these assumptions should be included in our forecast for improved
Wksh13 Wksh14 accuracy. However, we need to fine tune and finalize all assumptions
Wksh15 active so that we can produce a final finished budget for planning purposes.
Budget
Period
Ref 2001 Assumptions & Comments
Operating Plan
16-1 Total Revenues 30500 Based on review of Pro Forma Financials, Marketing, etc.
16-2 Cost of Goods Sold -28356 Volume projections, production budgets, and vertical analysis
16-3 Operating Expenses -1334 Average % of Sales per Vertical Analysis
16-4 Operating Income 810
16-5 Interest Expenses -310 Based on anticipated levels of debt and past history
16-6 Income Taxes -3300 Based on anticipated taxable income and effective rate
16-7 Other Non Operating Expenses -200 Provision for contingency was added on this line item
16-8 Earnings Before Extra Ord Items -3000

16-9 Extra Ordinary Items 650 Per our Simple Model Forecast
16-10 Net Income -2350
Financial Plan
Budgeted Cash Flows
16-11 Net Income -2350

16-12 Depreciation and Amortization 470 Review of Simple Model Forecast and Capital Expenditure Budget
16-13 (Increase) Decrease Defer Taxes

16-14 (Gain) Loss on Sale of Assets 15 Per Simple Forecast Model
16-15 (Increase) Decrease Current Assets #REF! Same formula as used in forecast models
16-16 (Increase) Decrease Current Liab #REF! Same formula as used in forecast models
16-17 Operating Cash Flow #REF!
Investment Sources of Cash:

16-18 Planned Sale of Assets 100 Per Simple Model Forecast
16-19 Planned Sale of Investments 2200 Per Simple Model Forecast
16-20 Other Investment Sources to be used
16-21 Total Investment Sources of Cash 2300
16-22 Capital Expenditures -4500 Budgeted $ 4.5 million in Capital Expenditure Budget
16-23 Acquisitions in Other Co's -350 Per forecast, strategic plan, and other budgets
16-24 Purchases of Investments -2500 Per forecast, strategic plan, and other budgets
16-25 Total Investment Applications of Cash -7350
Cash Flow from Financing Activities

16-26 Proceeds from Loans & Debt 1450 Per Financing Requirements and other budgets
16-27 Proceeds from Minority Interest 15 Per historical financials and investment budget
16-28 Other Financing Activities
16-29 Total Financing Sources of Cash 1465

16-30 Payments on Loans and Debt -1250 Per forecast and other budgets
16-31 Dividends Paid to Shareholders -2500 Per Simple Model Forecast
16-32 Purchase / Retire Stock -1500 Per strategic plan and other budgets
16-33 Other Financing Activities
16-34 Total Financing Applications of Cash -5250
16-35 Total Change to Cash #REF!
16-36 Beginning Cash Balance 3468

16-37 Forecasted Ending Balance #REF!

Budgeted Balance Sheet
16-38 Cash and Cash Equivalents #REF! Per above

16-39 Short Term Marketable Securities 10 Per historical financials
16-40 Accounts Receivable 3050 Same formula as used in forecast models
16-41 Inventory 2440 Same formula as used in forecast models
16-42 Other Current Assets 1983 Same formula as used in forecast models
16-43 Total Current Assets #REF!
16-44 Fixed Assets 1002109 Same formula as used in forecast models

16-45 Accumulated Depreciation -470 Same formula as used in forecast models
16-46 Net Fixed Assets 1001639
16-47 Longterm Investments 559 Same formula as used in forecast models
16-48 Investments in Other Companies 1000 Per review of forecast and strategic plans
16-49 Intangibles and Other Assets 230 Per review of forecast and historical balances
16-50 Total Non Current Assets 1003428
16-51 Total Assets #REF!
16-52 Accounts Payable 5185 Same formula as used in forecast models

16-53 Short Term Borrowings 3660 Same formula as used in forecast models
16-54 Short Term Portion of LT Debt 40 Per review of forecast and historical information
16-55 Other Current Liabilities 1830 Same formula as used in forecast models
16-56 Total Current Liabilities 10715
16-57 Longterm Debt / Borrowings 186418 Same formula as used in forecast models
16-58 Other Longterm Liabilities 1100 Per review of historical information and expected growth rates.
16-59 Total Non Current Liabilities 187518
16-60 Total Liabilities 198233
16-61 Preferred Stock

16-62 Common Equity 2200 Per Simple Model Forecast
16-63 Additional Paid in Capital 5700 Per Simple Model Forecast
16-64 Retained Earnings -4850 Same formula as used in forecast models
16-65 Adj for Foreign Currency Translation -5000 Per Simple Model Forecast

16-66 Treasury Stock 577747 Same formula as used in forecast models
16-67 Total Equity 575797
16-68 Total Liabilities and Equity 774030
16-69 External Financing Required #REF!

enditure Budget

Microsoft Excel 9.0 Answer Report
Worksheet: [Detail_Analysis.xls]13 - Pro Forma (Exp)
Report Created: 3/16/2002 3:42:28 PM
Target Cell (Min)

Cell Name Original Value Final Value
$G$60 Mean Squared Error Square 20525549 12297836
Adjustable Cells
$D$24 Set Smoothing Factor 1 1
Constraints
Cell Name Cell Value Formula Status Slack
$D$23 Smoothing Factor must be between 0 and 1 $D$23>=$D$23Binding
$D$24 Set Smoothing Factor 1 $D$24<=$E$23Binding 0

Microsoft Excel 9.0 Answer Report
Worksheet: [Detail_Analysis.xls]13 - Pro Forma (Exp)
Report Created: 3/16/2002 5:19:05 PM
Target Cell (Min)

