Financial planning and forecasting

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For the company to achieve future financial goals, through the annual financial statements is expected to predict future growth and capital needs of the situation 。 Can be roughly divided into the most optimistic, most pessimistic and normal, etc. Financial planning should be to make a prediction for the future, and based on certain assumptions. Once these assumptions are defeated by facts (such as assuming stable economic growth, but then gradually decline), the administrator shall immediately make appropriate amendments to reflect the real situation 。...

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Nội dung Text: Financial planning and forecasting

Financial planning and forecasting For the company to achieve future financial goals, through the annual financial statements is expected to predict future growth and capital needs of the situation 。 Can be roughly divided into the most optimistic, most pessimistic and normal, etc. Financial planning purposes A bridge To prevent Clear of More between emergency the target choices investment situations and financing
Financial planning content 一一 1. Assumptions – Financial planning should be to make a prediction for the future, and based on certain assumptions. Once these assumptions are defeated by facts (such as assuming stable economic growth, but then gradually decline), the administrator shall immediately make appropriate amendments to reflect the real situation 一 2. Sales forecast – Future financial projections are derived from sales forecasts, so if the dependent variable is the estimated assets and estimated funding needs, the sales is the independent variable, to predict future financial position, must first predict future sales, to increase the accuracy of the forecasts of future 一
3. Expectation to the preparation of financial statements • Financial planning process needs to forecast future financial statements, usually are based on projections of sales, and through sales and balance sheet, income statement relationship between individual subjects in the preparation of 一 4. Estimated increase in the amount of assets • When sales increase, you must meet the fixed assets (such as machinery, plant) or working capital (such as accounts receivable) increases, it is necessary to calculate the required amount of the increase in the number of assets and
5. Forecast demand for additional funds • Sales increased to improve the company's profits, retained earnings, however, whether earned assets sufficient to cover the funds needed? If the answer is no, the company will generate additional demand for funds, or issue new shares to foreign borrowing to supplement some lack of funds 一 6. Select the channel of financing • The final step of financial planning, that is, choose to borrow, issue new shares or otherwise as the most appropriate financing pipeline, which will inevitably have to assess the level of cost of capital, consider the equity dilution and dividend policy and other issues 一
一一 Sales forecast • But forecast possible future sale of the company situation, you must first calendar year based on sales forecasts as the starting point of the situation 一 • In order to accurately predict future trends, by several aspects 一 – The company's products are divided into different product groups, respectively, plotted according to their past sales trends, and observe the trends and forecast future trends of various products 一 – Forecast market size for each product separately, and the company's products share 一 – Predictive value of individual product sales plus the General Logistics Department, the company can come to next year's sales forecast.
The estimation method additional funding requirements AFN) 一一 • Assume 一 – Balance sheet of most of the subjects are directly and closely with the sales relationship 一 – In the current sales level, all assets are most appropriate scale 一 1. Percentage of sales method – The spontaneous increase in balance sheet income statement divided by the sales of the subject, seek a percentage, then based on "sales forecast" is multiplied by the percentage of various subjects, obtained a projected balance sheet. We can see by how much additional capital the company, after deducting the remaining funds within the financial needs of the company is required additional funding requirements.
2. Formula method Among them 一 A* 一 spontaneous increase in the assets (all assets subject) L* 一 Spontaneous increase in liabilities (accounts payable, accrued expenses) S 一 Sales S1 一 Estimated sales ΔS 一 Incremental sales = (S1-S) M 一 Net profit margin d 一 Dividend payout ratio Note: does not increase with the sales increase in the proportion of subjects, such as notes payable, retained earnings, long-term liabilities, such as the ordinary share capital (with the assumptions and conditions
Examples of financial forecasting 20x6 sales of 3.99 billion yuan  Dividend rate of 50%  Net profit margin of 5%  Total liabilities must be 1  There is no spare capacity 
First, the assumptions and the sales forecast: (Percentage of sales method, the same as those formula method) 1. Assumptions 。 Sales can be expected 20x7 annual growth of 20% 。 2. Sales forecast 。 20x7 = annual sales of 3.99 billion yuan x (1+20%) = 4.788 billion yuan
Percentage of sales method 一一 3. Expectation to the preparation of financial statements Step1: Calculating the percentage of sales  Sales will determine the changes with changes in subjects, and divided by sales, find the percentage of sales 一 Step2: With sales forecast changes the balance of subjects  The 20X7 annual sales forecast 4.788 billion yuan, a request by the steps of a percentage of sales of the subject can be obtained at the end of the relevant subjects in the forecast amount of 20X7 一 Step3: Treatment does not change the subject with the balance of sales  20X6 at the end of the course continue to use the amount, including notes payable, long-term debt and common stock 一
Step4: Retained earnings forecast 20X7 annual net profit = sales × profit margin forecast = $ 4.788 billion yuan × 5% = $ 239,400,000 20X7 一 Retained earnings end 一 20X6 一 Retained earnings end 一 20X7 一 Degree of net profit × 一 1 一 Dividend payout ratio) 一 $ 324,941,400 一 $ 239,400,000 × (1 一 50%) 一 $444,641,400
Step5: Estimated demand for additional funds  The expected and the balance sheet asset accounts sum, obtained by total assets of $ 2,743,524,000 is expected. • It is expected that the total liabilities and shareholders' equity is only $ 2,569,816,200, so is the shortage of additional funding requirements: $ 173,707,800 = $ 2,743,524,000 - $2,569,816,200 Note: According to pecking order theory, first cope with retained earnings, capital requirements , The additional debt funding requirements should be less than re-issue new shares.
Step6: Additional funding  The estimated debt space Has been used longterm liabilities $ 94,054,800,current liabilities of $ 1,283,625,000.  So if longterm debt used to finance, we have sufficient additional funding requirements cope: Longterm debt = $ 94,054,800 + $173,707,800 = $ 267,762,600 Total Liabilities = $ 267,762,600 + $1,283,625,000 = $ 1,551,387,000
Second, the formula method
Restrictions on capital demand forecasts • More or less regardless of prediction method has its own assumptions, but the real world is not the case, it is also a direct result of money demand forecasts restrictions. 一 • With the assets of economies of scale – With sales of assets is not necessarily the same changes in the proportion of change. • Need to purchase a large number of assets – With sales of assets is not necessarily the same changes in the proportion of change.
Business growth and corporate financial policy – Internal growth rate • External financing in the company completely the case, the estimated growth rate of the highest level 一 ROA × b = 一一一一一 1 − ROA × b – Maintain the growth rate • In the company to maintain a fixed debt / equity ratio under the premise and not to issue new shares to finance, its growth rate is the highest value. ROE × b = 一一一一一 1 − ROE × b