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INTERACTIVE TEMPLATES FOR USE WITH

TECHNIQUES OF FINANCIAL ANALYSIS, 10th Edition README


by ERICH A. HELFERT
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© Modernsoft Inc., 1999


All rights reserved
README

© Modernsoft Inc., 1999


All rights reserved
Chapter 1: The Business System - An Overview Income Statement
Key Assumptions Balance Sheet Cash Flow
Operations: Price (per unit) 50,000 The Business System
Volume (units) 40,000 New
Fixed costs 400,000,000 investment
Variable costs - % sales 80% 700,000,000
Depreciation - % fixed assets 0% Depreciation
Investment: Current assets - % sales 25% effect Dis-investment Investment
Current liabilities - % costs 0% 0 Investment 0
Capital expenditures 200,000,000 base
Dis-investment 0 0
Financing: Interest rate 9% Work cap. change Investment change Cap. Expenditures
Tax rate 40% 500,000,000 700,000,000 200,000,000
Dividend payout 60%
Debt/equity ratio - targeted 60%
Debt as % of capitalization 38%
Price Volume
Income Statement Period 1 50,000 Costs 40,000
Sales 2,000,000,000 (fixed & variable) Operations
Costs 2,000,000,000 2,000,000,000
Depreciation 0
Operating profit (EBIT) 0
Interest 11,812,500
Profit before taxes -11,812,500
Taxes -4,725,000 Operating profit Interest
Net income -7,087,500 Dividends after taxes (tax adjusted)
Dividends 0 0 0 7,087,500
Retained earnings -7,087,500
Retained
earnings
Balance Sheet Base Period Period 1 -7,087,500
Current assets 0 500,000,000 Financing
Fixed assets 0 200,000,000 Shareholders'
Assets 0 700,000,000 equity Long-term debt
437,500,000 262,500,000
Current liabilities 0 0 Change in stock Funds surplus Change in debt
Long-term debt 0 262,500,000 444,587,500 (deficit) 262,500,000
Shareholders' equity 0 437,500,000 #DIV/0!
Liabilities and equity 0 700,000,000 Funding
potential
Working capital 0 500,000,000 #DIV/0!
Capitalization 0 700,000,000

Cash Flow Statement Cash Flow


Operating Activities:
Net income -7,087,500 -200,000,000
Depreciation 0
Change in working capital -500,000,000
0
Cash provided by operating activites -507,087,500

Investing Activities: -500,000,000


Capital expenditures -200,000,000
Dis-investments 0 -7,087,500
Cash (used in) investing activities -200,000,000
262,500,000
Financing Activities:
Debt proceeds (repayments) 262,500,000
444,587,500
Dividends paid 0
Stock proceeds (repurchase) 444,587,500
Cash from financing activites 707,087,500 0
Investing Operating Financing
Change in cash 0 -500,000,000 -250,000,000 0 250,000,000 500,000,000

© Modernsoft Inc., 1999


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Capital expenditures ###


Dis-investments 0
Working capital ###
Income (cash basis) -7,087,500
Debt 262,500,000
Stock 444,587,500
Dividends 0
Chapter 3: System View of Key Ratios and their Elements
Key Assumptions Income Statement / Balance Sheet
Ratios Chart Cash Flow Statement
Key Assumptions EBIT
Operations: margin
Price (per unit) 50,000 0.0% Operating
Volume (units) 40,000 Operating decisions profit margin
Fixed costs 400,000,000 Income tax 0.0%
Variable costs - % sales 80% rate
Investment: 40.0% Return on
Current assets - % sales 25% investment
Current liabilities - % sales 15% 0.00%
Capital expenditures 200,000,000 Working capital
Dis-investment 0 turnover
Depreciation % fixed assets 0% 10.0 Capital
Financing: Investment decisions turnover
Interest rate 9% Fixed asset 5.0
Tax rate 40% turnover
Dividend payout 60% 10.0 Return on equity
Debt/equity ratio - targeted 60% (ROE)
Debt as percent of capitalization 38% -1.62%
Long-term Debt proceeds
Income Statement Period 1 debt 149,999,700
Sales 2,000,000,000 150,003,000 Leverage Net leverage
Costs 2,000,000,000 Financing decisions proportions contribution
Depreciation 0 Payout/ 60.0% -1.62%
Operating profit (EBIT) 0 retention Stock proceeds Interest rate
Interest 6,750,284 40.0% 254,049,570 after tax
Profit before taxes -6,750,284 Equity Ret. earnings 2.70%
Taxes -2,700,113 250,005,000 -4,050,170 "Spread"
Net income -4,050,170 -2.70%
Dividends 0
Retained earnings -4,050,170

Balance Sheet Base Period Period 1 Note: For purposes of illustration, all calculations in the chart above
Current assets 2,500 500,000,000 (except for interest expense/rate) are based on year end balances.
Fixed assets 8,000 200,008,000
Assets 10,500 700,008,000 In practice, using average balance might be more appropriate.

Current liabilities 1,600 300,000,000


Long-term debt 3,300 150,003,000
Shareholders' equity 5,600 250,005,000
Liabilities and equity 10,500 700,008,000

Working capital 900 200,000,000


Capitalization 8,900 400,008,000

Cash Flow Statement


Operating Activities:
Net income -4,050,170
Depreciation 0
Change in working capital -199,999,100
Cash provided by operating activites -204,049,270

Investing Activities:
Capital expenditures -200,000,000
Dis-investments 0
Cash (used in) investing activities -200,000,000

Financing Activities:
Debt proceeds (repayments) 149,999,700
Dividends paid 0
Stock proceeds (retirements) 254,049,570
Cash from financing activites 404,049,270

Change in cash 0
© Modernsoft Inc., 1999
All rights reserved
Chapter 4: Projection of Financial Requirements - Cash Budgets

Key Assumptions Accounts Receivable Pro forma income statem


Cash Budget by Month Inventory Analysis Pro forma balance shee
Collection Pattern - Sales Accrued Liabilities

