FINANCIAL ACCOUNTING ASSIGNMENT

Chapter 6 – Financial Planning & Forecasting

DIVA TERTIA ALMIRA – NIU 470320

6-1
𝐀∗ 𝐋∗
𝑨𝑭𝑵 = 𝚫𝐒 − 𝚫𝐒 − 𝑴(𝑺𝟏)(𝑹𝑹)
𝐒𝟎 𝐒𝟎
A* : $ 3 Mio ΔS : $ 1 Mio
S0 : $ 5 Mio S1 : $ 6 Mio (Increase 20%)
L* : $ 0.5 Mio M : 5%
(Account Payable & Accrued Liabilities) RR : 30%

3 0.5
𝐴𝐹𝑁 = (1) − (1) − 5%(6)(30%)
5 5
𝑨𝑭𝑵 = $𝟒𝟏𝟎, 𝟎𝟎𝟎

6-2

A* : $ 4 Mio
4 0.5
𝐴𝐹𝑁 = (1) − (1) − 5%(6)(30%)
5 5
𝑨𝑭𝑵 = $𝟔𝟏𝟎, 𝟎𝟎𝟎
𝐀∗
The capital intensity ratio ( 𝐒𝟎) is higher than in the question 6-1; thus, this firm is more capital
intensive--it would need a larger increase in total assets to support the increase in sales.

6-3
3 0.5
𝐴𝐹𝑁 = (1) − (1) − 5%(6)(100%)
5 5
𝑨𝑭𝑵 = $𝟐𝟎𝟎, 𝟎𝟎𝟎
Because the firm doesn’t oay any dividend, the Retentention Ratio become 100%, so the firm will have
a higher level of retained earnings which would reduce the amount of AFN.

6-4

Assumptions:
• Sales increase : 25%
• Operating cost : 70% from Sales
• Tax rate, interest expense dan dividend pay out ratio remain constant
 2015 2016E Remarks
Sales 700 875 25% Increase
Operating cost 500 612,5 70% From Sales
EBIT 200 262,5
Interest 40 40 Constant
EBT 160 222,5
Taxes (40%) 64 89 Rate constant
Net Income 96 133,5
Dividends 32 44,5 Ratio constant (33.333%)
Addition to R/E 63 89 Ratio constant (66.667%)
Dalam $ Mio

a. $133,50 Mio

(𝟒𝟒,𝟓−𝟑𝟐)
b. 𝑮𝒓𝒐𝒘𝒕𝒉 = 𝟑𝟐
= 𝟑𝟗. 𝟎𝟔%

6-5

Sales : $ 5 Bio
Fixed Assets : % 1,7 Bio
Capacity : 90%

Actual Sales
a. 𝐹𝑢𝑙𝑙 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑆𝑎𝑙𝑒𝑠 =
% of capacity at which fixed assets were operated
$5
𝐹𝑢𝑙𝑙 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑆𝑎𝑙𝑒𝑠 =
90 %
𝑭𝒖𝒍𝒍 𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝑺𝒂𝒍𝒆𝒔 = $ 𝟓, 𝟓𝟓𝟔 𝑩𝒊𝒐

Target fixed assets Actual Fixed Assets

b. =
Sales Full capacity Sales
Target fixed assets $ 1, 7
=
Sales $ 5,556
𝐓𝐚𝐫𝐠𝐞𝐭 𝐟𝐢𝐱𝐞𝐝 𝐚𝐬𝐬𝐞𝐭𝐬
= 𝟑𝟎, 𝟔%
𝐒𝐚𝐥𝐞𝐬

c. Sales Forecast = $ 5 Bio * 112% = $ 5,6 Bio

Δ Fixed Assets = 30,6% x
Δ Fixed Assets = 30,6% 𝑥 ($5,6 𝐵𝑖𝑜 − $5,556 𝐵𝑖𝑜)
𝚫 𝐅𝐢𝐱𝐞𝐝 𝐀𝐬𝐬𝐞𝐭𝐬 = $𝟏𝟑, 𝟔 𝑴𝒊𝒐
Walter Industries need to increase fixed assets by $13,6 Mio

6-6

Sales = $ 300 Mio

Growth = 12% to $ 336 Mio

Inventories = $25 + 0.125 (Sales)

Inventories (Forecast) = $25 + 0.125 ($336)
𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐢𝐞𝐬 (𝐅𝐨𝐫𝐞𝐜𝐚𝐬𝐭) = $𝟔𝟕 𝐌𝐢𝐨

Sales
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
Inventory
$ 336
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 =
$ 67
𝑰𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝑻𝒖𝒓𝒏𝒐𝒗𝒆𝒓 = 𝟓, 𝟎𝟏 𝒙