Women in Banking 15m (Empty)

Activision Blizzard Inc.
ATVI
Preparing Income Statement Forecasts
One of the most important roles in finance is to be able to estimate the future performance of a company
therefore part of the skill of an analyst is to accurately predict the future performance of a company (reme
forecast financials for Activision Blizzard. Your goal is to use the information (and videos) provided to forec
Key: Scoring:
Linked Cell - No Action Required: Black You will be scored based on:
Hard Input - No Action Required: Blue 1. Correct cell outputs
Empty - Action Required: 2. Correct formulas
Complete - Correct Output Y 3. Speed
Complete - Incorrect Output Y (Speed of submission is the leas
TASK 1
One of the first elements of any company analysis is to forecast revenue growth. So much of a company's
investment. Your first task is to use the information provided by your team to forecast revenue to 2027.
Estimated Annual Revenue Growth 10%
Income Statement
Amounts in millions Units
Revenue $m
TASK 2
The next thing you need to do is forecast the Cost of Goods Sold in a given year. COGS are the 'direct' costs
estimate COGS as a percentage of Revenue, making the formula quite straightforward!
COGS as a % of Revenue 29%
Income Statement
Cost of Goods Sold (COGS) $m
TASK 3
From here we can get to our first profit number (remember we are going through an Income statement wh
numbers which we want to take a look at as analysts.
Gross Profit Revenue - COGS
Income Statement
Gross Profit $m
TASK 4
The second category of costs that we need to analyse are 'Indirect Costs' or costs that are associated with
given these forecasts and only need to arrive at our second type of profit - Operating Profit. This is the mo
Operating Profit Gross Profit - Indirect Costs

Income Statement
Product Development $m
Selling, General & Administrative $m
Operating Profit $m
TASK 5
To get to Net Profit (Profit once all costs have been taken away) - we need to factor in any interest paymen
or keep as cash to invest at a future date.
Total Debt 3,611

Interest on Debt 5%
Profit Before Tax Operating Profit - Interest
Tax Rate 20%
Net Profit For The Year Profit Before Tax - Tax Provision
Income Statement
– Interest Expense $m
Pretax Income $m
– Tax Provision $m
Net Income $m
TASK 6
The last stage is a little confusing. Operating Profit, which we completed in Task 4 is also called Earnings Be
Amortisation (EBITDA). In short, this is the profit of the company before taking off the Depreciation and Am
company so that we can better understand its core profitability.
EBITDA Operating Profit + D&A

EBIT (AKA Operating Profit) $m
Depreciation & Amortization $m
EBITDA $m
BONUS RATIOS TASK (only if time)
2022-2027 Revenue CAGR %

Gross Profit Margin %
Operating Profit Margin %
Net Profit Margin %
Debt/EBITDA x
EBITDA/Interest Coverage x
FINAL INCOME STATEMENT!!
That's it - you've generated a full Income Statement for the first company you are analysing - it looks prett
Income Statement
Revenue $m
Cost of Sales $m
Gross Profit $m
Product Development $m
Selling, General & Administrative $m
Operating Income $m
– Interest Expense $m
Pretax Income $m
– Tax Provision $m
Net Income $m
EBIT $m
Depreciation & Amortization $m
EBITDA $m
he future performance of a company that you are advising, or investing in. We all know that past performance is not an accurate proxy
ure performance of a company (remember, as investors we care much more about the future than the past!). During this simulation, y
mation (and videos) provided to forecast the future financial performance of Activision.
Scoring:
You will be scored based on:
1. Correct cell outputs
2. Correct formulas
3. Speed
(Speed of submission is the least important!)
ue growth. So much of a company's performance is dependent on 'top line' revenue - the quicker the growth, the more attractive the
team to forecast revenue to 2027.
Historical Projected
FY2019A FY2020A FY2021A FY2022A FY2023E FY2024E
6,489 8,086 8,803 7,528 8,281 9,109
given year. COGS are the 'direct' costs associated with generating revenue (e.g. the raw materials and labour that go into creating, say,
e straightforward!
2,094 2,260 2,317 2,222 2,401 2,642
oing through an Income statement which basically looks at Revenue - Different Types of Cost = Profit). In this instance we are looking a
4,395 5,826 6,486 5,306 5,879 6,467
sts' or costs that are associated with the day-to-day running of the company - think admin costs, marketing costs, research and develo
ofit - Operating Profit. This is the most important type of profit which factors in all operational costs (but excludes taxes and interest).
998 1,150 1,337 1,421 1,584 1,637
1,790 1,942 1,890 2,215 2,516 2,700
1,607 2,734 3,259 1,670 1,779 2,131
need to factor in any interest payments + taxes. The Net Profit number is our third type of profit and is important as it determines how
(180) (230) (280) (330) (181) (181)
1,427 2,504 2,979 1,340 1,598 1,950
(285) (501) (596) (268) (320) (390)
1,142 2,003 2,383 1,072 1,279 1,560
ed in Task 4 is also called Earnings Before Interest and Tax (EBIT). Analyst actually prefer to analyse a fourth type of profit: Earnings Be
re taking off the Depreciation and Amortisation of Company assets (which is a) a non-cash cost, and b) is not a core operational cost).
1,607 2,734 3,259 1,670 1,779 2,131
328 197 116 106 119 127
1,935 2,931 3,375 1,776 1,898 2,258
pany you are analysing - it looks pretty nice when all put together:
6,489 8,086 8,803 7,528 8,281 9,109