KEY ASSUMPTIONS Aug Sep (e) Oct Nov Dec


Current sales and forecast 1,925,000 2,050,000 2,175,000 2,300,000 2,450,000

Current purchases and forecast 750,000 675,000 650,000 650,000 650,000


Terms: net (days) 45 45 45

Collection period (days): 63 60 50 50 40


Date change effective (e.g. 31 = 31st of month ) 31 30 20

Materials usage 825,000 825,000 825,000


Wages and salaries (paid as incurred) 215,000 215,000 215,000
Other manufacturing expenses (paid as incurred) 420,000 420,000 420,000
Depreciation 43,000 43,000 43,000
Cost of goods sold as percent of sales 70.0% 70.0% 70.0%
Selling and administrative expenses % sales 15.0% 15.0% 14.0%
Payments on note payable 750,000
Interest due
Dividends payable 25,000
Income taxes due
Income tax rate 50.0% 50.0% 50.0%

XYZ COMPANY
Cash Budget by Month
Six Months Ended March 31, 2002 ($000's)

Oct Nov Dec


Cash receipts:
Collections 2,608 2,092 2,983

Cash disbursements:
Payments for purchases 1.50 months lag Err:502 Err:502 Err:502
Wages 215 215 215
Other expenses 420 420 420
Selling and administrative expense 326 345 343
Note repayments - 750 -
Interest payments - - -
Dividend payments 25 - -
Tax payments - - -
Total disbursements Err:502 Err:502 Err:502

Net cash receipts (disbursements) Err:502 Err:502 Err:502

Cumulative cash flow Err:502 Err:502 Err:502

Collection Pattern - Sales ($000's)


Month of sale
Timing of collections Days Aug Sep Oct Nov Dec
Oct. 1-10 60 642 - -
Oct. 11-20 60 642 - -
Oct. 21-31 50 642 683 -
Nov. 1-10 50 - 683 - -
Nov. 11-20 50 - 683 - -
Nov. 21-30 50 - - 725 -
Dec. 1-10 50 - 725 - -
Dec. 11-20 40 - 725 767 -
Dec. 21-31 40 - - 767 -
Jan. 1-10 40 - 767 -
Jan. 11-20 40 - - 817
Jan. 21-31 40 - - 817
Feb. 1-10 40 - 817
Feb. 11-20 40 - -
Feb. 21-28 40 - -
Mar. 1-10 40 -
Mar. 11-20 40 -
Mar. 21-31 40 -

Accounts Receivable ($000's)


% $000's
August sales 100.0% 1,925
September sales 100.0% 2,050
Sept. 30, 2001 3,975 60

October sales 0.0% -


November sales 33.3% 767
December sales 100.0% 2,450
Dec. 31, 2001 3,217 40

January sales 0.0% -


February sales 33.3% 917
March sales 100.0% 2,850
March 31, 2002 3,767 40

Inventory Analysis ($000's)

12/31/2001 3/31/2002
Raw materials:
Beginning balance (ending 9/30/01) 3 month average 2,725 2,725
Purchases 650 per mo. 1,950 3,900
4,675 6,625
Withdrawals 825 per mo. 2,475 4,950
Ending balance 2,200 1,675

Finished goods:
Beginning balance (ending 9/30/01) 3 month average 6,420 6,420
Materials 825 per mo. 2,475 4,950
Wages 215 per mo. 645 1,290
Other expenses 420 per mo. 1,260 2,520
Depreciation 43 per mo. 129 258
10,929 15,438
Cost of goods sold reported 4,848 10,605
Ending balance 6,082 4,833

Accrued Liabilities ($000's)

12/31/2001 3/31/2002

Beginning balance (ending 9/30/01) 2,875 2,875


Accrued interest 75 150
Accrued taxes (income statement) 494 1,171
3,444 4,196
Interest payment - 300
Tax payment - 375
Balance shown 3,444 3,521
XYZ COMPANY
Pro Forma Income Statements ($000's)
3 months ended 6 months ended
12/31/2001 3/31/2002
Sales 6,925 15,150
Cost of goods sold 4,848 10,605
Gross margin 2,078 4,545
Selling and administrative 1,014 2,054
Interest 75 150
Profit before taxes 988 2,341
Income taxes 494 1,171
Net income 494 1,171

XYZ COMPANY
Pro Forma Balance Sheets ($000's)

9/30/01 (e) 12/31/2001 3/31/2002


Cash 740 Err:502 Err:502
Accounts receivable 3,975 3,217 3,767
Raw materials 2,725 2,200 1,675
Finished goods 6,420 6,082 4,833
Plant and equipment (net) 7,210 7,081 6,952
Other assets 1,730 1,730 1,730
Total assets 22,800 Err:502 Err:502

Accounts payable 1,050 975 975


Notes payable 4,120 3,370 2,620
Accrued liability 2,875 3,444 3,521
Long-term debt 5,250 5,250 5,250
Preferred stock 1,750 1,750 1,750
Common stock 5,000 5,000 5,000
Retained earnings 2,755 3,224 3,876
Total liabilities 22,800 23,013 22,991
Collections calculation:

Lag Sales Sales 000's Collectx Change


10 Aug. 1-10 641,667 641.7
20 Aug. 11-20 641,667 641.7
30 Aug. 21-31 641,667 641.7
40 Sep. 1-10 683,333 683.3 60.0
50 Sep. 11-20 683,333 683.3 60.0
60 Sep. 21-30 683,333 683.3 60.0
70 10 Oct. 1-10 725,000 725.0 50.0 31
80 20 Oct. 11-20 725,000 725.0 50.0 31
90 40 Oct. 21-31 725,000 725.0 50.0 31
100 50 Nov. 1-10 766,667 766.7 50.0 30
110 60 Nov. 11-20 766,667 766.7 50.0 30
120 70 Nov. 21-30 766,667 766.7 50.0 30
130 80 Dec. 1-10 816,667 816.7 40.0 20
140 100 Dec. 11-20 816,667 816.7 40.0 20
150 110 Dec. 21-31 816,667 816.7 40.0 20
160 120 Jan. 1-10 875,000 875.0 40.0 31
170 130 Jan. 11-20 875,000 875.0 40.0 31
180 140 Jan. 21-31 875,000 875.0 40.0 31
190 150 Feb. 1-10 916,667 916.7 40.0 28
200 160 Feb. 11-20 916,667 916.7 40.0 28
210 170 Feb. 21-28 916,667 916.7 40.0 28
220 180 Mar. 1-10 950,000 950.0 40.0 31
230 190 Mar. 11-20 950,000 950.0 40.0 31
240 200 Mar. 21-31 950,000 950.0 40.0 31
250 250
260 260
270 270
280 280
290

Collection all preceding periods; fill in gaps


in sequencing (10-40)

