Financial forecasting and decision making / Wallace N. Davidson.

Format:

Book

Author/Creator:

Davidson, Wallace N. (Wallace Norman), 1952- author.

Language:

English

Subjects (All):

Corporations--Finance--Mathematical models.

Corporations.

Physical Description:

1 online resource (1 volume (unpaged))

Edition:

1st edition

Place of Publication:

[Place of publication not identified] : Wiley, 2018.

System Details:

text file

Summary:

Many companies fail to succeed due to poor planning, which is one reason why accountants are in big demand. Skilled at forecasting, accountants can plan a company's future by determining the maximum sustainable growth and predict its external fund requirements. This book provides you with the basic tools necessary to project the balance sheet and statements of income and cash flow, enabling you to add a unique value to your client(s) work. This book will prepare you to do the following: Recall the basics of planning and forecasting financial statements Recall considerations related to a basic forecasting model Identify the evidence of growth mismanagement and develop the skills to determine maximum sustainable growth Apply statistical procedures to forecasting Analyze projected or forecasted financial statements

Contents:

Intro

FINANCIAL FORECASTING AND DECISION MAKING

TABLE OF CONTENTS

Chapter 1 FORECASTING PREREQUISITES

LEARNING OBJECTIVES

An Overview of the Forecasting Process

KNOWLEDGE CHECK

More on the Forecasting Process

PURPOSE OF FORECASTING

FIRST-PASS FORECAST

SIMULATION

ASSUMPTIONS AND SENSITIVITY ANALYSIS

PLANNING AND FORECASTING

Budgets Versus Forecasted Financial Statements

BUDGETS

FORECASTED FINANCIAL STATEMENTS

Financial Planning Prerequisites

Corporate Growth

Value of a Company

Chapter 2 USING THE BASIC FORECASTING MODEL

Making Assumptions

Percent of Sales and Sales Forecasts

SALES FORECAST AND FORECASTING

THE SALES FORECAST

WHO PREPARES THE SALES FORECAST?

The Basic Forecasting Model

PERCENT OF SALES METHOD

Explanation of the Basic Model

Identification of Spontaneous and Quasi-spontaneous Accounts

SPONTANEOUS ASSETS

SPONTANEOUS LIABILITIES

The Basic Model: An Example

NEED FOR FUNDS

INTERNALLY GENERATED SOURCES

IMPACT OF PROFITS ON EFN

EFN AND SALES INCREASES

Using the Basic Model for Planning

DIVIDENDS

FINANCING

SALES GROWTH

ESTIMATING SALES

The Basic Model: Sensitivity Analysis

EXAMPLE

ANOMALY OF SALES GROWTH

The Zeta Company Case Study

The Balance Sheet: Percent of Sales Method

Forecasting the Balance Sheet: An Example

Using the Projected Balance Sheet for Decision Making: Capital Structure Decision

Methods of Financing EFN

EXTERNAL SOURCES

INTERNAL SOURCES

Using the Projected Balance Sheet for Decision Making: Working Capital Decisions

WORKING CAPITAL AND PROFITS

SECOND-PASS FORECAST: IMPROVING WORKING CAPITAL.

