4-11 Projecting Pro Forma Statements with the percent of sales method Project sales based on forecasted growth rate in sales Forecast some items as a percent of the forecasted sales ● Costs O Cash ● Accounts receivable ore Copy right C 2002 by Harcourt, Inc. All rights reserved
4 - 11 Copyright © 2002 by Harcourt, Inc. All rights reserved. Projecting Pro Forma Statements with the Percent of Sales Method ◼Project sales based on forecasted growth rate in sales ◼Forecast some items as a percent of the forecasted sales ⚫Costs ⚫Cash ⚫Accounts receivable (More...)
4-12 Items as percent of sales (Continued iNventories ● Net fixed assets O Accounts payable and accruals ■ Choose other items O Debt which determines interest) O Dividends which determines retained earnings) ● Common stock Copy right C 2002 by Harcourt, Inc. All rights reserved
4 - 12 Copyright © 2002 by Harcourt, Inc. All rights reserved. ◼Items as percent of sales (Continued...) ⚫Inventories ⚫Net fixed assets ⚫Accounts payable and accruals ◼Choose other items ⚫Debt (which determines interest) ⚫Dividends (which determines retained earnings) ⚫Common stock
4-13 Percent of sales: Inputs 2001 2002 Actual Proi. COGS/Sales 60% 60% SGA/Sales 35% 35% Cash/sales 1% Acct, resales 12% 12% Iny/sales 12% 12% Net Fa/sales 25% 25% aP accr/sales 5% 5% Copy right C 2002 by Harcourt, Inc. All rights reserved
4 - 13 Copyright © 2002 by Harcourt, Inc. All rights reserved. Percent of Sales: Inputs COGS/Sales 60% 60% SGA/Sales 35% 35% Cash/Sales 1% 1% Acct. rec./Sales 12% 12% Inv./Sales 12% 12% Net FA/Sales 25% 25% AP & accr./Sales 5% 5% 2001 2002 Actual Proj
4-14 Other Inputs Percent growth in sales 25% Growth factor in sales(g) 125 Interest rate on debt 8% Tax rate 40% Dividend payout rate 30% Copy right C 2002 by Harcourt, Inc. All rights reserved
4 - 14 Copyright © 2002 by Harcourt, Inc. All rights reserved. Other Inputs Percent growth in sales 25% Growth factor in sales (g) 1.25 Interest rate on debt 8% Tax rate 40% Dividend payout rate 30%
4-15 20021st Pass Income Statement 2002 2001 Factor 1st Pass Sales $2,000g=12552,500 Less: COGS Pct=60% 500 SGA Pct=35%875 EBIT $125 Interest 16 16 EBT $109 Taxes(40%) Net, income 65 Div(30%) $19 Add to re $46 Copy right C 2002 by Harcourt, Inc. All rights reserved
4 - 15 Copyright © 2002 by Harcourt, Inc. All rights reserved. 2002 1st Pass Income Statement 2001 Factor 2002 1st Pass Sales $2,000 g=1.25 $2,500 Less: COGS Pct=60% 1,500 SGA Pct=35% 875 EBIT $125 Interest 16 16 EBT $109 Taxes (40%) 44 Net. income $65 Div. (30%) $19 Add. to RE $46