Lag Diff Lag Calc Lag 1 Lag 2 Lag 3 Lag 4


10 10 10 10 - - -
20 10 20 20 - - -
40 20 30 30 40 - -
50 10 50 50 - - -
60 10 60 60 - - -
70 10 70 70 - - -
80 10 80 80 - - -
100 20 90 90 100 - -
110 10 110 110 - - -
120 10 120 120 - - -
130 10 130 130 - - -
140 10 140 140 - - -
150 10 150 150 - - -
160 10 160 160 - - -
170 10 170 170 - - -
180 10 180 180 - - -
190 10 190 190 - - -
200 10 200 200 - - -

Payment of purchases - 30 60 90 120 150


July (e) Aug Sep (e) Oct Nov Dec Jan
750,000 750,000 675,000 650,000 650,000 650,000 650,000
- - 45 45 45 45
payment Err:502 Err:502 Err:502 Err:502

1 2 3 4 5 vlookup
Terms: - 1 2 3 Month lag
15 0.5000 0.5000
30 1.0000
45 0.5000 0.5000 15
60 1.0000
90 1
Pro forma income statements
Pro forma balance sheets

Jan Feb Mar


2,625,000 2,750,000 2,850,000

650,000 650,000 650,000


45 45 45

40 40 40
31 28 31

825,000 825,000 825,000


215,000 215,000 215,000
420,000 420,000 420,000
43,000 43,000 43,000
70.0% 70.0% 70.0%
14.0% 12.0% 12.0%
750,000
300,000
25,000
375,000
50.0% 50.0% 50.0%

Jan Feb Mar Total

2,400 2,567 2,708 15,358

Err:502 Err:502 Err:502 Err:502


215 215 215 1,290
420 420 420 2,520
368 330 342 2,054
- 750 - 1,500
300 - - 300
25 - - 50
375 - - 375
Err:502 Err:502 Err:502 Err:502

Err:502 Err:502 Err:502 Err:502

Err:502 Err:502 Err:502

Jan Feb Totals: 15,358

2,608

2,092
2,983

-
- 2,400
-
- -
875 - 2,567
875 -
875 -
- 917 2,708
- 917

days

days

days

6 month average
650 per mo.

825 per mo.

6 month average
825 per mo.
215 per mo.
420 per mo.
43 per mo.
Assume annual interest of 300

Net income: 1/1/02 - 3/31/02 677

45 days

© Modernsoft Inc., 1999


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Date Change? Collect

60
60
60 Aug Sep Oct Nov Dec
10 - 60 Oct. 1-10 642 - -
20 - 60 Oct. 11-20 642 - -
31 1 50 Oct. 21-31 642 683 -
10 - 50 Nov. 1-10 - 683 - -
20 - 50 Nov. 11-20 - 683 - -
31 1 50 Nov. 21-30 - - 725 -
10 - 50 Dec. 1-10 - 725 - -
20 1 40 Dec. 11-20 - 725 767 -
31 - 40 Dec. 21-31 - - 767 -
10 - 40 Jan. 1-10 - 767 -
20 - 40 Jan. 11-20 - - 817
31 1 40 Jan. 21-31 - - 817
10 - 40 Feb. 1-10 - 817
20 - 40 Feb. 11-20 - -
31 1 40 Feb. 21-28 - -
10 - 40 Mar. 1-10 -
20 - 40 Mar. 11-20 -
31 1 40 Mar. 21-31 -

10 20 30 40 50 60 70
Sales: 642 642 642 683 683 683 725
Aug. 1-10 Aug. 11-20 Aug. 21-31 Sep. 1-10 Sep. 11-20 Sep. 21-30 Oct. 1-10
10 Aug. 1-10
20 Aug. 11-20
30 Aug. 21-31
40 Sep. 1-10
50 Sep. 11-20
60 Sep. 21-30
70 Oct. 1-10 641.7 - - - - - -
80 Oct. 11-20 - 641.7 - - - - -
90 Oct. 21-31 - - 641.7 683.3 - - -
100 Nov. 1-10 - - - - 683.3 - -
110 Nov. 11-20 - - - - - 683.3 -
120 Nov. 21-30 - - - - - - 725.0
130 Dec. 1-10 - - - - - - -
140 Dec. 11-20 - - - - - - -
150 Dec. 21-31 - - - - - - -
160 Jan. 1-10 - - - - - - -
170 Jan. 11-20 - - - - - - -
180 Jan. 21-31 - - - - - - -
190 Feb. 1-10 - - - - - - -
200 Feb. 11-20 - - - - - - -
210 Feb. 21-28 - - - - - - -
220 Mar. 1-10 - - - - - - -
230 Mar. 11-20 - - - - - - -
240 Mar. 21-31 - - - - - - -

180 210
Feb Mar
650,000 650,000 Purchases
45 45 Terms
Err:502 Err:502
Jan Feb

-
-
-
- -
875 -
875 -
875 -
- 917
- 917

80 90 100 110 120 130 140 150 160 170


725 725 767 767 767 817 817 817 875 875
Oct. 11-20 Oct. 21-31 Nov. 1-10 Nov. 11-20 Nov. 21-30 Dec. 1-10 Dec. 11-20 Dec. 21-31 Jan. 1-10 Jan. 11-20

- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
725.0 - - - - - - - - -
- 725.0 766.7 - - - - - - -
- - - 766.7 - - - - - -
- - - - 766.7 - - - - -
- - - - - 816.7 - - - -
- - - - - - 816.7 - - -
- - - - - - - 816.7 - -
- - - - - - - - 875.0 -
- - - - - - - - - 875.0
- - - - - - - - - -
- - - - - - - - - -
- - - - - - - - - -
180 190 200 210 220 230 240
875 917 917 917 950 950 950
Jan. 21-31 Feb. 1-10 Feb. 11-20 Feb. 21-28 Mar. 1-10 Mar. 11-20 Mar. 21-31

- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
- - - - - - -
875.0 - - - - - -
- 916.7 - - - - -
- - 916.7 - - - -
Chapter 5: Break-Even Analysis
Key Assumptions Profit and Losses as a Function of Volume Changes
Operating Break-Even Chart
Key Assumptions
Contribution per unit
Revenue 750
Variable costs 250
Contribution 500
Fixed costs 200
Break-even volume 400
Profits and losses as a function of volume changes of 25.0%