Using the Projected Balance Sheet for Decision Making: Retention Decisions

THIRD-PASS FORECAST

Problems and Limitations Associated with the Basic Model

Case Study

Chapter 3 MANAGEMENT USES OF THE FORECASTING TECHNIQUE: A CASE ANALYSIS ON WORKING CAPITAL PLANNING

LEARNING OBJECTIVE

The Davidson Toy Company

WORKSHEETS

Chapter 4 USING FORECASTING TO PLAN THE COMPANY'S CAPITAL STRUCTURE

Value of the Firm

The Effect of Debt on the Cost of Capital

DEBT EFFECT

CONCLUSION

RISK EFFECT

Other Factors: Bankruptcy Costs

BANKRUPTCY COSTS

PROBABILITY OF BANKRUPTCY

Financing the Expected Funds Needed (EFN): Capital Structure Theory

BASIC IDEAS

Relation of Cost of Capital and Value to Debt Ratio

Optimal Capital Structure

HOW TO USE THIS IDEA

Factors Influencing Debt Usage

SALES GROWTH RATE

SALES STABILITY

ASSET AND COST STRUCTURE AND OPERATING LEVERAGE

CONTROL

OTHER FACTORS INFLUENCING DEBT USAGE

Short Versus Long-Term Debt

Case Studies

Chapter 5 FORECASTING THE BALANCE SHEET: STATISTICAL PROCEDURES

Statistical Procedure Regression

Advantages of Regression Analysis

Finding a Trend Line with Two Data Points

Regression Analysis

Using Regression: An Example

THE CORRELATION COEFFICIENT

Regression and Forecasting the Balance Sheet: An Example

ASSUME

Using Regression to Forecast the Income Statement

Chapter 6 FORECASTING THE INCOME STATEMENT

How Expenses Vary with Sales Changes

PREDICTING EXPENSES

PREPARE FORECAST WITH CONSIDERABLE DETAIL

FIXED EXPENSES

CHANGES IN FIXED EXPENSES

VARIABLE EXPENSES

CHANGES IN VARIABLE RATES.

The Income Statement Percent of Sales Method

FIXED AND VARIABLE EXPENSE APPROACH

VARIABLE EXPENSE APPROACH

Finding Fixed and Variable Expenses Graphically

Using Regression to Determine Fixed and Variable Expenses

Example of Using Regression to Determine Expense Components

Forecasting the Income Statement

Chapter 7 RECONCILING THE INCOME STATEMENT AND BALANCE SHEET

Why There Must Be a Reconciliation

Reconciliation of the Income Statement and the Balance Sheet

PROCEDURE

RECONCILIATION: EXAMPLE OF SETTING-UP THE RECONCILIATION EQUATION

Reconciliation: A Complete Example

Forecasting and Reconciling the Income Statement: An Example

Reconciliation: An Example

Reconciliation: A Second Example

Chapter 8 EVIDENCE OF GROWTH MISMANAGEMENT

Evidence of Growth Mismanagement

Fixed Assets to Net Worth

Net Sales to Net Worth: The Trading Ratio

The Trading Ratio of Company A: An Example

Other Important Ratios to Monitor During Periods of Growth

COLLECTION PERIOD

INVENTORY TURNOVER

PROFIT MARGIN

Chapter 9 MAXIMUM SUSTAINABLE GROWTH

The Basic Model: Maximum Sustainable Growth

The Sustainable Growth Model

Maximum Sustainable Growth: An Example

ASSUMPTIONS

Maximum Sustainable Growth: A Second Example

Improving Sustainable Growth

Sustainable Growth: Available External Equity

Sustainable Growth with Regression

Chapter 10 FORECASTING SALES.

LEARNING OBJECTIVES

Forecasting Sales: Sales Goal

The Best Guess Forecast: Bottom-up

Compound Growth: An Example of Forecasting Sales

Fluctuating or Cyclical Sales

Using Regression to Predict Sales

Forecasting Sales: Regression Approach

Quick Mart Lumber Company

Chapter 11 INTEGRATING THE PERCENT OF SALES WITH A SHORTER-TERM FORECAST OF CASH NEEDS

Shorter-Term Cash Needs

SCHEDULE OF ASSUMPTIONS

Appendix A THE BASIC FORECASTING MODEL

OBJECTIVE

KEY WORDS

THE NEED FOR A SALES FORECAST

FORECASTING THE BALANCE SHEET

THE FORECASTED INCOME STATEMENT

RECONCILING THE TWO PRO FORMA FINANCIAL STATEMENTS

GLOSSARY OF CONTROLLERSHIP AND FINANCIAL MANAGEMENT TERMS

INDEX

SOLUTIONS

CHAPTER 1

CHAPTER 2

CHAPTER 3

CHAPTER 4

CHAPTER 5

CHAPTER 6

CHAPTER 7

CHAPTER 8

CHAPTER 9

CHAPTER 10

CHAPTER 11

LEARN MORE

WHY AICPA?

EULA.

Notes:

Description based on print version record.

ISBN:

9781119514244

111951424X

9781119514282

1119514282

9781119514251

1119514258

OCLC:

1030303259