2,094 2,260 2,317 2,222 2,401 2,642
4,395 5,826 6,486 5,306 5,879 6,467
998 1,150 1,337 1,421 1,584 1,637
1,790 1,942 1,890 2,215 2,516 2,700
1,607 2,734 3,259 1,670 1,779 2,131
(180) (230) (280) (330) (181) (181)

1,427 2,504 2,979 1,340 1,598 1,950
(285) (501) (596) (268) (320) (390)
1,142 2,003 2,383 1,072 1,279 1,560
1,607 2,734 3,259 1,670 1,779 2,131

328 197 116 106 119 127
1,935 2,931 3,375 1,776 1,898 2,258
ormance is not an accurate proxy for future financial performance, and
e past!). During this simulation, you will be tasked with preparing
growth, the more attractive the company becomes, as a potential
Task 1: https://youtu.
Projected
FY2025E FY2026E FY2027E
10,020 11,022 12,124###
labour that go into creating, say, an Electric Vehicle). We tend to
Task 2: https://youtu.b
Projected
FY2025E FY2026E FY2027E
2,906 3,196 3,516
In this instance we are looking at Gross Profit - the first of 3 key profit
Projected
FY2025E FY2026E FY2027E
7,114 7,825 8,608
keting costs, research and development costs. Thankfully we have been

but excludes taxes and interest).
Task 4: https://youtu.be
Projected
FY2025E FY2026E FY2027E
1,659 1,647 1,600
2,854 2,971 3,045
2,602 3,208 3,963
s important as it determines how much we can distribute as dividends,
Projected
FY2025E FY2026E FY2027E
(181) (181) (181)
2,421 3,027 3,782
(484) (605) (756)
1,937 2,422 3,026
fourth type of profit: Earnings Before Interest, Tax, Depreciation and

b) is not a core operational cost). So, we need to find the EBITDA of this
2,602 3,208 3,963

133 137 140
2,735 3,345 4,103
No Red Green Formatting or

Videos. Give it a go!
Projected
FY2025E FY2026E FY2027E
10,020 11,022 12,124

2,906 3,196 3,516
7,114 7,825 8,608
1,659 1,647 1,600
2,854 2,971 3,045
2,602 3,208 3,963
(181) (181) (181)

2,421 3,027 3,782
(484) (605) (756)
1,937 2,422 3,026
2,602 3,208 3,963

133 137 140
2,735 3,345 4,103
Task 1: https://youtu.be/ZLg-pIdj-E8
Task 2: https://youtu.be/iB2rxZDKmR8
Task 2: https://youtu.be/iB2rxZDKmR8
Task 3: https://youtu.be/cOob-N-Avtc
Task 4: https://youtu.be/XKEpW1dQ70E
Task 5: https://youtu.be/7TbLejO3uvE
Task 6: https://youtu.be/2IvJ4krwrV0
Task 6: https://youtu.be/2IvJ4krwrV0
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Activision Blizzard Inc.

Preparing Income Statement Forecasts

Estimated Annual Revenue Growth 10%

Cost of Goods Sold (COGS) $m

Gross Profit Revenue - COGS

Operating Profit Gross Profit - Indirect Costs

Total Debt 3,611

EBITDA Operating Profit + D&A

BONUS RATIOS TASK (only if time)

2022-2027 Revenue CAGR %

FINAL INCOME STATEMENT!!

6,489 8,086 8,803 7,528 8,281 9,109

(180) (230) (280) (330) (181) (181)

1,607 2,734 3,259 1,670 1,779 2,131

growth, the more attractive the company becomes, as a potential

labour that go into creating, say, an Electric Vehicle). We tend to

keting costs, research and development costs. Thankfully we have been

s important as it determines how much we can distribute as dividends,

fourth type of profit: Earnings Before Interest, Tax, Depreciation and

2,602 3,208 3,963

No Red Green Formatting or

10,020 11,022 12,124

(181) (181) (181)

2,602 3,208 3,963

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