Profits and Losses as a Function of Volume Changes of 25.0%

Volume Increase Profits Increase


400 -
500 25.0% 50,000
625 25.0% 112,500 125%
781 25.0% 190,625 69%
977 25.0% 288,281 51%
1,221 25.0% 410,352 42%
Volume Decrease Losses Decrease
400 25.0% -
300 25.0% 50,000
225 25.0% 87,500 75%
169 25.0% 115,625 32%
127 25.0% 136,719 18%
95 25.0% 152,539 12%

Operating Break-Even Chart


1,000
900
800
$ Thousands

700
600
500 Column Q
Column R
400 Column S
300
200
200
100
-
0 100 200 300 400 500 600 700 800 900 1000 1100 1200

Volume
s as a Function of Volume Changes
k-Even Chart

Volume
0
100
200
300
400
500
600
Column Q 700
Column R 800
Column S 900
1000
1100
1200

1000 1100 1200

© Modernsoft Inc., 1999


All rights reserved
Revenue Variable Fixed
- 200 200
75 225 200
150 250 200
225 275 200
300 300 200
375 325 200
450 350 200
525 375 200
600 400 200
675 425 200
750 450 200
825 475 200
900 500 200
Chapter 5: Basic Financial Growth Model
Key Assumptions
Net assets (capitalization) 500.0 Results Sustainable Growth Equation
Debt as percent of capitalization 50.0% Income Statement The Business System - Overview
Gross return on net assets 10.0% Balance Sheet Cash Flow (graph)
Interest rate (before tax) 6.0% Cash Flow Statement
Tax rate 33.3%
Dividend payout 0.0%

Capital structure:
Debt as percent of capitalization 50.0% Sustainable Growth Equation
Debt to equity ratio 100.0%
Debt 250.0 ROS
Equity 250.0 20.0%
Net assets (capitalization) 500.0 Debt to equity x
ROC 100.0% Sustainable Sales / assets
Profitability (after taxes): 10.0% x growth rate 40.0%
Gross return on net assets 10.0% x + ( ROC - i ) = = x
Amount of profit 50.0 Retention rate 6.0% 16.0% Financial leverage
Interest rate (before tax) 6.0% 100.0% x 200.0%
Tax rate 33.3% Retention rate x
Interest rate (tax-adjusted) 4.0% 100.0% Retention rate
Amount of interest (tax-adjusted) 10.0 100.0%
Profit after interest 40.0

Disposition of profit:
Dividend payout 0.0% The Business System
Dividends paid - New
Reinvestment of profit 40.0 investment
105
Financing: Depreciation Dis-investment
Additional debt 40.0 effect Investment
Funding potential 80.0 25 Investment base
#REF!

Cash flow implications: 500


Amount of aftertax profit 40.0 Work cap. change Investment change Cap. Expenditures
Depreciation effect 25.0 80
Cash flow from operations 65.0
Dividends paid -
Cash flow available for reinvestment 65.0
Additional debt 40.0
Total investment potential 105.0
Price Volume
Results:
Net return on net assets 8.0% Costs Operations
Return on equity 16.0% (fixed & variable)
Growth in equity 16.0%

Income Statement Period 1


Sales 200
Costs 100
Dividends Operating profit Interest
Depreciation 25 after taxes (tax-adjusted)
Operating profit 75 0 50 10
Interest 15
Income before taxes 60 Retained
Taxes 20 earnings Financing
Net income 40 40
Dividends 0
Retained earnings 40 Shareholders' Long-term debt
equity
Balance Sheet Period 0 Period 1 290 290
Current assets Change in stock Funds surplus Change in debt
Fixed assets 0 (deficit) 40
Assets 500 580 0
Funding potential
Current liabilities
Long-term debt 250 290 80
Shareholders' equity 250 290
Liabilities and equity 500 580

Working capital
Capitalization 500 580

Cash Flow Statement


Operating Activities: Cash Flow
Net income 40 Investment potential -105
Depreciation 25 Cash flow from operations 65
Change in working capital -105 Debt 40
Cash provided by operating activites 65 Stock 0
Dividends 0
Investing Activities: Investment potential
65
Capital expenditures -105
Dis-investments 0
Cash flow from operations
Cash (used in) investing activities -105
40
Financing Activities:
Debt proceeds (repayments) 40 Debt
Dividends paid 0 0
Stock proceeds (repurchase) 0 Stock
Cash from financing activites 40
0
Increase (decrease) in cash 0 Dividends
Beginning cash 0
Ending cash 0 -120 Investing
-100 -80 -60 -40
Operating -20 0 20
Financing 40 60 80

© Modernsoft Inc., 1999


All rights reserved
Chapter 5: Financial Growth Model - Impact of Different Policies

Policy assumption inputs Capital structure Financing (next year)


Profitablity (after taxes) Cash flow implications
Disposition of profit Results

POLICY ASSUMPTION INPUTS: Case I Case II Case III Case IV Case V Case VI Case VII
Net assets (capitalization) 500.0 500.0 500.0 500.0 500.0 500.0 500.0
Debt as percent of capitalization 0.0% 50.0% 50.0%
Gross return on net assets 10.0% 10.0% 10.0%
Interest rate (before tax) 0.00% 6.00% 6.00%
Tax rate 33.3% 33.3% 33.3%
Dividend payout 0.0% 0.0% 50.0%
Depreciation effect 25.0 25.0 25.0

Capital structure: Case I Case II Case III Case IV Case V Case VI Case VII
Debt as percent of capitalization 0.0% 50.0% 50.0% 0.0% 0.0% 0.0% 0.0%
Debt to equity ratio 0.0% 100.0% 100.0% 0.0% 0.0% 0.0% 0.0%
Debt - 250.0 250.0 - - - -
Equity 500.0 250.0 250.0 500.0 500.0 500.0 500.0
Net assets (capitalization) 500.0 500.0 500.0 500.0 500.0 500.0 500.0

Profitability (after taxes):


Gross return on net assets 10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0%
Amount of profit 50.0 50.0 50.0 - - - -
Interest rate (before tax) 0.00% 6.00% 6.00% 0.00% 0.00% 0.00% 0.00%
Tax rate 33.3% 33.3% 33.3% 0.0% 0.0% 0.0% 0.0%
Interest rate (tax-adjusted) 0.00% 4.00% 4.00% 0.00% 0.00% 0.00% 0.00%
Amount of interest (tax-adjusted) - 10.0 10.0 - - - -
Profit after interest 50.0 40.0 40.0 - - - -

