Financial Statements of a company

Project Assessment: Given Data, Rules

and Questions.

Course 2016-2017

Midterm version

On next two slides, you find Financial Statements of a company,

Balance Sheet (B/S) for year 2012 and 2013 below,

Given Data (I)

Income Statement (I/S) for year 2013,

Given Data (II)

How to prepare Income Statement for past year 2012 and forecast year 2014 ?

 To be applied for year 2014 forecast and 2012 past year (only required I/S forecast for

2014, not B/S),

a) General Manager of the company has required your support to forecast the Income

Statement figures for year 2014. You have the estimation from Sales Director of 6% on sales

growth. Moreover Financial Manager confirms keeping rest of Income Statement categories (1)

on same relative weight over sales than year 2013 . Only C.O.G.S. have changed and you

should apply 64,7 %.

b) You know Sales for year 2012 was of 46,236 $ mil. General Manager doesn´t have available

Income Statement for year 2012 and ask you building up just applying same relative weight

over Sales (1) than year 2013. Only C.O.G.S. have changed and you should take 66,5 %.

Note (1) => Just remind that Tax Expenses has to be calculated over Taxable Income, not over

Sales.

Some Rules (I)

 Note for being considered on Cash-Flow and ratios calculations,

c) Further than figures shown on Income Statement of 2013, you should take S/T and L/T

debts repayments amount from Balance Sheet for year 2013. On 2012 was repaid 150 $ mil as

S/T debt to bank. Moreover Financial Manager explains that for year 2014 is expected to

reimburse 155 $ mil of L/T debt.

d) Financial Manager informs you of an expected new investment of 210 $ mil for year 2014.

e) You know that total purchases for year 2013 can be estimated on a 65% of Cost of Goods

sold. An equal % could be applied in year 2012 and 2014.

f) On year 2012 and 2014 it has been applied same dividends payment policy than year 2013.

Some Rules (II)

Based on B/S of year 2012 and 2013 and I/S of year 2012, 2013 and 2014, give answer to

following points (I),

 Give some comments about Liquidity and Enforceability trend on Balance Sheet of this

company.

 “Understanding the business before FS analysis work (slide 14, Topic 1)”: try to identify

which type of business is based on Balance Sheet structure.

 Define a Time Horizon (minimum three years on Income Statement) and calculate cash-

flow estimations for three years. Explain the trend and the consistency with Liquidity

tren don Balance and Liquidity ratios calculations you will get from the rest of questions.

 Propose a minimum of three Key Performance Indicators (KPI) to follow up on the

Balanced ScoredCard (BSC) Financial Perspective. Try to build the link of those three

financial KPI with strategic goals on the other three perspectives.

Questions (I)

Some additional questions,

 Calculate the R.O.A.and R.O.E before taxes and either the Financial Leverage, per year.

How you understand the yearly variances ?. Assume all expenses are variable (Total

Leverage Effect = Financial Leverage Effect).

 Identify and calculate Activity S/T and Liquidity ratios per year (just only this two

categories) and calculate the Cash Conversion Cycle (Days). Explain the meaning of your

outcome and the consistency with liquidity position of the company per year.

Your role : Financial consultant supporting to General Manager of this company. You are

placed in first of January 2014 and working on hystorical analysis of years 2012 and

2013 and either on forecasting / budget financial figures for year 2014.

Questions (II)

1) Calculate yearly Cash–Flow based in Direct method.

2) Corporate Tax for year 2012 and 2014 should be calculated based on effective

tax rate of year 2013.

3) Lenght of document: minimum of four pages and maximum of six. Use file

format you feel more comfortable (excel, word, powerpoint,…) to run the

project BUT prepare a pdf file for being sent to professor by mail.

Barcelona, March 21 st of 2017

Other given data details