$G$46 Mean Squared Error Square 65536151 59853342
Adjustable Cells
$D$25 Assign weights to appropriate periods 0.00% 0.00%
$E$25 Assign weights to appropriate periods 2.00% 1.50%
$F$25 Assign weights to appropriate periods Total weights should add up to => 5.00% 4.50%
$G$25 Assign weights to appropriate periods 35.00% 34.50%
$H$25 Assign weights to appropriate periods 60.00% 59.50%
Constraints
Cell Name Cell Value Formula Status Slack
$I$25 Assign weights to appropriate periods 100.00% $I$25=$E$23 Binding 0
$D$25 Assign weights to appropriate periods 0.00% $D$25<=$E$23Not Binding 1
$E$25 Assign weights to appropriate periods 1.50% $E$25<=$E$23Not Binding 0.99
$F$25 Assign weights to appropriate periods Total weights should add up to => 4.50% $F$25<=$E$23Not Binding 0.96
$G$25 Assign weights to appropriate periods 34.50% $G$25<=$E$23Not Binding 0.66
$H$25 Assign weights to appropriate periods 59.50% $H$25<=$E$23Not Binding 0.41
$D$25 Assign weights to appropriate periods 0.00% $D$25>=$D$23Binding 0.00%
$E$25 Assign weights to appropriate periods 1.50% $E$25>=$D$23Not Binding 1.50%
$F$25 Assign weights to appropriate periods Total weights should add up to => 4.50% $F$25>=$D$23Not Binding 4.50%
$G$25 Assign weights to appropriate periods 34.50% $G$25>=$D$23Not Binding ###
$H$25 Assign weights to appropriate periods 59.50% $H$25>=$D$23Not Binding ###

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Financial Analysis & Forecasting Prepared by Matt H.

Evans, CPA, CMA, CFM

If a cell appears in red, this indicates a warning concerning a calculation.

A) Input Worksheets for financial analysis using historical data:

Worksheet Title Purpose

Prepared by Matt H. Evans 05/28/2011 Page 1

B) Output Worksheets for evaluating financial performance:

C) Pro Forma / Forecasted Financials for Budgeting:

Prepared by Matt H. Evans 05/28/2011 Page 2

Prepared by Matt H. Evans 05/28/2011 Page 3

What reporting periods will be entered?

2-9 Number of historical periods to be analyzed 5

How are the amounts expressed in the financial statements?

Prepared by Matt H. Evans 05/28/2011 Page 4

property plant and equipe 798883 821208 1094494 1042697 997609

Accounts Payable 69216 149633 154286 180762 121882

Longterm Debt / secured 234229 217689 186609 153334 186218

Prepared by Matt H. Evans 05/28/2011 Page 5

Total Liabilities & Equity #NAME? #NAME? #NAME? #NAME? #NAME?

Check: Assets = Liab + Equity ? #REF! #REF! #REF! #REF! #REF!

NonDepreciable Fixed Assets 0 0 0 0 0

Prepared by Matt H. Evans 05/28/2011 Page 6

Interest Expenses -38618 -72811 -63890 -76119 -77694

Extra Ordinary Items (Loss) Gain

Primary EPS #NAME? #NAME? #NAME? #NAME? #NAME?

Prepared by Matt H. Evans 05/28/2011 Page 7

Prepared by Matt H. Evans 05/28/2011 Page 8

Net Income #NAME? #NAME? #NAME? #NAME? #NAME?

Capital Expenditures -1455 -2750 -3880 -5220 -4108

Proceeds from Borrowings 1070 1044 1460 1880 1105

Increase (Decrease) to Cash #REF! #REF! #REF! #REF! #REF!

Beginning Cash Balance 1010 629 994 1695 2489

Prepared by Matt H. Evans 05/28/2011 Page 9

Prepared by Matt H. Evans 05/28/2011 Page 10

EBITDA Margin #REF! #REF! #REF! #REF! #REF!

Free Cash Flow:

Prepared by Matt H. Evans 05/28/2011 Page 11

Prepared by Matt H. Evans 05/28/2011 Page 12

Operating Leverage #REF! #REF! #REF! #REF!

Financial Leverage #NAME? #NAME? #NAME? #NAME?

Total Leverage #NAME? #NAME? #NAME? #NAME?

Check Totals 0.00 #NAME? #NAME? #NAME? #NAME?

Prepared by Matt H. Evans 05/28/2011 Page 13

Annual Annual Annual Annual Annual

Acid Test Ratio 0.29 0.21 0.14 0.09 0.20

Current Ratio #REF! #REF! #REF! #REF! #REF!

Prepared by Matt H. Evans 05/28/2011 Page 14

Annual Annual Annual Annual Annual

Days Required to Collect A/R 34 2291 1342 814 846

Total Asset Turnover #REF! #REF! #REF! #REF! #REF!

Operating Assets Ratio #REF! #REF! #REF! #REF! #REF!

Gross Profit Margin 10% 3% 5% 1% 15%

Operating Margin 7% -2% 1% -3% 11%

Prepared by Matt H. Evans 05/28/2011 Page 15

Annual Annual Annual Annual Annual

Direct Cost to Operating Revenues 90% 98% 96% 99% 85%

Capitalization Rate / Asset Return:

Return on Shareholder Equity 14% -32% -19% -41% 38%

Debt to Total Assets #REF! #REF! #REF! #REF! #REF!

Debt to Common Equity 2 2 2 2 2

Times Interest Earned #NAME? #NAME? #NAME? #NAME? #NAME?

Price to Earnings (P/E) #NAME? #NAME? #NAME? #NAME? #NAME?

Price to Book Value #NAME? #NAME? #NAME? #NAME? #NAME?