Disposition of profit:
Dividend payout 0.0% 0.0% 50.0% 0.0% 0.0% 0.0% 0.0%
Dividends paid - - 20.0 - - - -
Reinvestment of profit 50.0 40.0 20.0 - - - -

Financing:
Additional debt - 40.0 20.0 - - - -
Funding potential 50.0 80.0 40.0 - - - -

Cash flow implications:


Amount of aftertax profit 50.0 40.0 40.0 - - - -
Depreciation effect 25.0 25.0 25.0 - - - -
Cash flow from operations 75.0 65.0 65.0 - - - -
Dividends paid - - 20.0 - - - -
Cash flow available for reinvestment 75.0 65.0 45.0 - - - -
Additional debt - 40.0 20.0 - - - -
Total investment potential 75.0 105.0 65.0 - - - -

Results:
Net return on net assets 10.0% 8.0% 8.0% 0.0% 0.0% 0.0% 0.0%
Return on equity 10.0% 16.0% 16.0% 0.0% 0.0% 0.0% 0.0%
Growth in equity 10.0% 16.0% 8.0% 0.0% 0.0% 0.0% 0.0%

© Modernsoft Inc., 1999


All rights reserved
Chapter 5: Five-Year Projection - Effect of Policy Changes

Policy assumption inputs Capital structure Financing (next year)


Profitablity (after taxes) Cash flow implications
Disposition of profit Results
($ thousands)
POLICY ASSUMPTION INPUTS: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Net assets (capitalization) 900.0
Debt as percent of capitalization 33.3% 43.0% 43.0% 50.0% 50.0% 50.0%
Gross return on net assets 8.0% 7.0% 8.0% 8.0% 9.0%
Interest rate (before tax) 6.00% 6.00% 6.00% 6.75% 6.75%
Tax rate 33.3% 33.3% 33.3% 33.3% 33.3%
Dividend payout 60.0% 50.0% 50.0% 50.0% 40.0%
Depreciation effect 40.0 46.0 50.0 65.0 72.0

($ thousands)
Capital structure: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Debt as percent of capitalization 33.3% 43.0% 43.0% 50.0% 50.0% 50.0%
Debt to equity ratio 50.0% 75.4% 75.4% 100.0% 100.0% 100.0%
Debt 300.0 470.7 492.5 688.9 728.5 787.5
Equity 600.0 624.0 652.9 688.9 728.5 787.5
Net assets (capitalization) 900.0 1,094.7 1,145.4 1,377.7 1,457.0 1,575.0

Profitability (after taxes): Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Gross return on net assets 8.0% 7.0% 8.0% 8.0% 9.0% 0.0%
Amount of profit 72.0 76.6 91.6 110.2 131.1 -
Interest rate (before tax) 6.00% 6.00% 6.00% 6.75% 6.75% 0.00%
Tax rate 33.3% 33.3% 33.3% 33.3% 33.3% 0.0%
Interest rate (tax-adjusted) 4.00% 4.00% 4.00% 4.50% 4.50% 0.00%
Amount of interest (tax-adjusted) 12.0 18.8 19.7 31.0 32.8 -
Profit after interest 60.0 57.8 71.9 79.2 98.3 -

Disposition of profit: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Dividend payout 60.0% 50.0% 50.0% 50.0% 40.0% 0.0%
Dividends paid 36.0 28.9 36.0 39.6 39.3 -
Reinvestment of profit 24.0 28.9 36.0 39.6 59.0 -

Financing (next year): Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


New debt, old ratio 12.0 21.8 27.1 39.6 59.0 -
New debt, revised ratio 158.7 - 169.2 - - (787.5)
Funding potential 194.7 50.7 232.3 79.2 118.0 (787.5)

Cash flow implications: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Amount of aftertax profit 60.0 57.8 71.9 79.2 98.3 -
Depreciation effect 40.0 46.0 50.0 65.0 72.0 -
Cash flow from operations 100.0 103.8 121.9 144.2 170.3 -
Dividends paid 36.0 28.9 36.0 39.6 39.3 -
Cash flow available for reinvestment 64.0 74.9 86.0 104.6 131.0 -
Additional debt 170.7 21.8 196.3 39.6 59.0 (787.5)
Total investment potential 234.7 96.7 282.3 144.2 190.0 (787.5)

Results: Year 1 Year 2 Year 3 Year 4 Year 5 Year 6


Net return on net assets 6.7% 5.3% 6.3% 5.8% 6.8% 0.0%
Return on equity 10.0% 9.3% 11.0% 11.5% 13.5% 0.0%
Growth in equity 4.0% 4.6% 5.5% 5.8% 8.1% 0.0%
Earnings per share 100,000 0.60 0.58 0.72 0.79 0.98 -
Dividends per share 0.36 0.29 0.36 0.40 0.39 -
ing (next year)
ow implications

Year 7 Year 8

Year 7 Year 8
0.0% 0.0%
0.0% 0.0%
- -
787.5 787.5
787.5 787.5

Year 7 Year 8
0.0% 0.0%
- -
0.00% 0.00%
0.0% 0.0%
0.00% 0.00%
- -
- -

Year 7 Year 8
0.0% 0.0%
- -
- -

Year 7 Year 8
- -
- -
- -

Year 7 Year 8
- -
- -
- -
- -
- -
- -
- -

Year 7 Year 8
0.0% 0.0%
0.0% 0.0%
0.0% 0.0%
- -
- -

© Modernsoft Inc., 1999


All rights reserved
Chapter 6 - 7: Comparing Alternatives - Present Value Analysis
Present Value Analysis Project Cash Flows Chart

Key Assumptions TOTALS 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Net investment outlay & recovery -10,500 -11,500 1,000


Annual benefits 28,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000
Depreciation 1,500 1,500 1,500 1,500 1,500 1,500 1,500
Tax rate 36.0%
PV Factor 14.0%

TOTALS 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Tax rate @36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36% 36%
Aftertax benefits 17,920 2,560 2,560 2,560 2,560 2,560 2,560 2,560 0 0 0 0 0 0 0 0
Depreciation tax shield 3,780 540 540 540 540 540 540 540 0 0 0 0 0 0 0 0
Total project cash flows (incl. recovery) 11,200 -11,500 3,100 3,100 3,100 3,100 3,100 3,100 4,100 0 0 0 0 0 0 0 0
PV Factor @ 14% 1.000 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140
Present value of investment cash flows -11,100 -11,500 0 0 0 0 0 0 400 0 0 0 0 0 0 0 0
Present value of operating cash flows 13,294 2,719 2,385 2,092 1,835 1,610 1,412 1,239 0 0 0 0 0 0 0 0
Present value of total cash flows -11,500 2,719 2,385 2,092 1,835 1,610 1,412 1,639 0 0 0 0 0 0 0 0
Cumulative present value -11,500 -8,781 -6,395 -4,303 -2,467 -857 555 2,193 2,193 2,193 2,193 2,193 2,193 2,193 2,193 2,193

Net present value @ 14% 2,193


Profitability index (BCR) @ 14% 1.20
Internal rate of return 19.9%
Present value payback @ 14% 6 Year * *
Project Cash Flows
7500
5000
2500
0
Depreciation tax shield
$ -2500 Annual benefits - aftertax

-5000 Net investment outlay & recovery

-7500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Net investment outlay


-11500
& recovery 0 0 0 0 0 0 1000 0 0 0 0 0 0 0 0
-10000
Annual benefits - aftertax 0 4000 4000 4000 4000 4000 4000 4000 0 0 0 0 0 0 0 0
-12500
Depreciation tax shield 540 540 540 540 540 540 540 0 0 0 0 0 0 0
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year

© Modernsoft Inc., 1999

All rights reserved


Chapter 9: Analysis of Financing Choices

Key Assumptions Recap of EPS Analyses


Balance Sheet Zero EPS Calculation
Range of EBIT and EPS Chart EPS Calculation - Original

Key Assumptions ($000's)


ABC COR
Operations: Original New
7.00
EBIT - before new product 7,999
EBIT - incremental from new product 2,000 6.50
Investment: 6.00
Current assets 15,000
5.50
Fixed assets (net) 29,000
Other assets 1,000 5.00
Current liabilities 7,000 4.50
Financing:
4.00
New financing (debt/preferred/common) 10,000
Tax rate 34.0% 34.0% EPS ($) 3.50

Interest rate 11.5% 3.00


Preferred dividend rate 12.5%
2.50
Dividends per share $2.50 $2.50
2.00
Common shares O/S (000's) 1,000 1,275
Price per common share (net) $10.00 $36.36 1.50
Cost of capital 13.25% 1.00
Retained earnings 28,000
0.50

Balance Sheet (original) 0.00


Current assets 15,000 0.00 1.00 2.00 3.00 4
Fixed assets 29,000
Other assets 1,000
Assets 45,000

Current liabilities 7,000


Long-term debt 0
Preferred stock 0
Common stock 10,000
Retained earnings 28,000
Liabilities and equity 45,000

ABC CORPORATION
Recap of EPS Analyses with new Product ($000's)
New Financing of $10 Million
Original Debt Preferred
Earnings before interest and taxes (EBIT) 7,999 9,999 9,999
Less: Interest charges on long-term debt 0 1,150 0
Earnings before income taxes 7,999 8,849 9,999
Less: Incomes taxes at 34% 2,720 3,009 3,400
Earnings after income taxes 5,279 5,840 6,599
Less: Preferred dividends 0 0 1,250
Earnings available for common stock 5,279 5,840 5,349
Common shares outstanding (000's) 1,000 1,000 1,000
Earnings per share (EPS) $5.28 $5.84 $5.35
Less: Common dividends per share $2.50 $2.50 $2.50
Retained earnings per share $2.78 $3.34 $2.85
Retained earnings in total 2,779 3,340 2,849
Original EPS change (before new product) -14.4% -23.7%
Final EPS change (with new product) 10.6% 1.3%
Specific cost 7.59% 12.50%

ABC CORPORATION
Zero EPS Calculation ($000's)
New Financing of $1 Million
Original Debt Preferred
Earnings per share (EPS) 0 0 0
Common shares outstanding (000's) 1,000 1,000 1,000
Earnings available for common stock 0 0 0
Preferred dividends 0 0 1,250
Earnings after taxes 0 0 1,250
Incomes taxes at 34% 0 0 644
Earnings before income taxes 0 0 1,894
Interest charges on long-term debt 0 1,150 0
EBIT or zero EPS 0 1,150 1,894

ABC CORPORATION ABC CORPORATION


Earnings per Share Calculation - Original ($000's) Earnings per Share with New Bond

Original
Earnings before interest and taxes (EBIT) 7,999 Earnings before interest and taxes (EBIT)
Less: Interest charges on long-term debt Less: Interest charges on long-term debt
Earnings before income taxes 7,999 Earnings before income taxes
Less: Incomes taxes at 34% 2,720 Less: Incomes taxes at 34%
Earnings after income taxes 5,279 Earnings after income taxes
Less: Preferred dividends Less: Preferred dividends
Earnings available for common stock 5,279 Earnings available for common stock

Common shares outstanding (000's) 1,000 Common shares outstanding (000's)


Earnings per share (EPS) $5.28 Earnings per share (EPS)
Less: Common dividends per share $2.50 Less: Common dividends per share
Retained earnings per share $2.78 Retained earnings per share
Retained earnings in total 2,779 Retained earnings in total
Original EPS
Change in EPS
Percent change in EPS

ABC CORPORATION ABC CORPORATION


Earnings per Share with New Preferred Stock Issue ($000's) Earnings per Share with New Comm
Before New With New
Product Product
Earnings before interest and taxes (EBIT) 7,999 9,999 Earnings before interest and taxes (EBIT)
Less: Interest charges on long-term debt 0 0 Less: Interest charges on long-term debt
Earnings before income taxes 7,999 9,999 Earnings before income taxes
Less: Incomes taxes at 34% 2,720 3,400 Less: Incomes taxes at 34%
Earnings after income taxes 5,279 6,599 Earnings after income taxes
Less: Preferred dividends 1,250 1,250 Less: Preferred dividends
Earnings available for common stock 4,029 5,349 Earnings available for common stock

Common shares outstanding (000's) 1,000 1,000 Common shares outstanding (000's)
Earnings per share (EPS) $4.03 $5.35 Earnings per share (EPS)
Less: Common dividends per share $2.50 $2.50 Less: Common dividends per share
Retained earnings per share $1.53 $2.85 Retained earnings per share
Retained earnings in total 1,529 2,849 Retained earnings in total
Original EPS $5.28 $5.28 Original EPS
Change in EPS -$1.25 $0.07 Change in EPS
Percent change in EPS -23.7% 1.3% Percent change in EPS
EPS Calculation with New Bond Issue
EPS Calculation with New Preferred Stock Issue
EPS Calculation with New Common Stock Issue

ABC CORPORATION: Range of EBIT and EPS Chart


7.00
6.50
6.00
5.50 5.28

5.00
4.53
4.50
Original
4.00 Bonds
3.50 Preferred
2.75
Common
3.00
Orig. EPS
2.50 Div/Sh
2.00
1.50
1.00
0.50

0.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00 11.00
EBIT ($millions)

ng of $10 Million
Common
9,999
0
9,999
3,400
6,599
0
6,599
1,275
$5.18
$2.50
$2.68
3,412
-21.6%
-2.0%
13.25%

ng of $1 Million
Common
0
1,275
0
0
0
0
0
0
0

CORPORATION
ngs per Share with New Bond Issue ($000's)
Before New With New
Product Product
gs before interest and taxes (EBIT) 7,999 9,999
s: Interest charges on long-term debt 1,150 1,150
gs before income taxes 6,849 8,849
s: Incomes taxes at 34% 2,329 3,009
gs after income taxes 4,520 5,840
s: Preferred dividends - 0
gs available for common stock 4,520 5,840

on shares outstanding (000's) 1,000 1,000


gs per share (EPS) $4.52 $5.84
s: Common dividends per share $2.50 $2.50
ed earnings per share $2.02 $3.34
ed earnings in total 2,020 3,340
$5.28 $5.28
-$0.76 $0.56
t change in EPS -14.4% 10.6%

CORPORATION
ngs per Share with New Common Stock Issue ($000's)
Before New With New
Product Product
gs before interest and taxes (EBIT) 7,999 9,999
s: Interest charges on long-term debt 0 0
gs before income taxes 7,999 9,999
s: Incomes taxes at 34% 2,720 3,400
gs after income taxes 5,279 6,599
s: Preferred dividends 0 0
gs available for common stock 5,279 6,599

on shares outstanding (000's) 1,275 1,275


gs per share (EPS) $4.14 $5.18
s: Common dividends per share $2.50 $2.50
ed earnings per share $1.64 $2.68
ed earnings in total 2,092 3,412
$5.28 $5.28
-$1.14 -$0.10
t change in EPS -21.6% -2.0%

© Modernsoft Inc., 1999


All rights reserved
EPS = [(E - i)(1 - t) - d]/s
E = EBIT
i = interest $
t = tax rate
d = preferred dividends $
s = shares outstanding

BREAKEVEN data source for graphing


EPS=
EBIT 0.00 5.32 8.76 11.00
E(1-t)/s Original 0.00 3.51 5.78 7.26
(E-i)(1-t)/s Bonds -0.76 2.75 5.02 6.50
(E(1-t)-d)/s Preferred -1.25 2.26 4.53 6.01
E(1-t)/s Common 0.00 2.75 4.53 5.69
Orig. EPS $5.28 $5.28 $5.28 $5.28
Div/Sh $2.50 $2.50 $2.50 $2.50
Chapter10-11: Total Company Valuation

Totals
Key Assumptions Year: 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

EBIT x (1 - t) 10,000 12,000 13,000 12,000 13,500 12,500


Add: write-offs and non-cash items 6,500 7,000 8,600 9,300 9,900 11,900
Less: net new working capital -1,200 -1,400 -1,800 500 -1,600 -2,000
Less: net new capital investments -8,000 -15,000 -10,200 -11,000 -22,000 -10,000
Add/less: significant non-operating items 500 -300 400 1,200 -800 0
Free cash flow 7,800 2,300 10,000 12,000 -1,000 12,400 0 0 0 0 0 0 0 0 0
Ongoing value 187,500
Present value factors @ 12.0% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183
Present value of free cash flow 6,964 1,834 7,118 7,626 -567 6,282 0 0 0 0 0 0 0 0 0
Present value of ongoing value 0 0 0 0 0 94,993 0 0 0 0 0 0 0 0 0
Cumulative present value 124,250 6,964 8,798 15,916 23,542 22,974 124,250 124,250 124,250 124,250 124,250 124,250 124,250 124,250 124,250 124,250

Firm value 124,250


Non-operating assets 5,700
Total value 129,950
Value of long-term debt outstanding 40,000 © Modernsoft Inc., 1999

Value of company equity 89,950 All rights reserved


Chapter 11: An Illustration of Economic Profit, CFROI, and Earnings Measures ($000's)

Key Assumptions The Divergence of Accounting and Cash Flow Measures (grap
Working capital - initial 2,000
Fixed investment - initial 10,000 Economic Profit Analysis
Economic life 8 Cash Flow Return on Investment Analysis
Cost of capital 10.0% Other Measures
Net present value factor 10.0%
NOPAT 824.4 Note: The simplified example here shows a company earning exac
Capital amortization 874.4 In other words, the net present value of Economic profits when disc
Depreciation effect 1,250 capital equals zero; likewise the DCF-ROI or IRR equals the Cost o

Economic Profit Analysis 0 1 2 3 4 5


Book value of fixed investment (beg.) 10,000 8,750 7,500 6,250 5,000
Working capital 2,000 2,000 2,000 2,000 2,000
Total book value 12,000 10,750 9,500 8,250 7,000
Cost of capital 10.0% 10.0% 10.0% 10.0% 10.0%
Capital charge @ 10% 1,200 1,075 950 825 700
NOPAT 824 824 824 824 824
Economic profit (EVA) -376 -251 -126 -1 124
Present value factor @ 10% 1.000 0.909 0.826 0.751 0.683 0.621
Net PV of economic profits @ 10% 0 -341 -207 -94 0 77

Cash Flow Return on Investment Analysis 1 2 3 4 5


NOPAT 824 824 824 824 824
Add back depreciation effect 1,250 1,250 1,250 1,250 1,250
Operating cash flow generated 2,074 2,074 2,074 2,074 2,074

Initial investment 12,000 12,000 12,000 12,000 12,000 12,000


Cost of capital 10.0% 10.0% 10.0% 10.0% 10.0%
Capital charge @ 10% 1,200 1,200 1,200 1,200 1,200
Capital amortization @ 10% 874 874 874 874 874
Terminal recovery of working capital 0 0 0 0 0
Total cash flow requried -12,000 2,074 2,074 2,074 2,074 2,074
Present value of future cash flows 12,000 1,886 1,714 1,559 1,417 1,288
Net present value @ 10% 0

Other Measures 0 1 2 3 4 5
ROE 6.9% 7.7% 8.7% 10.0% 11.8%
ROCE / RONA 6.9% 7.7% 8.7% 10.0% 11.8%
ROGI 17.3% 17.3% 17.3% 17.3% 17.3%
CFROI 10.0% 10.0% 10.0% 10.0% 10.0%

The Divergence of Accounting and Cash Flow Measures


30.0%
27.5%
25.
25.0%
22.5%
20.0%
Rate of return

17.
17.5%
15.0%
12.5%
10.
10.0%
27.5%
25.
25.0%
22.5%
20.0%

Rate of return
17.
17.5%
15.0%
12.5%
10.
10.0%
7.5% 6.9%

5.0%
2.5%
0.0%
1 2 3 4 5 6 7 8
Year

Graph Data
1 2 3 4 5 6
Project/business IRR 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Cost of capital 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Accounting ROA 6.9% 7.7% 8.7% 10.0% 11.8% 14.3%
Accounting ROGI 17.3% 17.3% 17.3% 17.3% 17.3% 17.3%
nd Cash Flow Measures (graph)

hows a company earning exactly its cost of capital.


e of Economic profits when discounted at the Cost of
F-ROI or IRR equals the Cost of capital.

6 7 8 9 10 11 12 13 14 15
3,750 2,500 1,250 0 0 0 0 0 0 0
2,000 2,000 2,000 0 0 0 0 0 0 0
5,750 4,500 3,250 0 0 0 0 0 0 0
10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
575 450 325 0 0 0 0 0 0 0
824 824 824 0 0 0 0 0 0 0
249 374 499 0 0 0 0 0 0 0
0.564 0.513 0.467 - - - - - - -
141 192 233 0 0 0 0 0 0 0

6 7 8 9 10 11 12 13 14 15
824 824 824 0 0 0 0 0 0 0
1,250 1,250 1,250 0 0 0 0 0 0 0
2,074 2,074 2,074 0 0 0 0 0 0 0

12,000 12,000 12,000 0 0 0 0 0 0 0


10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
1,200 1,200 1,200 0 0 0 0 0 0 0
874 874 874 0 0 0 0 0 0 0
0 0 2,000 0 0 0 0 0 0 0
2,074 2,074 4,074 0 0 0 0 0 0 0
1,171 1,065 1,901 0 0 0 0 0 0 0

6 7 8 9 10 11 12 13 14 15
14.3% 18.3% 25.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
14.3% 18.3% 25.4% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
17.3% 17.3% 17.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
10.0% 10.0% 10.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Measures

25.4%

17.3%
Project/business IRR
Cost of capital
Accounting ROA
Accounting ROGI
10.0%
25.4%

17.3%
Project/business IRR
Cost of capital
Accounting ROA
Accounting ROGI
10.0%

7 8

© Modernsoft Inc., 1999


All rights reserved

7 8
10.0% 10.0%
10.0% 10.0%
18.3% 25.4%
17.3% 17.3%
WELCOME to Interactive Templates for TFA
These templates are intended to be used as a companion to TECHNIQUES OF FINANCIAL ANALYSIS (TFA),
by Dr. Erich Helfert, 10th Millennium Edition.

Every template is taken from specific examples/exercises in the text book. References to the book are
found on the Main Menu. As such, these templates should be used along side the book which explains
the relevance and design of each exercise.

Insofar as TFA's emphasis is around the concept that any business is essentially a financial system of cash
flows ... these templates allow the user to examine the interrelationships between investment,
operating, and financing variables within the financial system. Collectively, they should greatly enhance
your understanding of the concepts presented in TFA.

Below is a quick reference on How to Use Interactive Templates for TFA and a few
Tips and Tricks.

HOW TO USE Interactive Templates for TFA


These templates are Microsoft Excel templates (using Excel 97). It is assumed the user has a basic
understanding of using Excel. All templates follow the schematic shown in the example below.

Sample Template START HERE Click to view


(Try me!) graph / table

direct access to any worksheet / template.


button. Alternatively, click on tabs below at any time for
Key Assumptions to any worksheet by simply clicking on the appropriate
Sales 500.0 Click here to access MAIN MENU. From there you can go
Costs as percent of sales 40.0%
ALL inputs are made in the Assumptions table found in the
upper left part of each worksheet.
Income Statement
Sales Sales 500.0 To display comments, rest pointer over cell with red
Costs Costs 200.0 comment indicator in upper-right corner of cell.
Income Income 300.0
Inputs are only allowed in white cells which are unlocked.
The remainder of the worksheet is protected and will NOT
allow any changes.
500.0 Change values here and observe the results in the tables
and charts.
400.0

300.0
Sales
Costs
200.0
Income Results are displayed in separate tables. Every table is
taken directly from TFA. All calculated terms are
100.0 displayed in shaded cells (which are locked and
protected).
-
Column F

Graphs and charts, also taken directly from TFA, are


dynamically linked to the inputs and results. Change the
inputs and observe the changes on the graph / chart.

Click on Home button to return to top of template.

TIPS and TRICKS


VIEWING Zoom in/out with different magnifications to optimize view for your screen.
Use split screen and freeze panes commands to view multiple panels.
Open new window to view multiple windows simultaneously.

SENSITIVITY To quickly view the results of changing one input, first enter new value in Assumptions
ANALYSIS section for input. Go to table / chart / graph to observe resultant change. Now use the
undo and redo buttons on your toolbar, alternatively, to see before and after impact.

MODIFYING If you're an experienced Excel user, if you wish you can easily modify and customize
TEMPLATES the template(s) for your own use. Simply unprotect the worksheet. However, be
careful not to violate the financial integrity of the interrelationships. (P.S. If you
mess up, don't worry. Simply retrieve the original templates from your program disk.)

Note: Some of the graphics may not appear correctly on your screen. This is NOT a problem
with your computer/screen or the template. These templates are optimized for
a screen resolution of 1024 x 768.

© Modernsoft Inc., 1999


All rights reserved